U.S. patent application number 16/427617 was filed with the patent office on 2019-11-14 for only-at-best trading orders in an electronic trading system.
The applicant listed for this patent is BGC PARTNERS, INC.. Invention is credited to Kevin M. Foley, Howard W. Lutnick, Joseph Noviello, Michael Sweeting.
Application Number | 20190347727 16/427617 |
Document ID | / |
Family ID | 36649552 |
Filed Date | 2019-11-14 |
United States Patent
Application |
20190347727 |
Kind Code |
A1 |
Lutnick; Howard W. ; et
al. |
November 14, 2019 |
ONLY-AT-BEST TRADING ORDERS IN AN ELECTRONIC TRADING SYSTEM
Abstract
Systems and methods of trading items on an electronic trading
system according to the invention are provided. The embodiments of
the invention are based at least in part on a new order type. The
new order type is an only at best order type, whereby trades are
preferably only executed at the best price the item is being bought
or sold.
Inventors: |
Lutnick; Howard W.; (New
York, NY) ; Foley; Kevin M.; (New York, NY) ;
Noviello; Joseph; (Summit, NJ) ; Sweeting;
Michael; (Surrey, GB) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
BGC PARTNERS, INC. |
WILMINGTON |
DE |
US |
|
|
Family ID: |
36649552 |
Appl. No.: |
16/427617 |
Filed: |
May 31, 2019 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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13532011 |
Jun 25, 2012 |
10346908 |
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16427617 |
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12761112 |
Apr 15, 2010 |
8209249 |
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13532011 |
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11407012 |
Apr 18, 2006 |
7729967 |
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12761112 |
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60672372 |
Apr 18, 2005 |
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Current U.S.
Class: |
1/1 |
Current CPC
Class: |
G06Q 40/00 20130101;
G06Q 40/04 20130101 |
International
Class: |
G06Q 40/04 20060101
G06Q040/04; G06Q 40/00 20060101 G06Q040/00 |
Claims
1. (canceled)
2. An apparatus comprising: at least one processor; and at least
one memory having instructions to store thereon which, when
executed by the at least one processor, direct the at least one
processor to: receive from a bidder an only-at-best bid to purchase
a trading product, the only-at-best bid comprising a bid price, in
which the at least one processor is configured to receive a
plurality of bids and offers from a plurality of trading
participants via a plurality of user workstations in electronic
communication with the at least one processor; determine that, at a
time when the only-at-best bid is received by the at least one
processor, at least two other trading participants are engaged in
an active trading session for the trading product at a first price
that is lower than the bid price, in which the at least two other
trading participants comprise at least one seller of the trading
product and at least one buyer of the trading product other than
the bidder, and in which being engaged in an active trading session
comprises being in a state of actively trading quantity of the
trading product; responsive to the first price is lower than the
bid price, prevent execution of a trade related to the trading
product until receipt of an acknowledgement message from the
computing device of the bidder; and responsive to the act of
determining that at least two other trading participants are
engaged in an active trading session for the trading product at a
first price that is lower than the bid price at a time when the
only-at-best bid is received by the at least one processor,
decrease, by the at least one processor, the bid price of the
only-at-best bid to the lower first price.
3. The apparatus of claim 2, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to: responsive to the first price lower than the bid
price, generate electronic signals to cause to communicate an alert
message directed to a graphical user interface of a computing
device of the bidder, wherein the alert message indicates that the
first price is lower than the bid price.
4. The apparatus of claim 2, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to: communicate an alert message, indicating that the
first price is lower than the bid price, directed to a graphical
user interface of a computing device of the bidder.
5. The apparatus of claim 2, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to: responsive to the first price lower than the bid
price, generate electronic signals to cause to communicate an alert
message directed to a graphical user interface of a computing
device of the bidder.
6. The apparatus of claim 2, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to cause to be displayed a participant-selectable
dialogue box that presents a selection to maintain the only-at-best
bid and a selection to modify the only-at-best bid.
7. The apparatus of claim 2, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to receive by the at least one processor an
instruction to enable an only-at-best setting applicable to the
only-at-best bid.
8. The apparatus of claim 2, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to provide by the at least one processor a selectable
setting that implements an only-at-best setting for a selected
group of orders.
9. The apparatus of claim 2, in which the only-at-best bid
comprises a request to: if (a) the bid price is higher than (b) a
best offer price of a best offer to sell the trading product that
has already been received by the at least one processor at a time
when the only-at-best bid is received by the at least one
processor, then either: (i) execute a trade with the best offer at
the best offer price, or (ii) queue the only-at-best bid at the
best offer price.
10. The apparatus of claim 9, in which the only-at-best bid
comprises a request to: if (a) the bid price is equal to or less
than (b) a best offer price of a best offer to sell the trading
product that has already been received by the at least one
processor at a time when the only-at-best bid is received by the at
least one processor, then treat the only-at-best bid as a regular
bid.
11. An apparatus comprising: at least one processor; and at least
one memory having instructions to store thereon which, when
executed by the at least one processor, direct the at least one
processor to: receive from an offeror an only-at-best offer to sell
a trading product, the only-at-best offer comprising an offer
price, in which the at least one processor is configured to receive
a plurality of bids and offers from a plurality of trading
participants via a plurality of user workstations in electronic
communication with the at least one processor, in which the at
least two other trading participants comprise at least one buyer of
the trading product and at least one seller of the trading product
other than the offeror; determine that, at a time when the
only-at-best offer is received by the at least one processor, at
least two other trading participants are engaged in an active
trading session for the trading product at a first price that is
higher than the offer price; responsive to the first price is
higher than the offer price, prevent execution of a trade related
to the trading product until receipt of an acknowledgement message
from the computing device of the offeror; and responsive to the act
of determining that at least two other trading participants are
engaged in an active trading session for the trading product at a
first price that is higher than the offer price at a time when the
only-at-best offer is received by the at least one processor,
increase the offer price of the only-at-best offer to the higher
first price.
12. The apparatus of claim 11, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to: communicate an alert message, indicating that the
first price is lower than the bid price, directed to a graphical
user interface of a computing device of the bidder.
13. The apparatus of claim 11, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to: responsive to the first price lower than the bid
price, generate electronic signals to cause to communicate an alert
message directed to a graphical user interface of a computing
device of the bidder.
14. The apparatus of claim 11, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to cause to be displayed a participant-selectable
dialogue box that presents a selection to maintain the only-at-best
offer and a selection to modify the only-at-best offer.
15. The apparatus of claim 11, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to receive by the at least one processor an
instruction to enable an only-at-best setting applicable to the
only-at-best offer.
16. The apparatus of claim 11, in which the instructions, when
executed by the at least one processor, further direct the at least
one processor to provide by the at least one processor a selectable
setting that implements an only-at-best requirement on a selected
group of orders.
17. The apparatus of claim 11, in which the only-at-best offer
comprises a request to: if (a) the offer price is lower than (b) a
best bid price of a best bid to purchase the trading product that
has already been received by the at least one processor at a time
when the only-at-best offer is received by the at least one
processor, then either: (i) execute a trade with the best bid at
the best bid price, or (ii) queue the only-at-best offer at the
best bid price.
18. The apparatus of claim 11, in which the only-at-best offer
comprises a request to: if (a) the offer price is equal to or
greater than (b) a best bid price of a best bid to purchase the
trading product that has already been received by the at least one
processor at a time when the only-at-best offer is received by the
at least one processor, then treat the only-at-best offer as a
regular offer.
19. An article of manufacture comprising: a computer-readable
medium that is non-transitory, in which the computer-readable
medium stores instructions which, when executed by a processor,
direct the processor to: receive from a trading participant an
only-at-best order to buy or sell an instrument, the only-at-best
order comprising an order price, in which the at least one
processor is configured to receive a plurality of bids and offers
from a plurality of trading participants via a plurality of devices
in electronic communication with the processor; determine whether
at a time when the only-at-best order is received by the at least
one processor, at least two other trading participants are actively
trading the instrument at a better price than the order price,
wherein the better price comprise comprises one of (1) a lower
price than the order price if the only-at-best order is an offer to
buy the instrument and (2) a higher price than the order price if
the only-at-best order is an order to sell the instrument; in
response to the only-at-best order is an order to buy the
instrument, alert that the better price is a lower price than the
order price; and responsive to the act of determining that at least
two other trading participants are engaged in an active trading
session for the instrument at a better price at a time when the
only-at-best order is received by the at least one processor,
change the order bid price of the only-at-best order to the better
price.
20. The article of manufacture of claim 19, further comprising
instructions: in which the only-at-best order is an order to sell
the instrument, further comprising instructions to alert the
trading participant that the better price is a higher price than
the order price.
21. The article of manufacture of claim 19, further comprising
instructions: in which the only-at-best order comprises a request
to: if, at a time when the only-at-best order is received, at least
two other trading participants are engaged in an active trading
session for the instrument at a better price, then either: (i)
execute the only-at-best order at the better price, or (ii) queue
the only-at-best order at the better price.
Description
CROSS-REFERENCES TO RELATED APPLICATION
[0001] This application claims the benefit of U.S. provisional
application No. 60/672,372, filed Apr. 18, 2005, which is hereby
incorporated by reference herein in its entirety.
BACKGROUND OF THE INVENTION
[0002] This invention relates to electronic trading systems. More
specifically, this invention relates to order types that are used
in electronic trading systems.
[0003] In electronic trading systems that trade based on bids and
offers, many traders have requested protection from mistakenly
trading through the stack (TTS)--i.e., accidentally hitting or
lifting a number of current bids or offers at different prices
instead of only acting on the bid or offer at the best price (the
highest bid price or the lowest offer price). When these traders
buy or sell items, they typically only want to execute trades at
the current best price.
[0004] Courtesy of the increasing usage of "black box" algorithmic
and statistical model trading computers connected to electronic
trading systems, coupled with the increased speed of communications
in modern broadband network environments, the price a human trader
is willing to trade at may have changed by the time he or she
reacts--e.g., by entering a trade command--to what he or she sees.
Modern trading systems give rise to the situation of a "race
condition" whereby the price a trade may be concluded at is,
according to Price & Time priority matching algorithms, the
first order to arrive at the trading host computer. However, the
trader may also be remotely domiciled--e.g., at home in the Country
or mobile--and connected at a slower network speed. As a result,
the price the trader is witnessing may not be the actual price in
the central trading host computer at that time. If the trader
enters a trade command at a worse price than has just been updated,
the trader runs the risk of missing the better updated price while
other traders are ahead in the market, thereby causing the trader
to trade through to the worse price.
[0005] For example, suppose that, in the market for an item such as
a U.S. Treasury five-year bond, there is a bid for 100.10 and an
offer for 100.11. In such a market, one participant may enter a buy
order at 100.11, in an effort to lift the outstanding offer of
100.11. At substantially the same time, another participant may
have entered a sell order at 100.10 in order to hit the outstanding
bid of 100.10. Nevertheless, if the new selling participant was
aware of the new buyer at the higher price, he would have not sold
the bond at the lower price. Rather, he would have preferred to
sell at the higher price or at least be placed in a queue to sell
at the higher price.
[0006] A trading participant would typically want to participate at
the best available market price as opposed to at a price that was
worse than the best available market price. Additionally, upon
seeing a better available market price, the trader's perception of
the marketplace is updated and he or she is less likely to want to
trade at the worse price.
[0007] Therefore, it would be desirable to provide participants
with an order type that restricts the trading to only the best
market price available.
[0008] It would also be desirable to provide participants with an
order type that circumvents the race condition caused technically
by electronic communication being quicker than human reaction.
[0009] It would also be desirable to provide a preferably
configurable electronic trading system setting that restricts some
or all of a participant's trading to only the best market price
available.
SUMMARY OF THE INVENTION
[0010] It is an object of the invention to provide participants
with an order type that restricts the trading to only the best
market price available.
[0011] It is another object of the invention to provide
participants with an order type that circumvents the race condition
caused technically by electronic communication being quicker than
human reaction.
[0012] It is yet another object of the invention to provide a
preferably configurable electronic trading system setting that
restricts some or all of a participant's trading to only the best
market price available.
[0013] These and other objects are accomplished in accordance with
the principles of the invention by providing systems and methods of
trading items on an electronic trading system. The embodiments of
the invention are based at least in part on a new order type. A
method according to the invention includes receiving an only at
best (or only-at-best) bid (offer) and determining whether the only
at best bid (offer) specifies a bid (offer) price that is higher
(lower) than the price of an offer (bid) in the electronic trading
system. When the only at best bid (offer) specifies a price that is
higher than the offer (bid) price in the system, a determination is
made as to whether the offer (bid) is available to lift (hit). When
the offer (bid) is available to lift (hit), a trade matching the
only at best bid (offer) and the offer (bid) is executed. When the
offer (bid) is not available to trade, the only at best bid (offer)
is queued at the price of the offer (bid). The participant may be
alerted that the bid (offer) specified a price that was higher
(lower) than the offer (bid) price and given the opportunity to
maintain the only at best order or modify it.
[0014] In some embodiments of the invention, a predetermined
setting may deactivate the only at best bid (offer) when an offer
(bid) is in the trading system at a predetermined price increment
lower (higher) than the only at best bid (offer).
BRIEF DESCRIPTION OF THE DRAWINGS
[0015] The above and other objects and advantages of the invention
will be apparent upon consideration of the following detailed
description, taken in conjunction with the accompanying drawings,
in which like reference characters refer to like parts throughout,
and in which:
[0016] FIG. 1 is a block diagram of an exemplary system that may be
used to implement the processes and functions of certain
embodiments of the present invention; and
[0017] FIG. 2 is a flow diagram that shows one method according to
the present invention.
DETAILED DESCRIPTION OF THE INVENTION
[0018] Many participants that trade on electronic trading systems
seek protection from mistakenly trading through the stack whereby
trades are executed at suboptimal prices. Such trading may be a
direct result of technical difficulties presented by connecting to
trading systems at slower speeds. One system according to the
invention enables a default participant setting that preferably
allows the participant to designate his or her orders as "Only at
Best"--i.e., to trade only at the best price the item is being
bought or sold. Orders that are entered at the market price may be
either executed at that market price or moved to another price at
which the market is already trading when that other price
represents the best price for the participant.
[0019] In some embodiments of the invention, the Only at Best
setting should only preferably apply if the participant is going to
trade through to a worse price than the best price. It should
preferably not intervene if the market moves away and the
participant misses the price--e.g., misses the buy at first price,
in which case the price then moves higher and the participant may
or may not join the queue of buyers.
[0020] In a specific situation according to the invention where the
market is at 100.10 bid and 100.11 offered, one participant enters
a Sell order at 100.10 and one enters a Buy order at 100.11. If the
Sell order reaches the market first and volume starts to trade at
the 100.10 price--i.e., at least two participants are engaged in an
active trading session at a price of 100.10--the participant trying
to buy at 100.11 is preferably placed in a queue of buyers at
100.10. (If the system places the participant's order at 100.11, he
or she will actually be trading through the stack at the suboptimal
price, which is not desired in this particular setting.)
[0021] A more aggressive participant who prefers the 100.11 price
when choosing that particular price should preferably not enable
the Only at Best option and should therefore choose the setting
that does not implement the only at best functionality described
above. In this situation, the participant's workstation, which may
be configured by the participant, configured as part of the system,
or set by a system operator or controller, should not be enabled to
implement only at best trading.
[0022] In alternative embodiments of the invention, the system
preferably alerts a participant if the market price has recently
changed immediately prior to his submitting an order. With respect
to the above-described example, such a "fast alert" system would
alert the participant that the item is in fact cheaper to purchase
(or more profitable to sell). The system may, in such embodiments,
prevent the transaction from occurring until the participant
acknowledges the alert. Thus, such a "fast alert" feature may be
used in conjunction with the only at best functionality described
above.
[0023] Referring to FIG. 1, exemplary system 100 for implementing
the invention is shown. As illustrated, system 100 may include one
or more workstations 110. Workstations 110 may be local or remote,
and are connected by one or more communications links 102 to
communications network 103 that is linked via communications link
105 to server 120. Server 120 may be linked to back office clearing
center 130 via communications link 107.
[0024] Server 120 may be any suitable server, processor, computer,
data processing device, or combination of the same. Server 120 may
be used to implement the governing logic that processes and
executes orders and trades, and distributes trade and market
information, including price and size information, to workstations
110. Communications network 103 preferably includes the Internet
but may consist of any suitable computer network such as an
intranet, a wide-area network (WAN), a local-area network (LAN), a
wireless network, a digital subscriber line (DSL) network, a frame
relay network, an asynchronous transfer mode (ATM) network, a
virtual private network (VPN), or any combination of the same.
Communications links 102 and 105 may be any communications links
suitable for communicating data between workstations 110 and server
120, such as network links, dial-up links, wireless links,
hard-wired links, etc.
[0025] Workstations 110 may be personal computers, laptop
computers, mainframe computers, dumb terminals, data displays,
Internet browsers, Personal Digital Assistants (PDAs), two-way
pagers, wireless terminals, portable telephones, etc., or any
combination of the same. Workstations 110 may be used by
participants to enter bid, offer, buy and sell orders, such as only
at best bids and offers, for the items being traded and view market
activity corresponding to these items.
[0026] A typical workstation 110 may include processor 111, display
112, input device 113, and memory 114, which may be interconnected,
in a preferred embodiment, memory 114 includes a storage device for
storing a workstation program for controlling processor 111. Memory
114 may also store participant configuration files, as described
below, and other data on the storage device. The workstation
program may include a trading application for running a trading
interface that may be displayed on display 112. Display 112 may
display to the user a participant-selectable dialogue box that
presents a selection to maintain the only at best order and a
selection to modify the only at best order.
[0027] Input device 113 may be used in conjunction with display 112
by participants to enter only at best bids/offers and to execute
and monitor trades. Processor 111 may use the workstation program
to receive trade information relating to the items being traded by
multiple participants of system 100, or other participants, and
display such information on display 112 or communicate such
information to display 112. Moreover, processor 111 may alert the
participant that submitted an only at best order that the bid or
offer specified a price that was higher in case of a bid (lower in
case of an offer) than the offer or bid price.
[0028] Server 120 may include processor 121, display 122, input
device 123, and memory 124, which may be interconnected. In
preferred embodiments, memory 124 includes a storage device for
storing a server program that provides the governing logic for
controlling processor 121. Processor 121 may use the server program
to process orders and execute trades communicated from various
workstations that are operated by multiple participants of system
100, or other participants, and communicate trade information, as
well as bid and offer information, to workstations 110 and back
office clearing center 130.
[0029] More specifically, processor 121 may use the server program
to process orders placed by participants in response to
participants entering commands using input device(s) 113, and
execute trades based on such orders, whenever applicable. For
example, processor 121 may determine whether a received only at
best offer (bid) specifies a price that is lower (higher) than that
of a bid (offer) and whether the bid (offer) is available to hit.
Moreover, processor 121 may execute a trade matching the only at
best offer (bid) and the bid (offer) when the bid is available to
hit. Otherwise, processor 121 may queue the only at best offer
(bid) to trade at the price of the bid (offer).
[0030] Back office clearing center 130 may be any suitable
equipment, such as a computer, a laptop computer, a mainframe
computer, etc., or any combination of the same, for causing trades
to be settled and/or verifying that trades are settled.
Communications link 107 may be any communications links suitable
for communicating data between server 120 and back office clearing
center 130, such as network links, dial-up links, wireless links,
hard-wired links, etc.
[0031] FIG. 2 is a flow chart 200 that describes a method that can
be used in certain embodiments of the invention. Step 210 shows
providing a participant with an opportunity to configure an only at
best setting. Step 220 shows providing a participant with an
opportunity to enable a fast alert setting. Step 230 shows
receiving only at best order information for an only at best order.
Step 240 shows placing the only at best order on an electronic
trading platform available to trade. It should be noted that an
only at best order preferably specifies at least the following
pieces of information: 1) a willingness to immediately trade at a
particular price, and 2) an indication as to whether the
willingness is to buy or to sell the item. While the only at best
order specifies a willingness to trade at a particular price, the
only at best order is preferably only to be traded if it can be
traded with the best contra order available as described below.
[0032] If the best order contra to the only at best order is not
available to be immediately acted upon, as queried in step 250,
then the only at best order is placed in a queue to trade at the
best contra order when it becomes available at step 260, If the
best order contra to the only at best order is available to be
immediately acted upon, then a trade is executed matching the only
at best order and the best contra order at step 270.
[0033] The participant is preferably alerted when circumstances
exist that may activate only at best functionality. Such
circumstances may be, for example, that a better price is available
for the item as compared to the price specified or implicated by
the only at best order. Preferably, the complete facts of the only
at best situation may be included in the alert sent to the
participant. Furthermore, the alert may include a
participant-selectable option to consummate the order independent
of whether a better contra order exists on the market.
[0034] The alert may preferably be a screen pop-up that states,
"There is a better price for your order than the one you
entered."
[0035] It has been shown that systems and methods for providing an
only at best order type according to the invention are
provided.
[0036] The embodiments described hereinabove are further intended
to explain best modes known of practicing the invention and to
enable others skilled in the art to utilize the invention in such,
or other, embodiments and with the various modifications required
by the particular applications or uses of the invention.
[0037] Accordingly, the description is not intended to limit the
invention to the form disclosed herein. Also, it is intended that
the appended claims be construed to include alternative
embodiments.
* * * * *