U.S. patent application number 11/495235 was filed with the patent office on 2007-02-01 for system and method for using trader lists in an electronic trading system to route a trading order with a reserved size.
Invention is credited to Matthew W. Claus, Kevin M. Foley, Nigel J. Renton.
Application Number | 20070027795 11/495235 |
Document ID | / |
Family ID | 56290842 |
Filed Date | 2007-02-01 |
United States Patent
Application |
20070027795 |
Kind Code |
A1 |
Claus; Matthew W. ; et
al. |
February 1, 2007 |
System and method for using trader lists in an electronic trading
system to route a trading order with a reserved size
Abstract
A system for managing trading orders comprises a memory operable
to store a trader list that is associated with a first trader and
that designates one or more other traders. The system further
comprises a processor communicatively coupled to the memory and
operable to receive a trading order from the first trader, wherein
the trading order is for an order quantity of a first trading
product. The processor is further operable to determine a first
portion and a second portion of the order quantity. The processor
is further operable to disclose the first portion of the order
quantity to a plurality of traders. If a configurable condition is
satisfied, the processor is further operable to disclose the second
portion of the order quantity to one or more traders that are not
designated by the trader list and to prevent the disclosure of the
second portion of the order quantity to the one or more designated
traders from the trader list.
Inventors: |
Claus; Matthew W.; (Summit,
NY) ; Foley; Kevin M.; (New York, NY) ;
Renton; Nigel J.; (London, GB) |
Correspondence
Address: |
BAKER BOTTS L.L.P.
2001 ROSS AVENUE
SUITE 600
DALLAS
TX
75201-2980
US
|
Family ID: |
56290842 |
Appl. No.: |
11/495235 |
Filed: |
July 27, 2006 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
60703623 |
Jul 29, 2005 |
|
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Current U.S.
Class: |
705/37 |
Current CPC
Class: |
G06Q 40/06 20130101;
G06Q 40/04 20130101; G06Q 40/00 20130101; G06Q 30/0251 20130101;
G06Q 50/188 20130101 |
Class at
Publication: |
705/037 |
International
Class: |
G06Q 40/00 20060101
G06Q040/00 |
Claims
1. A system for managing trading orders, comprising: a memory
operable to store a trader list that is associated with a first
trader and that designates one or more other traders; a processor
communicatively coupled to the memory and operable to: receive a
trading order from the first trader, wherein the trading order is
for an order quantity of a first trading product; determine a first
portion and a second portion of the order quantity; disclose the
first portion of the order quantity to a plurality of traders; and
if a configurable condition is satisfied: disclose the second
portion of the order quantity to one or more traders that are not
designated by the trader list; and prevent the disclosure of the
second portion of the order quantity to the one or more designated
traders from the trader list.
2. The system of claim 1, wherein: the trading order is a first
trading order; the determination of the first portion and the
second portion of the order quantity from the first trading order
is based at least in part on a first preference associated with the
first trader; and the processor is further operable to: receive
from the first trader a second trading order for an order quantity
of a second trading product; determine a first portion and a second
portion of the order quantity from the second trading order,
wherein the determination of the first portion and the second
portion of the order quantity from the second trading order is
based at least in part on a second preference associated with the
first trader; and disclose the first portion of the order quantity
from the second trading order to a plurality of traders.
3. The system of claim 2, wherein the determined first portion of
the order quantity from the first trading order is different than
the determined first portion of the order quantity from the second
trading order.
4. The system of claim 2, wherein the first preference is
associated with the first trading product and the second preference
is associated with the second trading product.
5. The system of claim 2, wherein: the trader list is a first
trader list associated with the first trading product; the
configurable condition is a first configurable condition associated
with the first trading product; the first trader is associated
with: a second configurable condition associated with the second
trading product; and a second trader list designating one or more
other traders; and the processor is further operable to: if the
second configurable condition is satisfied: disclose the second
portion of the order quantity from the second trading order to one
or more traders that are not designated by the second trader list;
and prevent the disclosure of the second portion of the order
quantity from the second trading order to the one or more
designated traders from the second trader list.
6. The system of claim 5, wherein the second trader list is
different from the first trader list.
7. The system of claim 5, wherein the second configurable condition
is different from the first configurable condition.
8. The system of claim 1, wherein the determination of the first
portion and the second portion of the order quantity is based at
least in part on one or more preferences associated with the first
trader.
9. The system of claim 8, wherein at least one of the one or more
preferences is to determine the first portion based at least in
part on a configurable percentage of the order quantity.
10. The system of claim 8, wherein at least one of the one or more
preferences is to determine the first portion based at least in
part on current market data.
11. The system of claim 8, wherein the processor is further
operable to allow the first trader to input the one or more
preferences.
12. The system of claim 1, wherein the processor is further
operable to allow the first trader to input the configurable
condition.
13. The system of claim 1, wherein: the trading order is a first
trading order; and the configurable condition is that a second
trading order aggress at least part of the first portion of the
order quantity from the first trading order.
14. The system of claim 1, wherein: the trading order is a first
trading order; and the configurable condition is that: a second
trading order aggress at least part of the first portion of the
order quantity from the first trading order; and the second trading
order is not from a trader designated by the trader list.
15. The system of claim 1, wherein the configurable condition is
that a best bid price or a best offer price in a trading system
satisfy a configurable threshold.
16. The system of claim 1, wherein the configurable condition is
that a trading volume associated with the first trading product
satisfy a configurable threshold.
17. The system of claim 1, wherein each of the one or more traders
designated by the trader list are market makers that specialize in
trading the first trading product.
18. The system of claim 1, wherein the trading order is part of a
substantially real-time order price feed from the first trader.
19. The system of claim 1, wherein disclosing the first portion of
the order quantity to a plurality of traders comprises transmitting
the first portion of the order quantity to the plurality of
traders.
20. A method for managing trading orders, comprising: receiving a
trading order from a first trader, wherein: the trading order is
for an order quantity of a first trading product; and the first
trader is associated with a trader list designating one or more
other traders; determining a first portion and a second portion of
the order quantity; disclosing the first portion of the order
quantity to a plurality of traders; and if a configurable condition
is satisfied: disclosing the second portion of the order quantity
to one or more traders that are not designated by the trader list;
and preventing the disclosure of the second portion of the order
quantity to the one or more designated traders from the trader
list.
21. The method of claim 20, wherein: the trading order is a first
trading order; the determination of the first portion and the
second portion of the order quantity from the first trading order
is based at least in part on a first preference associated with the
first trader; and further comprising: receiving from the first
trader a second trading order for an order quantity of a second
trading product; determining a first portion and a second portion
of the order quantity from the second trading order, wherein the
determination of the first portion and the second portion of the
order quantity from the second trading order is based at least in
part on a second preference associated with the first trader; and
disclosing the first portion of the order quantity from the second
trading order to a plurality of traders.
22. The method of claim 21, wherein the determined first portion of
the order quantity from the first trading order is different than
the determined first portion of the order quantity from the second
trading order.
23. The method of claim 21, wherein the first preference is
associated with the first trading product and the second preference
is associated with the second trading product.
24. The method of claim 21, wherein: the trader list is a first
trader list associated with the first trading product; the
configurable condition is a first configurable condition associated
with the first trading product; and the first trader is associated
with: a second configurable condition associated with the second
trading product; and a second trader list designating one or more
other traders; and further comprising: if the second configurable
condition is satisfied: disclosing the second portion of the order
quantity from the second trading order to one or more traders that
are not designated by the second trader list; and preventing the
disclosure of the second portion of the order quantity from the
second trading order to the one or more designated traders from the
second trader list.
25. The method of claim 24, wherein the second trader list is
different from the first trader list.
26. The method of claim 24, wherein the second configurable
condition is different from the first configurable condition.
27. The method of claim 20, wherein the determination of the first
portion and the second portion of the order quantity is based at
least in part on one or more preferences associated with the first
trader.
28. The method of claim 27, wherein at least one of the one or more
preferences is to determine the first portion based at least in
part on a configurable percentage of the order quantity.
29. The method of claim 27, wherein at least one of the one or more
preferences is to determine the first portion based at least in
part on current market data.
30. The method of claim 27, further comprising allowing the first
trader to input the one or more preferences.
31. The method of claim 20, further comprising allowing the first
trader to input the configurable condition.
32. The method of claim 20, wherein: the trading order is a first
trading order; and the configurable condition is that a second
trading order aggress at least part of the first portion of the
order quantity from the first trading order.
33. The method of claim 20, wherein: the trading order is a first
trading order; and the configurable condition is that: a second
trading order aggress at least part of the first portion of the
order quantity from the first trading order; and the second trading
order is not from a trader designated by the trader list.
34. The method of claim 20, wherein the configurable condition is
that a best bid price or a best offer price in a trading system
satisfy a configurable threshold.
35. The method of claim 20, wherein the configurable condition is
that a trading volume associated with the first trading product
satisfy a configurable threshold.
36. The method of claim 20, wherein each of the one or more traders
designated by the trader list are market makers that specialize in
trading the first trading product.
37. The method of claim 20, wherein the trading order is part of a
substantially real-time order price feed from the first trader.
38. The method of claim 20, wherein disclosing the first portion of
the order quantity to a plurality of traders comprises transmitting
the first portion of the order quantity to the plurality of
traders.
39. Logic for managing trading orders, the logic encoded in
computer-readable media and operable when executed to: receive a
trading order from a first trader, wherein: the trading order is
for an order quantity of a first trading product; and the first
trader is associated with a trader list designating one or more
other traders; determine a first portion and a second portion of
the order quantity; disclose the first portion of the order
quantity to a plurality of traders; and if a configurable condition
is satisfied: disclose the second portion of the order quantity to
one or more traders that are not designated by the trader list; and
prevent the disclosure of the second portion of the order quantity
to the one or more designated traders from the trader list.
40. The logic of claim 39, wherein: the trading order is a first
trading order; the determination of the first portion and the
second portion of the order quantity from the first trading order
is based at least in part on a first preference associated with the
first trader; and the logic is further operable when executed to:
receive from the first trader a second trading order for an order
quantity of a second trading product; determine a first portion and
a second portion of the order quantity from the second trading
order, wherein the determination of the first portion and the
second portion of the order quantity from the second trading order
is based at least in part on a second preference associated with
the first trader; and disclose the first portion of the order
quantity from the second trading order to a plurality of
traders.
41. The logic of claim 40, wherein the determined first portion of
the order quantity from the first trading order is different than
the determined first portion of the order quantity from the second
trading order.
42. The logic of claim 40, wherein the first preference is
associated with the first trading product and the second preference
is associated with the second trading product.
43. The logic of claim 40, wherein: the trader list is a first
trader list associated with the first trading product; the
configurable condition is a first configurable condition associated
with the first trading product; the first trader is associated
with: a second configurable condition associated with the second
trading product; and a second trader list designating one or more
other traders; and the logic is further operable when executed to,
if the second configurable condition is satisfied: disclose the
second portion of the order quantity from the second trading order
to one or more traders that are not designated by the second trader
list; and prevent the disclosure of the second portion of the order
quantity from the second trading order to the one or more
designated traders from the second trader list.
44. The logic of claim 43, wherein the second trader list is
different from the first trader list.
45. The logic of claim 43, wherein the second configurable
condition is different from the first configurable condition.
46. The logic of claim 39, wherein the determination of the first
portion and the second portion of the order quantity is based at
least in part on one or more preferences associated with the first
trader.
47. The logic of claim 46, wherein at least one of the one or more
preferences is to determine the first portion based at least in
part on a configurable percentage of the order quantity.
48. The logic of claim 46, wherein at least one of the one or more
preferences is to determine the first portion based at least in
part on current market data.
49. The logic of claim 46, further comprising allowing the first
trader to input the one or more preferences.
50. The logic of claim 39, further comprising allowing the first
trader to input the configurable condition.
51. The logic of claim 39, wherein: the trading order is a first
trading order; and the configurable condition is that a second
trading order aggress at least part of the first portion of the
order quantity from the first trading order.
52. The logic of claim 39, wherein: the trading order is a first
trading order; and the configurable condition is that: a second
trading order aggress at least part of the first portion of the
order quantity from the first trading order; and the second trading
order is not from a trader designated by the trader list.
53. The logic of claim 39, wherein the configurable condition is
that a best bid price or a best offer price in a trading system
satisfy a configurable threshold.
54. The logic of claim 39, wherein the configurable condition is
that a trading volume associated with the first trading product
satisfy a configurable threshold.
55. The logic of claim 39, wherein each of the one or more traders
designated by the trader list are market makers that specialize in
trading the first trading product.
56. The logic of claim 39, wherein the trading order is part of a
substantially real-time order price feed from the first trader.
57. The logic of claim 39, wherein disclosing the first portion of
the order quantity to a plurality of traders comprises transmitting
the first portion of the order quantity to the plurality of
traders.
Description
RELATED APPLICATION
[0001] This patent application claims priority from Patent
Application Ser. No. 60/703,623, filed Jul. 29, 2005 entitled:
System and Method for Limiting Aggressive Trading in an Electronic
Trading System.
TECHNICAL FIELD OF THE INVENTION
[0002] The present invention relates generally to electronic
trading and, more specifically, to a system for using trader lists
in an electronic trading system to route a trading order with a
reserved size.
BACKGROUND OF THE INVENTION
[0003] In recent years, electronic trading systems have gained wide
spread acceptance for trading of a wide variety of items, such as
goods, services, financial instruments, and commodities. For
example, electronic trading systems have been created that
facilitate the trading of financial instruments and commodities
such as stocks, bonds, currency, futures contracts, oil, and
gold.
[0004] Many of these electronic trading systems use a bid/offer
process in which bids and offers are submitted to the systems by a
passive side and then those bids and offers are hit or lifted (or
taken) by an aggressive side. For example, a passive trading
counterparty may submit a "bid" to buy a particular trading
product. In response to such a bid, an aggressive side counterparty
may submit a "hit" in order to indicate a willingness to sell the
trading product to the first counterparty at the given price.
Alternatively, a passive side counterparty may submit an "offer" to
sell the particular trading product at the given price, and then
the aggressive side counterparty may submit a "lift" (or "take") in
response to the offer to indicate a willingness to buy the trading
product from the passive side counterparty at the given price.
SUMMARY OF THE INVENTION
[0005] In accordance with the present invention, the disadvantages
and problems associated with prior electronic trading systems have
been substantially reduced or eliminated.
[0006] In one embodiment, a system for managing trading orders
comprises a memory operable to store a trader list that is
associated with a first trader and that designates one or more
other traders. The system further comprises a processor
communicatively coupled to the memory and operable to receive a
trading order from the first trader, wherein the trading order is
for an order quantity of a first trading product. The processor is
further operable to determine a first portion and a second portion
of the order quantity. The processor is further operable to
disclose the first portion of the order quantity to a plurality of
traders. If a configurable condition is satisfied, the processor is
further operable to disclose the second portion of the order
quantity to one or more traders that are not designated by the
trader list and to prevent the disclosure of the second portion of
the order quantity to the one or more designated traders from the
trader list.
[0007] In another embodiment, a method for managing trading orders
comprises receiving a trading order from a first trader, wherein
the trading order is for an order quantity of a first trading
product and the first trader is associated with a trader list
designating one or more other traders. The method continues by
determining a first portion and a second portion of the order
quantity. The method continues by disclosing the first portion of
the order quantity to a plurality of traders. If a configurable
condition is satisfied, the method continues by disclosing the
second portion of the order quantity to one or more traders that
are not designated by the trader list and preventing the disclosure
of the second portion of the order quantity to the one or more
designated traders from the trader list.
[0008] Various embodiments of the present invention may benefit
from numerous advantages. It should be noted that one or more
embodiments may benefit from some, none, or all of the advantages
discussed below.
[0009] One advantage is that the trading platform uses trader lists
that assist traders in managing risks associated with trading. For
example, a particular trader may perceive that trades with highly
specialized traders are not likely to be profitable. Based on this
perception, the particular trader may configure a trader list to
designate those highly specialized traders with which the
particular trader does not want to trade. When the particular
trader submits a trading order and/or an order price feed, the
trading platform may transmit the trading order and/or the order
price feed to the other traders in the trading system, with the
exception of those traders designated by the trader list. Thus, the
trading platform may prevent trades that the particular trader
believes would be unprofitable.
[0010] Another advantage is that, by using trader lists, the
trading platform may limit or eliminate small trades that are
perceived as nuisances. For example, a particular trader may
submit, as a trading order, an offer to trade a large quantity of a
particular trading product. In a system without trader lists, small
traders would receive the trading order and attempt to aggress
relatively small portions of the total quantity of the trading
order. The particular trader that submitted the trading order might
perceive such small transactions as nuisances. To eliminate these
nuisances, the trading platform allows the particular trader to
configure a trader list that designates those traders in the
trading system that are prone to aggress against relatively small
portions of a large bid or offer. Thus, when the particular trader
submits a trader order, the trading platform may transmit the
trading order to the other traders in trading system, with the
exception of those small traders designated by the trader list.
Thus, by allowing traders to configure trader lists, the trading
platform may assist traders in managing risks and in avoiding
nuisance-type trades.
[0011] Other advantages will be readily apparent to one having
ordinary skill in the art from the following figures, descriptions,
and claims.
BRIEF DESCRIPTION OF THE DRAWINGS
[0012] For a more complete understanding of the present invention
and its advantages, reference is now made to the following
description, taken in conjunction with the accompanying drawings,
in which:
[0013] FIG. 1 illustrates one embodiment of a trading system in
accordance with the present invention;
[0014] FIG. 2A illustrates an example of a trader profile,
according to certain embodiments of the present invention;
[0015] FIG. 2B illustrates an example of a flow of operation
between traders and a trading platform, according to certain
embodiments of the present invention;
[0016] FIG. 2C illustrates an example of a flow of operation
between traders and a trading platform, according to certain
embodiments of the present invention;
[0017] FIG. 3 illustrates a flowchart for generating and using
trader lists to process trading orders, according to certain
embodiments of the present invention;
[0018] FIG. 4 illustrates an example of a trader profile configured
for dividing a trading order into a display portion and a held
portion, according to certain embodiments of the present invention;
and
[0019] FIG. 5 illustrates a flowchart for processing a display
portion and a held portion of a trading order, according to certain
embodiments of the present invention.
DETAILED DESCRIPTION OF THE INVENTION
[0020] FIG. 1 illustrates a trading system 10 according to certain
embodiments of the present invention. System 10 may include one or
more terminals 14 coupled to a trading platform 18 by one or more
communications networks 20. Generally, trading system 10 may
receive and process trading orders 24 from traders 12. More
specifically, trading system 10 may generate for a particular
trader 12 a trader list 44 that designates one or more other
traders 12 with whom the particular trader 12 does not want to
trade. Upon receiving trading order 24 from the particular trader
12, trading system 10 may prevent the transmission of the received
trading order 24 to traders 12 designated by trader list 44
associated with the particular trader 12. By using trader list 44
to process trading order 24, trading platform 18 may assist trader
12 in avoiding a trade between trader 12 and those traders 12 that
are designated by trader list 44.
[0021] Trading system 10 comprises one or more terminals 14.
Terminal 14 represents any suitable local or remote end-user
devices that may be used by traders 12 to access one or more
elements of trading system 10, such as trading platform 18.
Terminal 14 may comprise a computer, workstation, telephone,
Internet browser, electronic notebook, Personal Digital Assistant
(PDA), pager, or any other suitable device (wireline, wireless, or
both), component, or element capable of receiving, processing,
storing, and/or communicating information with other components of
system 10. Terminal 14 may also comprise any suitable user
interface such as a display, microphone, keyboard, or any other
appropriate terminal equipment according to particular
configurations and arrangements. It will be understood that there
may be any number of terminals 14 communicatively connected to
trading platform 18.
[0022] In some embodiments, terminal 14 may be communicatively
coupled to interface server 15. Interface server 15 is generally
operable to transmit trading orders 24, order price feeds 26, and
market data between terminal 14 and trading platform 18. A
particular interface server 15 that is coupled to terminal 14 for a
particular trader 12 may store one or more trader profiles 38,
trader preferences 42, and trader lists 44 (described below)
associated with one or more traders 12. Based at least in part on
trader profile 38, interface server 15 may prevent the disclosure
of one or more trading orders 24 and/or one or more order price
feeds 26 to trader 12. In particular, interface server 15 may use
trader list 38 to filter particular trading orders 24 from a stream
of market data received from trading platform 18. A particular
interface server 15 may be communicatively coupled to any number
and combination of terminals 14. Interface server 15 represents a
general-purpose personal computer (PC), a Macintosh, a workstation,
a Unix-based computer, a server computer, or any suitable
processing device. Interface server 15 may include any hardware,
software, firmware, or combination thereof operable to perform the
functions and/or operations described above.
[0023] Terminals 14 are operable to receive trading orders 24 from
traders 12 and to send trading orders 24 to trading platform 18.
Trading orders 24 may comprise orders to trade products such as,
for example, stocks, equity securities, bonds, mutual funds,
options, futures, derivatives, currencies, other financial
instruments, or any suitable trading product. Such trading orders
24 may comprise bids, offers, market orders, limit orders, stop
loss orders, day orders, open orders, GTC ("good till cancelled")
orders, "good through" orders, "all or none" orders, "any part"
orders, or any other order suitable for trading.
[0024] The various types of trading orders 24 in trading system 10
may generally be characterized as either passive trading orders 24
or aggressive trading orders 24. An aggressive trading order 24 is
an order that activates or triggers a trade. In contrast, a passive
trading order 24 is an order that does not, by itself, activate or
trigger a trade. A "hit" and a "take" (e.g., "lift") are examples
of aggressive trading orders 24. A "bid" and an "offer" are
generally examples of passive trading orders 24. (In some
situations, however, a bid or an offer may be considered an
aggressive trading order 24. For example, if trader 12 submits an
offer that is below the best bid price, the offer may trigger or
activate a trade and, therefore, be considered an aggressive
trading order 24.) An example illustrates passive and aggressive
trading orders 24. A passive trader 12 may submit a "bid" to buy a
particular amount of product A at a given price. In response to
such a bid, an aggressive trader 12 may submit a "hit" to activate
or trigger a sale of the particular amount of product A to the
passive trader 12 at the given price. In this example, the bid is a
passive trading order 24 and the hit is an aggressive trading order
24. As another example, a passive trader 12 may submit an "offer"
to indicate a willingness to sell a particular amount of product A
at a given price. Subsequently, an aggressive trader 12 may submit
a "lift" (or "take") in response to the offer to activate or
trigger the purchase of the particular amount of product A at the
given price from the passive trader 12. In this example, the offer
is a passive trading order 24 and the lift (or take) is an
aggressive trading order 24.
[0025] Although terminals 14 are described herein as being used by
"traders" 12, it should be understood that the term "trader" is
meant to broadly apply to any user of trading system 10, whether
that user is an agent acting on behalf of a principal, a principal,
an individual, a legal entity (such as a corporation), or any
machine or mechanism that is capable of placing and/or responding
to trading orders 24 in system 10. Certain traders 12 may be
customers 12a. Other traders 12 may be market makers 12b.
[0026] Market maker 12b is any individual, firm, or other entity
that submits and/or maintains either or both bid and offer trading
orders 24 simultaneously for the same instrument. For example,
market maker 12b may be a brokerage or bank that maintains either a
firm bid and/or offer price in a given security by standing ready,
willing, and able to buy and/or sell that security at publicly
quoted prices. Market maker 12b generally displays bid and/or offer
prices for specific numbers of specific securities, and if these
prices are met, market maker 12b will immediately buy for and/or
sell from its own accounts. According to certain embodiments, a
single trading order 24 may be filled by a number of market makers
12b at potentially different prices.
[0027] Customer 12a may be any user of trading system 10 that is
not a market maker 12b. Customer 12a may be an individual investor,
an agent acting on behalf of a principal, a principal, an
individual, a legal entity (such as a corporation), or any machine
or mechanism that is capable of placing and/or responding to
trading orders 24 in system 10.
[0028] In some embodiments, market makers 12b may include
individuals, firms or other entities that are granted particular
privileges such that trading orders 24 received from such
individuals, firms or other entities are treated as being received
from a traditional market maker 12b (such as a brokerage or bank,
for example). For example, certain individuals, firms or other
entities that may otherwise be treated as customers 12a may be
granted privileges to be treated as market makers 12b for the
purposes of the systems and methods discussed herein. To receive
market maker privileges, an individual, firm or other entity may be
required to pay a fee, pay a commission, or submit and/or
simultaneously maintain both bid and offer trading orders 24 for
particular instruments. According to certain embodiments, an
individual, firm or other entity may be designated as a market
maker 12b for particular instruments but as a customer 12a for
other instruments.
[0029] In some embodiments, a multi-tiered system of market makers
12b may be employed. Trading platform 18 may grant different
privileges to different market makers 12b based on one or more
criteria such as, for example, whether market maker 12b is
associated with an electronic feed, whether market maker 12b is a
strong trader, or whether market maker 12b has particular
information. Market makers 12b may be categorized into different
tiers for different tradable instruments. For instance, a
particular market maker 12b may be categorized as a first-level
market maker for instrument(s) for which that market maker 12b is a
strong trader and as a second-level market maker 12b for other
types of instruments.
[0030] Terminals 14 may be communicatively coupled with order price
feed modules 16. An order price feed module 16 comprises any
suitable hardware and/or software for generating and/or
communicating one or more order price feeds 26. In some
embodiments, order price feed module 16 may be separate from
terminal 14 and interface server 15. In other embodiments, order
price feed module 16 may be comprised within terminal 14 or
interface server 15. Thus, the functions and operations of order
price feed module 16 may, in some embodiments, be performed by
terminal 14, interface server 15, or any other suitable component
of trading system 10. An order price feed 26 may be a real time (or
substantially real time) data stream indicating the current best
bid and/or offer that trader 12 is willing to send or make
available for a particular trading product. Order price feed 26 for
a particular trading product may comprise an offer quantity, an
offer price, a bid quantity, and/or a bid price. A particular
market maker 12b may supply order price feed 26 (e.g., bid-offer
spreads) for a particular trading product to multiple market
centers 40 and/or trading platforms 18 to allow that market maker
12b to flood the general marketplace with its best bid and offer
price. According to certain embodiments, market maker 12b generates
revenue by persistently trading at its bid and offer prices and
profiting the difference. Such a strategy may be referred to as
"trading the bid-offer spread."
[0031] Terminals 14 and/or order price feed modules 16 may be
communicatively coupled to trading platform 18 via network 20.
Network 20 is a communication platform operable to exchange data or
information between terminals 14 and trading platform 18 and/or
market centers 40. In some embodiments, network 20 may represent an
Internet architecture that enables terminals 14 to communicate with
platform 18 and/or market centers 40. In other embodiments, network
20 may be a plain old telephone system (POTS), which traders 12
could use to perform the same operations or functions. In some
embodiments, network 20 may be any packet data network (PDN)
offering a communications interface or exchange between any two
nodes in system 10. Network 20 may further comprise any combination
of the above examples and any local area network (LAN),
metropolitan area network (MAN), wide area network (WAN), wireless
local area network (WLAN), virtual private network (VPN), intranet,
or any other appropriate architecture or system that facilitates
communications between terminals 14 and platform 18 and/or market
centers 40.
[0032] Market centers 40 comprise all manner of order execution
venues including exchanges, Electronic Communication Networks
(ECNs), Alternative Trading Systems (ATSs), market makers, or any
other suitable market participants. Each market center 40 maintains
a bid and offer price in a given trading product by standing ready,
willing, and able to buy or sell at publicly quoted prices, also
referred to as market center prices. A particular market center 40
may facilitate trading of multiple trading products, such as, for
example, stocks, fixed income securities, futures contracts,
currencies, precious metals, and so forth. Market centers may be
communicatively coupled to trading platform 18 via network 20.
[0033] Trading platform 18 is a trading architecture that
facilitates the routing, matching, and otherwise processing of
trading orders 24 and/or order price feeds 26. Trading platform 18
may comprise a management center or a headquartering office for any
person, business, or entity that seeks to route, match, process, or
fill trading orders 24 and/or order price feeds 26. Accordingly,
trading platform 18 may include any suitable combination of
hardware, software, personnel, devices, components, elements, or
objects that may be utilized or implemented to achieve the
operations and functions of an administrative body or a supervising
entity that manages or administers a trading environment. Trading
platform 18 may comprise a processor 32 and a memory 34.
[0034] Processor 32 is operable to process trading orders 24,
record trading orders 24 in memory 34 and route trading orders 24
to traders 12 and/or market centers 40. Processor 32 is further
operable to execute rules 36 stored in memory 34 to generate and
use trader lists 44 to manage the disclosure of trading orders 24
and/or order price feeds 26 between traders 12. Processor 32 may
comprise any suitable combination of hardware and software
implemented in one or more modules to provide the described
function or operation.
[0035] Memory 34 comprises any suitable arrangement of random
access memory (RAM), read only memory (ROM), magnetic computer
disk, CD-ROM, or other magnetic or optical storage media, or any
other volatile or non-volatile memory devices that store one or
more files, lists, tables, or other arrangements of information
such as trading orders 24. Although FIG. 1 illustrates memory 34 as
internal to trading platform 18, it should be understood that
memory 34 may be internal or external to components of trading
system 10, depending on particular implementations. Also, memory 34
illustrated in FIG. 1 may be separate or integral to other memory
devices to achieve any suitable arrangement of memory devices for
use in trading system 10.
[0036] According to certain embodiments, memory 34 comprises rules
36 and trader profiles 38. Generally, rules 36 comprises software
instructions for routing, matching, processing, or filling trading
orders 24. In particular, rules 36 may comprise instructions for
generating and using trader lists 44 to manage the disclosure of
trading orders 24 and/or order price feeds 26 between traders 12
and/or market centers 40.
[0037] Trader profiles 38 generally comprise information regarding
the identity, address, employer, and/or account information of
traders 12. In some embodiments, each trader 12 in trading system
10 is associated with a respective trader profile 38. Trader
profile 38 may comprise trader preferences 42 and trader lists 44
of a particular trader 12. Trader profile 38 may further comprise
other relevant information such as, for example, activity logs,
trade data, and history data associated with trader 12. Trading
platform 18 may allow a person or entity to register to use trading
system 10 as a trader 12. When a particular trader 12 registers to
use trading system 10, trading platform 18 may generate trader
profile 38 for that trader 12. Thus, for each trader 12 in trading
system 10, memory 34 may store a corresponding trader profile
38.
[0038] It should be understood that the internal structure of
trading platform 18 and the interfaces, processors, and memory
devices associated therewith is malleable and can be readily
changed, modified, rearranged, or reconfigured to achieve the
intended operations of trading platform 18.
[0039] In operation, trading platform 18 may use trader lists 44 to
minimize the risk of a particular trader 12 trading with other
traders 12 with whom the particular trader 12 does not want to
trade. For example, a particular trader 12 may perceive that trades
with highly specialized traders 12 are not likely to be profitable.
Based on this perception, the particular trader 12 may configure
trader list 44 to designate those highly specialized traders 12
with which the particular trader 12 does not want to trade. When
trading platform 18 receives trading order 24 from a particular
trader 12, trading platform 18 may scan trader profile 38
associated with trader 12 to identify the particular trader list 44
associated with trader 12. Trader list 44 may designate one or more
traders 12 in trading system 10. Trading platform 18 may then
transmit trading order 24 to traders 12 in trading system 10 with
the exception of those traders 12 designated by trader list 44.
Trading platform 18 may affirmatively prevent the transmission of
trading order 24 to those particular traders 12 designated by
trader list 44. Thus, because trading platform 18 uses trader list
44, a particular trader 12 may avoid trades between the particular
trader 12 and those traders 12 designated by trader list 24.
[0040] According to certain embodiments, trading platform 18 may
allow persons or entities to register to use trading system 10 as
traders 12. When trader 12 registers to use trading system 10,
trading platform 18 may request and receive from trader 12
information regarding the trader preferences 42, account, identity,
affiliation, size, trading history, and/or other suitable
attributes of trader 12. Based on this information provided by
trader 12, trading platform 18 may generate trader profile 38 for
trader 12. Trading platform 18 may store trader preferences 42 of
trader 12 in trader profile 38.
[0041] In some embodiments, trading platform 18 may allow a
particular trader 12 to create trader list 44 that designates one
or more traders 12 with whom the particular trader 12 does not want
to trade. Trader 12 may generate multiple trader lists 44. For
example, a particular trader 12 may generate one trader list 44 for
one type of trading product and another trader list 44 for another
type of trading product. Each of trader lists 44 associated with a
particular trader 12 may be the same or different. Trading platform
18 may store trader lists 44 of a particular trader 12 in trader
profile 38 of that trader 12. Trading platform 18 may allow trader
12 to create trader lists 44 when trader 12 registers to use
trading system 10. Once trader 12 creates trader lists 44, trader
12 may thereafter update, modify, and/or change trader lists 44 to
reflect changes in the market and/or in the trading strategies.
[0042] In some embodiments, for a particular trader 12, trading
platform 18 may create all or a portion of trader lists 44
automatically based on trader preferences 42 of that trader 12.
Trading platform 18 may generate trader list 44 for a particular
trader 12 by comparing trader preferences 42 of the particular
trader 12 with trader profiles 38 of the other traders 12 in
trading system 10. For example, trader 12 may submit to trading
platform 18 a particular trader preference 42 to avoid trading
ten-year notes with traders 12 whose trade volume for ten-year
notes exceeded $500,000,000 during the last 7 days. Trading
platform 18 may store this particular trader preference 42 in
trader profile 38 associated with trader 12. In this example,
trading platform 18 may then scan trader profiles 38 of the other
traders 12 to identify those traders 12 in trading system 10 whose
trade volume for ten-year notes exceeded $500,000,000 during the
last 7 days. Trading platform 18 may generate trader list 44
designating the identified traders 12 and may store the generated
trader list 44 in trader profile 38. In the present example,
trading platform 18 may update trader list 44 at the end of each
day, each week, or other configurable period such that trader list
44 may be based on recent trading activity (i.e., the trading of
ten-year notes during the most recent 7 days).
[0043] The foregoing example illustrates trader preference 42 based
on a particular characteristic of counterparty traders 12 (i.e.,
trading volume that exceeded a particular threshold ($500,000,00)
of a particular trading product (ten-year notes)). It should be
understood, however, that trader preference 42 may be based on any
number and combination of characteristics associated with
counterparty traders 12. For example, trader preference 42 may be
associated with a particular trading product and trader list 44 may
designate those traders 12 that specialize in trading the
particular trading product. As another example, trader preference
42 may be associated with a particular trading activity and trader
list 44 may designate those traders 12 that engage in the
particular trading activity. Thus, it should be understood that a
particular trader preference 42 may be based on the size,
affiliation, trading history, identity, specialty, and/or any other
suitable characteristic of counterparty traders 12.
[0044] Once trading platform 18 receives from a particular trader
12 trading order 24, trading platform 18 may determine whether
trader profile 38 associated with the particular trader 12 includes
a trader list 44. If trader profile 38 includes a trader list 44,
trading platform 18 may transmit trading order 24 to traders 12 in
trading system 10 with the exception of those traders 12 designated
by the trader list 44. Trading platform 18 may prevent the
transmission of trading order 24 to those traders 12 designated by
the trader list 44. Transmitting trading order 24 to traders 12 may
comprise disclosing, displaying, and/or otherwise communicating
trading order 24 to traders 12. Preventing the transmission of
trading order 24 may comprise deleting trading order 24 from one or
more queues associated with those traders 12 designated by trader
list 44, filtering trading order 24 from one or more data streams
associated with traders 12 designated by trader list 44, and/or
routing trading order 24 away from those traders 12 designated by
trader list 44.
[0045] It should be understood that, just as trading platform 18
may use trader list 44 to filter the transmission of trading order
24, trading platform 18 may use trader list 44 to filter the
transmission of order price feed 26. In particular, when trader 12
submits order price feed 26, trading platform 18 may use trader
list 44 associated with trader 12 to prevent the transmission of
order price feed 26 to those traders 12 designated by trader list
44. Trading platform 18 may thereby prevent traders 12 that are
designated by trader list 44 associated with a particular trader 12
from aggressing against order price feed 26 associated with the
particular trader 12.
[0046] In some embodiments, trading platform 18 may transmit to a
particular trader 12 trading orders 24 from those traders 12
designated by trader list 44 associated with particular trader 12.
Thus, although the designated traders 12 may not receive trading
orders 24 from the particular trader 12 associated with trader list
44, the particular trader 12 may receive trading orders 24 from the
designated traders 12. In some embodiments, trading platform 18 may
cause terminal 14 to display trading order 24 from a designated
trader 12 as dimmed or highlighted relative to the display of a
particular trading order 24 submitted by a particular trader 12
that is not designated by trader list 44. For example, a particular
trader A is associated with trader list 44 that designates traders
B and D. In this example, trading system 10 comprises traders A, B,
C, D, and E. If trader A submits trading order 24a, then trading
platform 18 may transmit trading order 24a to traders C and E but,
based on trader list 44, prevent the transmission of trading order
24a to traders B and D. In this example, if trader B submits
trading order 24b and if trader C submits trading order 24c, then
trading platform 18 may transmit trading order 24b and trading
order 24c to terminal 14 associated with trader A. Because trader B
is designated by trader list 44 associated with trader A, trading
platform 18 may cause terminal 14 associated with trader A to
display trading order 24b as dimmed or highlighted relative to
trading order 24c. Although the foregoing example illustrates
trader list 44 as designating two traders (i.e., traders B and D),
it should be understood that trader list 44 may designate any
number and combination of traders 12 based on any number and
combination of suitable criteria.
[0047] In the foregoing example, based on trader list 44, trading
platform 18 prevents the transmission and/or disclosure of a
particular trading order 24 to particular traders 12. It should be
understood, however, that the function of preventing the
transmission and/or disclosure of particular trading orders 24
and/or order price feeds 26 may be performed by interface server
15, by trading platform 18, or by interface server 15 and trading
platform 18 in conjunction. For example, interface server 15 may
comprise all or a portion of an application program interface (API)
associated with trading platform 18. In some embodiments, interface
server 15 associated with a particular trader 12 may store trader
profiles 38 (including trader preferences 42 and trader lists 44).
Based at least in part on trader list 44, interface server 15 may
prevent the disclosure of one or more trading orders 24 and/or
order price feeds 26 to one or more traders 12. Thus, in some
embodiments, the function of preventing the disclosure of trading
order 24 to a particular trader 12 may be performed at least in
part by one or more interface servers 15.
[0048] According to certain embodiments, the use of trader lists 44
to process trading orders 24 may offer various advantages. It
should be noted that one or more embodiments may benefit from some,
none, or all of the advantages discussed below. One advantage is
that, by using trader lists 44, trading platform 18 assists traders
12 in managing risks associated with trading. For example, a
particular trader 12 may perceive that trades with highly
specialized traders 12 are not likely to be profitable. Based on
this perception, the particular trader 12 may configure trader list
44 to designate those highly specialized traders 12 with which the
particular trader 12 does not want to trade. When the particular
trader 12 submits trading order 24 and/or order price feed 26,
trading platform 18 may transmit trading order 24 and/or order
price feed 26 to traders 12 in trading system 10 with the exception
of those traders 12 designated by trader list 44. Thus, trading
platform 18 may prevent trades that the particular trader 12
believes would be unprofitable.
[0049] Another advantage is that, by using trader lists 44, trading
platform 18 may limit or eliminate small trades that are perceived
as nuisances. For example, a particular trader 12 may submit as
trading order 24 an offer to trade a large quantity of a particular
trading product. In a system without trader list 44, small traders
12 may receive trading order 24 and attempt to aggress against
relatively small portions of the total quantity of trading order
24. The particular trader 12 that submitted trading order 24 may
perceive such a small transaction as a nuisance. To eliminate this
nuisance, the particular trader 12 may configure trader list 44 to
designate those traders 12 in trading system 10 that are prone to
aggress only small portions of a large bid or offer. Thus, when the
particular trader 12 submits trader order 24, trading platform 18
may transmit trading order 24 to traders 12 in trading system 10
with the exception of those small traders 12 designated by trader
list 44. Thus, trading platform 18 may reduce the occurrence of
nuisance-type trades. Thus, by allowing traders 12 to configure
trader lists 44, trading platform 18 may assist traders 12 in
managing risks and in avoiding nuisance-type trades.
[0050] FIGS. 2A and 2B provide an example of using trader list 44
to prevent trades between a particular trader 12 and other traders
12 with whom the particular trader 12 does not want to trade. In
particular, FIG. 2A illustrates trader profile 38 associated with a
particular trader 12. In this example, the particular trader 12 is
referred to as Trader H. Trader H submits to trading platform 18
trader preferences 42a, 42b, and 42c. Trader preference 42a is to
avoid executing trades for ten-year notes with traders 12 whose
trade volume for ten-year notes exceeded $500,000,000 during the
past seven days. Trader preference 42b is to avoid executing trades
for Euros where the trade value would be less than $50,000. Trader
preference 42c is to avoid executing trades for stock A with
traders 12 that are not associated with an order price 26 feed for
Japanese Yen. Trading platform 18 stores trader preferences 42a,
42b, and 42c in trader profile 38 associated with Trader H.
[0051] In the present example, trading platform 18 used trader
preferences 42 in trader profile 38 to automatically generate
trader lists 44 for Trader H. Because trader preference 42a relates
to ten-year notes, trading platform 18 generates trader list 44a
associated with ten-year notes. In particular, trading platform 18
scans trader profiles 38 to identify traders 12 in trading system
10 whose trade volume for ten-year notes during the past seven days
exceeds $500,000,000. In the present example, trading platform 18
determines that, during the past seven days, the trade volumes for
ten-year notes for each of Traders A, E, F, and G exceeded
$500,000,000. Accordingly, trading platform 18 configures trader
list 44a to designate Traders A, E, F, and G.
[0052] Because trader preference 42b relates to Euros, trading
platform 18 generates trader list 44b associated with Euros. In
particular, trading platform 18 scans trader profiles 38 to
identify those traders 12 in trading system 10 that tend to
initiate trades for Euros where the trade value is less than
$50,000. In the present example, trading platform 18 determines
that Traders B and D tend to initiate such trades. Accordingly,
trading platform 18 configures trader list 44b to designate Traders
B and D.
[0053] Because trader preference 42c relates to stock A, trading
platform 18 generates trader list 44c associated with stock A.
Based on trader preference 42c, trading platform 18 scans trader
profiles 38 to identify those traders 12 that are not associated
with an order price feed 26 for Japanese Yen. In the present
example, trading platform 18 determines that Traders C, E, and D
are not associated with an order price feed 26 for Japanese Yen.
Accordingly, trading platform 18 configures trader list 44c to
designate Traders C, E, and D. Thus, Trader H is associated with
three trader lists 44 and each trader list 44 is associated with a
different trading product. As illustrated in the present example,
trading platform 18 may automatically generate and/or configure
trader lists 44 based on trader preferences 42 stored in trader
profile 38 of a particular trader 12.
[0054] FIG. 2B illustrates one embodiment of a flow of operation
between traders 12 and trading platform 18 according to the example
trader profile 38 illustrated in FIG. 2A. In this example, trading
system 10 comprises eight traders 12--namely, Traders A-H. In the
present example, Trader H submits to trading platform 18 trading
order 24 for ten-year notes. Upon receiving trader order 24,
trading platform 18 determines that trader profile 38 associated
with Trader H comprises trader list 44a associated with ten-year
notes. In particular, trading platform 18 determines that trader
list 44a designates Traders A, E, F, and G. Trading platform 18
transmits trading order 24 to Traders B, C, and D. Based on trader
list 44a, however, trading platform 18 prevents the transmission of
trading order 24 to Traders A, E, F, and G. Thus, trading platform
18 allows Trader H to avoid trades for ten-year notes with those
traders 12 in trading system 10 with whom Trader H does not want to
trade.
[0055] FIG. 2C illustrates another embodiment of a flow of
operation between traders 12 and trading platform 18 according to
the example trader profile 38 illustrated in FIG. 2A. In this
example, trading system 10 comprises eight traders 12--namely,
Traders A-H. Each trader 12 is associated with a respective
interface server 15. In this example, each interface server 15
stores one or more trader profiles 38. Trader profiles 38 comprise
trader preferences 42 and trader lists 44 (not shown). In this
example, the function of preventing the disclosure of particular
trading orders 24 to particular traders 12 is performed at least in
part by interface servers 15. In particular, trader H submits
trading order 24 to trading platform 18. Upon receiving trading
order 24, trading platform 18 transmits trading order 24 to
interface servers 15 associated with Traders A-G respectively. In
this example, interface servers 15 associated with Traders A-G each
comprise trader profile 38 associated with Trader H (as illustrated
in FIG. 2A). Trader profile 38 associated with Trader H comprises
trader list 44a designating traders A, E, F, and G. In this
example, based on trader list 44a, interface servers 15 associated
with Traders B, C, and D transmit trading order 24 to terminals 14
associated with Traders B, C, and D, respectively. Based on trader
list 44a, interface servers 15 associated with Traders A, E, F, and
G, respectively, do not transmit trading order 24 to terminals 14
associated with Traders A, E, F, and G, respectively. Interface
servers 15 associated with Traders A, E, F, and G may prevent the
transmission of trader order 24 of Trader H by filtering that
trading order 24 out of data transmissions from trading platform
18. Thus, in some embodiments, a particular interface server 15 may
comprise one or more trader profiles 38 and may filter or prevent
the transmission of particular trading orders 24.
[0056] Although the foregoing example illustrates trader
preferences 42 and trader lists 44 associated with ten-year notes,
Euros, and a particular stock, it should be understood that trader
preferences 42 and trader lists 44 may be based on any number and
combination of trading products, market data, profile data, trading
system information, and/or other suitable criteria. In the
foregoing example, trading platform 18 automatically generates
trader lists 44 based on trader preferences 42 associated with
trader 12. It should be understood that, in some embodiments,
trader 12 may configure trader lists 44 by manually selecting the
particular traders 12 to be in trader lists 44.
[0057] FIG. 3 illustrates a flowchart for generating and using
trader lists 44 to process trading orders 24. The method begins at
step 302 when trading platform 18 receives one or more trader
preferences 42 from a particular trader 12. Trader 12 may submit
trader preferences 42 at the time of registering to use trading
system 10, and trading platform 18 may use trader preferences 42 to
generate trader profile 38 associated with trader 12. In some
embodiments, after trader 12 registers and submits the initial
trader preferences 42, trading platform 18 may allow trader 12 to
later modify, delete, and/or add to trader preferences 42. At step
304, trading platform 18 compares trader preferences 42 of the
particular trader 12 with trader profiles 38 of the other traders
12 in trading system 10. For example, if a first trader 12 submits
trader preference 42 to avoid trading with traders 12 having a
particular characteristic, trading platform 18 may compare the
trader preference 42 (e.g., the particular characteristic) with
trader profiles 38 to identify those traders 12 having the
particular characteristic.
[0058] At step 306, based at least in part on the comparison,
trading platform 18 generates one or more trader lists 44
designating one or more traders 12. Trading platform 18 may store
trader lists 44 in trader profile 38 associated with trader 12. In
some embodiments, trader 12 may be associated with a plurality of
trader lists 44 and each of the plurality of trader lists 44 may be
associated with a respective trading product. At step 308, trading
platform 18 receives trading order 24 from trader 12. Trading
platform 18 identifies, at step 310, the one or more traders 12
designated by the appropriate trader list 44 based on, for example,
the trading product associated with the trading order 24. At step
312, trading platform 18 transmits trading order 24 to traders 12
in trading system 10 with the exception of the one or more traders
12 designated by trader list 44 identified at step 310. At step
314, trading platform 18 prevents the transmission of trading order
24 to the one or more traders 12 designated by trader list 44.
Preventing the transmission of trading order 24 may comprise
deleting trading order 24 from one or more queues associated with
traders 12 designated by trader list 44, filtering trading order 24
from one or more data streams associated with traders 12 designated
by trader list 44, and/or routing trading order 24 away from
traders 12 designated by trader list 44.
[0059] FIG. 4 illustrates a particular trader profile 38 that is
configured to use trader lists 44 for the partial disclosure of a
trading order 24. In some embodiments, trading platform 18 may
configure trading order 24 to comprise two parts--a display portion
and a held portion. Trading platform 18 may be configured to
transmit the display portion of trading order 24 to other traders
12 and to withhold from transmission the held portion of trading
order 24 until one or more configurable conditions are satisfied.
Once the one or more configurable conditions associated with the
held portion of trading order 24 are satisfied, trading platform 18
may transmit and/or disclose the held portion of trading order 24
to one or more traders 12 in trading system 10.
[0060] In some embodiments, trading platform 18 may determine the
display portion and the held portion of trading order 24 based at
least in part on trader preferences 42 associated with trader 12.
Trader 12 may submit to trading platform 18 a particular trader
preference 42 to determine the display portion and/or the held
portion of a particular trading order 24 based on current market
data, based on a configurable percentage of the total quantity of
trading order 24, based on a configurable threshold, and/or any
number and combination of suitable criteria.
[0061] In some embodiments, trading platform 18 may be configured
to transmit the display portion of trading order 24 from a
particular trader 12 to all other traders 12 in trading system 10.
Once the display portion of trading order 24 has been aggressed by
one or more traders 12, trading platform 18 may transmit the held
portion of trading order 24 to one or more traders 12 that are not
designated by trader list 44 associated with the particular trader
12. In some embodiments, trading platform 18 may prevent the
transmission of the held portion of trading order 24 to those
traders 12 designated by trader list 44 associated with trader 12.
Thus, trading platform 18 may be configured to transmit the display
portion of trading order 24 to all other traders 12 in trading
system 10 and to limit the transmission of the held portion of
trading order 24 to those traders 12 that are not designated by
trader list 44.
[0062] FIG. 4 illustrates an example trader profile 38 for Trader
F. In this example, trader profile 38 may be used to divide trading
order 24 into a display portion and a held portion. Trader profile
38 comprises three trader preferences (42x, 42y, and 42z) that are
related to trading Euros. In particular, trader preference 42x is
to configure the display portion of trading order 24 to be equal to
40% of the total quantity of trading order 24. Trader preference
42y is to transmit the display portion of trading order 24 from
Trader F to all other traders 12 in trading system 10. In the
present example, trading system 10 comprises Traders A-H. Trader
preference 42z is to transmit the held portion of trading order 24
to a particular trader 12 if (1) that particular trader 12 has
aggressed at least a portion of the display portion of trading
order 12 and (2) that particular trader 12 is not designated by
trader list 44 associated with Trader F. In addition to comprising
trader preferences 42, trader profile 38 associated with Trader F
comprises trader list 44f. Trader list 44f relates to trading Euros
and designates Traders A and D.
[0063] In the present example, Trader F submits to trading platform
18 trading order 12 for a total quantity of 20,000,000 Euros. Based
on trader preference 42x in trader profile 38, trading platform 18
determines that the display portion of trading order 24 is
8,000,000 Euros (i.e., 40% of the total quantity) and that the held
portion of trading order 24 is 12,000,000 Euros (i.e., 60% of the
total quantity). Based on trader preference 42y, trading platform
18 transmits the display portion of trading order 24 (i.e.,
8,000,000 Euros) to Traders A, B, C, D, E, G, and H. Subsequently,
Trader C aggresses the entire display portion of trading order 24.
As a result, trading platform 18 determines whether the
configurable condition of trader preference 42z has been satisfied.
In this example, trading platform 18 determines that Trader C
aggressed the display portion of trading order 24 and that Trader C
is not designated by trader list 44f. As a result, trading platform
18 transmits and/or discloses to Trader C the held portion (i.e.,
the remaining 12,000,000 Euros) of trading order 24. Thus, without
disclosing the held portion of trading order 24 to at least those
traders 12 designated by trader list 44, trading platform 18
provides Trader C with an opportunity to aggress against the held
portion of trading order 24.
[0064] The foregoing example illustrates using a configurable
percentage of the total quantity of trading order 24 to determine
the display portion of trading order 24. It should be understood,
however, that trading platform 18 may determine the display portion
of trading order 24 based on any suitable data, tiers, threshold,
and/or other suitable information. Although trading order 24 in the
foregoing example relates to trading Euros, it should be understood
that the method and system described herein may be applied to
trading orders 24 for any number and combination of suitable
trading products.
[0065] In the foregoing example, the configurable condition for
transmitting the held portion of trading order 24 is based on
whether a particular trader 12 has aggressed all or a portion of
the display portion of trading order 24. It should be understood,
however, that the transmission of the held portion of trading order
24 may be triggered based on any number and combination of suitable
conditions. For example, the transmission of the held portion of
trading order 24 may be based on whether the market has crossed,
whether the best bid or offer price in trading system 10 has
satisfied a configurable threshold, whether the current trading
activity in trading system 10 has satisfied a particular threshold,
and/or any other suitable condition.
[0066] In some embodiments, just as trading platform 18 may divide
trading order 24 into a display portion and a held portion, trading
platform 18 may be configured to divide a particular order price
feed 26 into a display portion and a held portion. The transmission
of the held portion of order price feed 26 to other traders 12 may
be triggered by any number and combination of configurable
conditions. In some embodiments, trading platform 18 may distribute
the display portion of trading order 24 and/or order price feed 26
among multiple price levels.
[0067] An example illustrates certain embodiments. Trader 12m
submits order price feed 26 for currency A to trading platform 18.
The total quantity of order price feed 26 is 100,000,000 units of
currency A. The best bid price associated with order price feed 26
is $2.00 per unit and the best offer price associated with order
price feed 26 is $2.20 per share. Trader preferences 42 stored in
trader profile 38 associated with trader 12m indicate that the
display portion of order price feed 26 should be 70,000,000 units
of currency A. Trader preferences 42 associated with trader 12m
also indicate that the held portion of order price feed 26 should
be disclosed if the market crosses. In this example, trader profile
38 comprises trader list 44 that is associated with currency A and
that designates trader 12p and trader 12q. Accordingly, trading
platform 18 discloses to the other traders 12 in trading system 10
(except trader 12p and trader 12q) a quantity of 70,000,000 units
of currency A with a best bid price of $2.00 per unit and a best
offer price of $2.20 per unit. Subsequently, the market for
currency A crosses. Consequently, trading platform 18 discloses the
held portion of order price feed 26b--the remaining 30,000,000
units--to the other traders 12 in trading system 10 (except for
trader 12p and trader 12q).
[0068] In the foregoing example, trader preferences 42 directed
trading platform 18 to set the display portion of order price feed
26 to be equal to a configurable level--70,000,000 units. In some
embodiments, trader preferences 42 may direct trading platform 18
to determine the display portion of order price feed 26 based on a
configurable percentage of the total quantity associated with order
price feed 26, based on current market data, or based on any number
and combination of suitable criteria. In some embodiments, trading
platform 18 may distribute the display portion and/or held portion
of order price feed 26 among multiple price levels. For instance,
referring to the foregoing example, trader preferences 42 may
indicate that half of the display portion of order price feed 26
should be disclosed at a bid price of $2.00 per unit and the other
half at a bid price of $2.10.
[0069] Although the foregoing examples use certain quantities,
percentages, and currency amounts to illustrate certain embodiments
of the present invention, it will be understood that any
quantities, percentages, currency amounts, or other suitable
metrics may be used without changing the operation or functionality
of the present invention.
[0070] The embodiments described herein offer important technical
advantages. Various embodiments may have none, some, or all of
these advantages. One advantage is that trading system 10 protects
traders 12 against latency. In particular, trading system 10 may
take a small amount of time to process trading orders 24 and/or
order price feeds 26 from traders 12. Markets, however, may
experience rapid changes in prices. If a market shifts immediately
after trader 12 submits trading order 24 and/or order price feed
26, that trader 12 may be exposed to trades at an undesirable
price. By allowing trader 12 to initially disclose less than all of
trading order 24 and/or order price feed 26 to other traders 12,
the present invention protects trader 12 against latency and shifts
in the market.
[0071] Another advantage is that trading platform 18 is operable to
use trader lists 44 associated with a particular trader 12 to avoid
trades between the particular trader 12 and other traders 12 with
whom the particular trader 12 does not want to trade. In some
embodiments, traders 12 may use trader lists 44 to avoid
nuisance-type trades and/or trades that are not likely to be
profitable. Thus, trader lists 44 assist traders 12 in managing
risks associated with trading.
[0072] In some embodiments, trading platform 18 may configure order
price feed 26 from a particular trader 12 to be an aggressive order
price feed 26. Similarly, trading platform 18 may configure trading
order 24 from a particular trader 12 to be an aggressive trading
order 24. In particular, trading platform 18 may receive trading
orders 24 from traders 12 and hold those trading orders 24 until
one or more configurable conditions occur in trading system 10. For
example, trader 12 may submit trader preference 42 that the best
bid or offer price of a particular trading product must reach a
configurable level before trading platform 18 may disclose trading
order 24 or use trading order 24 to aggress one or more contra
trading orders 24.
[0073] As an example, Trader 12w submits trading order 24 to
purchase 1,000,000 shares of stock A to trading platform 18. In
addition, Trader 12w submits trader preference 42 to not disclose
trading order 24 until the price per share for stock A in the
market reaches $50.00, and then to submit trading order 24 as an
aggressive trading order 24. In this example, trading platform 18
stores trading order 24 and trader preference 42 in memory 34.
Subsequently, trading platform 18 detects that the price per share
for stock A has reached $50.00. As a result, trading platform 18
submits trading order 24 of Trader 12w to aggress against the
available volume of stock A in trading system 10. Thus, trading
platform 18 may allow trader 12 to submit configurable conditions
that must occur before trading platform 18 discloses trading order
24 and/or uses trading order 24 to aggress a contra trading order
24. Trading platform 18 may thereby increase the likelihood that a
particular trading order 24 and/or order price feed 26 from a
particular trader 12 will not be disclosed to other traders 12
until conditions desired by the particular trader 12 are present in
the market.
[0074] In some embodiments, trading platform 18 may use trader
lists 44 to process aggressive order price feeds 26 and/or
aggressive trading orders 24. For example, upon receiving an
aggressive order price feed 26 from a first trader 12, trading
platform 18 may determine that the first trader 12 is associated
with a particular trader list 44. In this example, the particular
trader list 44 designates a third trader 12 but not a second trader
12. Based on the particular trader list 44, trading platform may
use the aggressive order price feed 26 to aggress against one or
more trading orders from the second trader 12. However, because the
particular trader list 44 designates the third trader 12, trading
platform 18 may prevent the aggressive order price feed 26 from
aggressing against trading orders 24 from the third trader 12.
Thus, trading platform 18 may use trader lists 44 to process
aggressive order price feeds 26 and/or aggressive trading orders
24.
[0075] FIG. 5 illustrates a flow chart for processing the display
portion and the held portion of a particular trading order 24,
according to certain embodiments. The method starts at step 502
when trading platform 18 receives trading order 24 from a
particular trader 12. In some embodiments, trading order 24 may be
associated with a total quantity of a particular trading product.
The particular trader 12 may be associated with a trader list 44
designating one or more traders 12.
[0076] At step 504, trading platform 18 determines a first portion
and a second portion of the order quantity associated with trading
order 24. The determination of the first portion and the second
portion may be based at least in part on one or more trader
preferences 42 associated with the particular trader 12. At step
506, trading platform 18 discloses the first portion of the order
quantity to a plurality of traders 12 in trading system 10. At step
508, trading platform 18 determines whether a configurable
condition has been satisfied. The configurable condition may be
based on one or more trader preferences 42 associated with the
particular trader 12. If trading platform 18 determines at step 508
that the configurable condition has been satisfied, then at step
510, trading platform 18 discloses the second portion of the order
quantity to one or more traders 12 that are not designated by
trader list 44 associated with the particular trader 12. At step
512, trading platform 18 prevents the disclosure of the second
portion of the order quantity to those traders 12 designated by
trader list 44.
[0077] If, at step 508, trading platform 18 determines that the
configurable condition has not been satisfied, then trading
platform 18 determines at step 514 whether a configurable time
period (e.g., for allowing the configurable condition to occur) has
expired. If trading platform 18 determines at step 514 that the
configurable time period has not expired, trading platform 18 may
return to step 508. If, however, trading platform 18 determines at
step 514 that the configurable time period has expired, the method
ends.
[0078] Although the present invention has been described in several
embodiments, a myriad of changes and modifications may be suggested
to one skilled in the art, and it is intended that the present
invention encompass such changes and modifications as fall within
the scope of the present appended claims.
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