System and method that provide incentives to qualified users of an electronic trading system

• US 8,498,922 B2
• Filed: 08/09/2010
• Issued: 07/30/2013
• Est. Priority Date: 06/15/1999
• Status: Expired due to Term

• Current Assignee: CFPH LLC (Cantor Fitzgerald, L.P.)
• Original Assignee: CFPH LLC (Cantor Fitzgerald, L.P.)
• Inventors: Fraser, Stuart A., Ginsberg, Philip M., Kirwin, Glenn D., Lutnick, Howard W.
• Primary Examiner(s): Subramanian, Narayanswamy
• Application Number:
  US12/852,762
• Publication Number:
  US 20100306042A1
• Time in Patent Office: 1,086 Days
• Field of Search: 705 35- 37
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0222 During e-commerce, i.e. online transactions
• CPC Class Codes: G06Q 30/0231 Awarding of a frequent usage incentive independent of the monetary value of a good or service purchased, or distance travelled
• CPC Class Codes: G06Q 30/0235 constrained by time limit or expiration date
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 99/00 Subject matter not provided for in other groups of this subclass

Abstract

Systems and methods for electronic trading that provide incentives to users of a trading system. The systems and methods may monitor a trading activity of the user and determine that the orders submitted by the user over a period of time exceed a first pre-determined threshold. Systems and methods also determine that a spread of the plurality of orders exceeds a second pre-determined threshold. Based on these determinations, the user is designated as qualifying for a special status, which entitles the user to incentives in trading. Systems and methods apply the incentives to an order submitted by the user. One such incentive provides the user with a priority in a trading queue, where orders submitted by the user are executed in advance of other orders in the trading queue.

Claims

1. A method comprising:

monitoring, via a processor, a trading activity of a user using a remote device that is remote to a trading system, in which the remote device and the processor are in electronic communication over a network;

determining, via the processor based on monitoring the trading activity of the user, that a plurality of orders submitted by the user over a period of time exceeds a first threshold and that a spread of the plurality of orders exceeds a second threshold, in which the first threshold and the second threshold are determined in advance of the act of monitoring;

designating, via the processor based on determining that the plurality of orders exceeds the first threshold and the second threshold, that the user qualifies for a special status;

determining, via the processor in response to determining that the user qualifies for the special status, that the user is entitled to at least one incentive in trading;

applying via the processor, the at least one incentive to an order submitted by the user, in which the at least one incentive provides the user with a priority in a trading queue; and

executing via the processor based on the special status of the user, the order submitted by the user in advance of other orders in the trading queue.

2. The method of claim 1 further comprising:

determining, based on determining that the plurality of orders exceeds the first threshold and the second threshold, that the user is a designated primary market maker.

3. The method of claim 1 further comprising:

determining, based on monitoring the trading activity of the user, that the user has sufficient credit acceptability.

4. The method of claim 1 further comprising:

determining, based on monitoring the trading activity of the user, that the user is sponsored by at least one other user of the trading system.

5. The method of claim 1 further comprising:

determining, based on monitoring the trading activity of the user, that the user meets a value level that is determined in advance of the act of monitoring.

6. The method of claim 1 further comprising:

determining, based on monitoring the trading activity of the user, that the user satisfies an order placement level.

7. The method of claim 1, in response to determining that the user is entitled to the at least one incentive in trading, an exclusivity to place bids and offers.

8. The method of claim 7 further comprising:

providing the user with the exclusive opportunity to place a bid or offer on a first order; and

blocking other users from an ability to place a bid or offer on the first order.

9. The method of claim 1 further comprising:

reducing, in response to determining that the user is entitled to the at least one incentive in trading, a transaction cost for processing an order submitted by the user.

10. The method of claim 1 further comprising:

waiving, in response to determining that the user is entitled to the at least one incentive in trading, a transaction cost for processing an order submitted by the user.

11. The method of claim 1 further comprising:

determining, based on monitoring the trading activity of the user, that a plurality of orders submitted by the user over a second period of time fails to meet the first threshold;

revoking, in response to the determination, the special status of the user; and

determining, based on the revoked special status, that the user no longer qualifies for the at least one incentive.

12. The method of claim 1 further comprising:

determining, based on monitoring the trading activity of the user during a second period of time, that a spread of the plurality of orders fails to meet the second threshold;

revoking, in response to the determination, the special status of the user; and

determining, based on the revoked special status, that the user no longer qualifies for the at least one incentive.

13. The method of claim 1, in which the first threshold comprises a minimum volume of orders;

and

in which the second threshold comprises a minimum difference in price between a bid and an offer.

14. The method of claim 1 further comprising:

determining, based on determining that the plurality of orders submitted by the user over a period of time exceeds a minimum volume and that the spread of the plurality of orders exceeds a parameter, that the user is a designated primary market maker, in which the parameter is determined in advance of the act of monitoring.

15. An apparatus comprising:

a processor; and

a memory, in which the memory stores instructions which, when executed by the processor, direct the processor to;

monitor a trading activity of a user on a trading system;

determine, based on monitoring the trading activity of the user, that a plurality of orders submitted by the user over a period of time exceeds a first threshold and that a spread of the plurality of orders exceeds a second threshold, in which the first threshold and the second threshold are determined in advance of the act of monitoring;

designate, based on determining that the plurality of orders exceeds the first threshold and the second threshold, that the user qualifies for a special status;

determine, in response to determining that the user qualifies for a special status, that the user is entitled to at least one incentive in trading;

apply the at least one incentive to an order submitted by the user, in which the at least one incentive provides the user with a priority in a trading queue; and

execute, based on the special status of the user, the order submitted by the user in advance of other orders in the trading queue.

16. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

determine, based on determining that the plurality of orders exceeds the first threshold and the second threshold, that the user is a designated primary market maker.

17. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

determine, based on monitoring the trading activity of the user, that the user has sufficient credit acceptability.

18. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

determine, based on monitoring the trading activity of the user, that the user is sponsored by at least one other user of the trading system.

19. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

provide, in response to determining that the user is entitled to the at least one incentive in trading, an exclusivity to place bids and offers.

20. The apparatus of claim 19, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

provide the user with the exclusive opportunity to place a bid or offer on a first order; and

blocking other users from an ability to place a bid or offer on the first order.

21. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

reduce, in response to determining that the user is entitled to the at least one incentive in trading, a transaction cost for processing an order submitted by the user.

22. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

reduce, in response to determining that the user is entitled to the at least one incentive in trading, a transaction cost for processing an order submitted by the user.

23. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

determine, based on monitoring the trading activity of the user, that a plurality of orders submitted by the user over a second period of time fails to meet the first threshold;

revoking, in response to the determination, the special status of the user; and

determining, based on the revoked special status, that the user no longer qualifies for the at least one incentive.

24. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

determine, based on monitoring the trading activity of the user during a second period of time, that a spread of the plurality of orders fails to meet the second threshold;

revoking, in response to the determination, the special status of the user; and

determining, based on the revoked special status, that the user no longer qualifies for the at least one incentive.

25. The apparatus of claim 15, in which the first threshold comprises a minimum volume of orders;

and

in which the second threshold comprises a minimum difference in price between a bid and an offer.

26. The apparatus of claim 15, in which the memory stores instructions which, when executed by the processor, further direct the processor to:

determine, based on determining that the plurality of orders submitted by the user over a period of time exceeds a minimum volume and that the spread of the plurality of orders exceeds a parameter, that the user is a designated primary market maker, in which the parameter is determined in advance of the act of monitoring.