System and method for dynamic pricing in an unbalanced market
View Patent ↗An electronic marketplace includes one or more computers supporting a market. There are fewer participants on a first side of the market than on a second side. Participants on the first side have a greater market capacity than market participants on the second side. Offers on the first side are inaccessible and offers on the second side are accessible to the participants. Offers are received from participants on the first side and participants on the second side. Each offer includes an offered price and an offered quantity. Any offers on the first side that include equal offered prices and any offers on the second side that include equal offered prices are prioritized according to a prioritization scheme, which determines the order in which they are matched with other offers. A first offer on the first side is matched with a second offer on the second side according to a relationship between offered prices associated with the first and second offers, and a strike price is determined based on the relationship.
1. An electronic marketplace for dynamic pricing in an unbalanced market, the electronic marketplace comprising:
a first side of the unbalanced market comprising a plurality of market participant user computers coupled with the electronic marketplace;
a second side of the unbalanced market comprising a plurality of market participant user computers coupled with the electronic marketplace, each market participant user computer associated with the first side of the unbalanced market having a larger market capacity than each market participant user computer associated with a second side of the unbalanced market and each market participant user computer associated with the second side of the unbalanced market having a smaller-capacity than each market participant user computer associated with the first side of the unbalanced market;
one or more computers collectively supporting the unbalanced market, the one or more computers collectively configured to:
receive offers from the one or more market participant user computers that is associated with the first side of the unbalanced market and from the one or more market participant user computers that is associated with the second side of the unbalanced market, each offer comprising at least an offered price and an offered quantity;
prioritize among any offers associated with the first side of the unbalanced market that comprise equal offered prices and among any offers associated with the second side of the unbalanced market that comprise equal offered prices according to a predetermined prioritization scheme, the prioritization among such equally priced offers determining the order in which they are matched with other offers;
match a first offer associated with the first side of the unbalanced market with a second offer associated with the second side of the unbalanced market according to a relationship between a first offered price associated with the first offer and a second offered price associated with the second offer; and
determine a strike price for the match between the first offer and the second offer based on the relationship between the first and second offered prices.
2. The electronic marketplace of claim 1 , wherein:
the first side of the unbalanced market comprises a bid side, the one or more market participant user computers that are associated with the first side of the unbalanced market comprise buyers, and the offers associated with the first side of the unbalanced market comprise bids; and
the second side of the unbalanced market comprises an ask side, the one or more market participant user computers that are associated with the second side of the unbalanced market comprise sellers, and the offers associated with the second side of the unbalanced market comprise asks.
3. The electronic marketplace of claim 1 , wherein the first side of the unbalanced market is sealed such that offered prices and offered quantities of offers associated with the first side of the unbalanced market are inaccessible to one or more market participant user computers.
4. The electronic marketplace of claim 1 , wherein the second side of the unbalanced market is open such that offered prices of offers associated with the second side of the unbalanced market are accessible to one or more market participant user computers.
5. The electronic marketplace of claim 1 , wherein the equally priced offers are prioritized according to the order in which they are received, an earlier-received offer being given a higher priority than a later-received offer having an equal offered price.
6. The electronic marketplace of claim 1 , wherein: the relationship between the first and second offers comprises the first and second offered prices being equal to each other; and the strike price for the match between the first and second offers is equal to the first and second offered prices.
7. The electronic marketplace of claim 1 , wherein: the relationship between the first and second offers comprises the first offered price being different from the second offered price; and the strike price for the match between the first and second offers comprises a price between the first and second offered prices.
8. The electronic marketplace of claim 7 , wherein the first offered price is greater than the second offered price and the strike price for the match between the first and second offers comprises the second offered price plus a predetermined fraction of the price difference between the first and second offered prices.
9. The electronic marketplace of claim 1 , wherein a partial depletion of an offered quantity due to one or more matches is inaccessible to one or more market participant user computers.
10. The electronic marketplace of claim 1 , wherein the one or more computers are further configured to remove an offer from the second side of the unbalanced market without giving one or more market participant user computers any indication whether the offer was removed due to the occurrence of a match between the offer and another offer or due to the cancellation of the offer.
11. A computer-implemented method for providing dynamic pricing in an unbalanced market, comprising:
providing a first side of the unbalanced market comprising a plurality of market participant user computers coupled with an electronic marketplace;
providing a second side of the unbalanced market comprising a plurality of market participant user computers coupled with the electronic marketplace, each market participant user computer associated with the first side of the unbalanced market having a larger market capacity than each market participant user computer associated with a second side of the unbalanced market and each market participant user computer associated with the second side of the unbalanced market having a smaller-capacity than each market participant user computer associated with the first side of the unbalanced market;
receiving offers from the one or more market participant user computers that is associated with the first side of the unbalanced market and from the one or more market participant user computers that is associated with the second side of the unbalanced market, each offer comprising at least an offered price and an offered quantity;
prioritizing among any offers associated with the first side of the unbalanced market that comprise equal offered prices and among any offers associated with the second side of the unbalanced market that comprise equal offered prices according to a predetermined prioritization scheme, the prioritization among such equally priced offers determining the order in which they are matched with other offers;
matching a first offer associated with the first side of the unbalanced market with a second offer associated with the second side of the unbalanced market according to a relationship between a first offered price associated with the first offer and a second offered price associated with the second offer; and
determining a strike price for the match between the first offer and the second offer based on the relationship between the first and second offered prices.
12. The method of claim 11 , wherein:
the first side of the unbalanced market comprises a bid side, the one or more market participant user computers that are associated with the first side of the unbalanced market comprise buyers, and the offers associated with the first side of the unbalanced market comprise bids; and
the second side of the unbalanced market comprises an ask side, the one or more market participant user computers that are associated with the second side of the unbalanced market comprise sellers, and the offers associated with the second side of the unbalanced market comprise asks.
13. The method of claim 11 , wherein the first side of the unbalanced market is sealed such that offered prices and offered quantities of offers associated with the first side of the unbalanced market are inaccessible to one or more market participant user computers.
14. The method of claim 11 , wherein the second side of the unbalanced market is open such that offered prices of offers associated with the second side of the unbalanced market are accessible to one or more market participant user computers.
15. The method of claim 11 , wherein the equally priced offers are prioritized according to the order in which they are received, an earlier-received offer being given a higher priority than a later-received offer having an equal offered price.
16. The method of claim 11 , wherein: the relationship between the first and second offers comprises the first and second offered prices being equal to each other; and the strike price for the match between the first and second offers is equal to the first and second offered prices.
17. The method of claim 11 , wherein: the relationship between the first and second offers comprises the first offered price being different from the second offered price; and the strike price for the match between the first and second offers comprises a price between the first and second offered prices.
18. The method of claim 17 , wherein the first offered price is greater than the second offered price and the strike price for the match between the first and second offers comprises the second offered price plus a predetermined fraction of the price difference between the first and second offered prices.
19. The method of claim 11 , wherein a partial depletion of an offered quantity due to one or more matches is inaccessible to one or more market participant user computers.
20. The method of claim 11 , further comprising removing an offer from the second side of the unbalanced market without giving one or more market participant user computers any indication whether the offer was removed due to the occurrence of a match between the offer and another offer or due to the cancellation of the offer.
21. A computer-readable medium embodied with software enabling dynamic pricing in an unbalanced market, the software when executed using one or more computers is configured to:
receive offers from one or more market participant user computers associated with a first side of the unbalanced market and from one or more market participant user computers associated with a second side of the unbalanced market, each offer comprising at least an offered price and an offered quantity;
prioritize among any offers associated with the first side of the unbalanced market that comprise equal offered prices and among any offers associated with the second side of the unbalanced market that comprise equal offered prices according to a predetermined prioritization scheme, the prioritization among such equally priced offers determining the order in which they are matched with other offers;
match a first offer associated with the first side of the unbalanced market with a second offer associated with the second side of the unbalanced market according to a relationship between a first offered price associated with the first offer and a second offered price associated with the second offer; and
determine a strike price for the match between the first offer and the second offer based on the relationship between the first and second offered prices.
22. The computer-readable medium of claim 21 , wherein:
the first side of the unbalanced market comprises a bid side, the one or more market participant user computers that are associated with the first side of the unbalanced market comprise buyers, and the offers associated with the first side of the unbalanced market comprise bids; and
the second side of the unbalanced market comprises an ask side, the one or more market participant user computers that are associated with the second side of the unbalanced market comprise sellers, and the offers associated with the second side of the unbalanced market comprise asks.
23. The computer-readable medium of claim 21 , wherein the first side of the unbalanced market is sealed such that offered prices and offered quantities of offers associated with the first side of the unbalanced market are inaccessible to one or more market participant user computers.
24. The computer-readable medium of claim 21 , wherein the second side of the unbalanced market is open such that offered prices of offers associated with the second side of the unbalanced market are accessible to one or more market participant user computers.
25. The computer-readable medium of claim 21 , wherein the equally priced offers are prioritized according to the order in which they are received, an earlier-received offer being given a higher priority than a later-received offer having an equal offered price.
26. The computer-readable medium of claim 21 , wherein:
the relationship between the first and second offers comprises the first and second offered prices being equal to each other; and
the strike price for the match between the first and second offers is equal to the first and second offered prices.
27. The computer-readable medium of claim 21 , wherein:
the relationship between the first and second offers comprises the first offered price being different from the second offered price; and
the strike price for the match between the first and second offers comprises a price between the first and second offered prices.
28. The computer-readable medium of claim 27 , wherein the first offered price is greater than the second offered price and the strike price for the match between the first and second offers comprises the second offered price plus a predetermined fraction of the price difference between the first and second offered prices.
29. The computer-readable medium of claim 21 , wherein a partial depletion of an offered quantity due to one or more matches is inaccessible to all of one or more market participant user computers.
30. The computer-readable medium of claim 21 , wherein the software is further operable to remove an offer from the second side of the unbalanced market without giving one or more market participant user computers any indication whether the offer was removed due to the occurrence of a match between the offer and another offer or due to the cancellation of the offer.
31. A system for providing dynamic pricing in an unbalanced market, the system comprising:
means for providing a first side of the unbalanced market comprising a plurality of market participant user computers coupled with an electronic marketplace;
means for providing a second side of the unbalanced market comprising a plurality of market participant user computers coupled with the electronic marketplace, each market participant user computer associated with the first side of the unbalanced market having a larger market capacity than each market participant user computer associated with a second side of the unbalanced market and each market participant user computer associated with the second side of the unbalanced market having a smaller-capacity than each market participant user computer associated with the first side of the unbalanced market;
means for receiving offers from the one or more market participant user computers that is associated with the first side of the unbalanced market and from the one or more market participant user computers that is associated with the second side of the unbalanced market, each offer comprising at least an offered price and an offered quantity;
means for prioritizing among any offers associated with the first side of the unbalanced market that comprise equal offered prices and among any offers associated with the second side of the unbalanced market that comprise equal offered prices according to a predetermined prioritization scheme, the prioritization among such equally priced offers determining the order in which they are matched with other offers;
means for matching a first offer associated with the first side of the unbalanced market with a second offer associated with the second side of the unbalanced market according to a relationship between a first offered price associated with the first offer and a second offered price associated with the second offer; and
means for determining a strike price for the match between the first offer and the second offer based on the relationship between the first and second offered prices.
32. An electronic marketplace for dynamic pricing in an unbalanced market, the electronic marketplace comprising:
a bid side of the unbalanced market comprising a plurality of buyers coupled with the electronic marketplace;
an ask side of the unbalanced market comprising a plurality of sellers coupled with the electronic marketplace, each buyer associated with the bid side of the unbalanced market having a larger market capacity than each seller associated with a ask side of the unbalanced market and each seller associated with the ask side of the unbalanced market having a smaller-capacity than each buyer associated with the bid side of the unbalanced market;
one or more computers collectively supporting the unbalanced market, the one or more computers collectively configured to:
receive bids from one or more buyers and asks from one or more sellers, each bid comprising at least a bid price and a bid quantity, each ask comprising at least an ask price and an ask quantity;
prioritize among any bids that comprise equal bid prices and among any asks that comprise equal ask prices according to the order in which they are received, an earlier-received bid or ask being given a higher priority than a later-received bid or ask having a equal bid or ask price, higher priority bids or asks being matched with asks or bids before lower-priority bids or asks are matched with asks or bids;
match a bid with an ask according to a relationship between a corresponding bid price and a corresponding ask price;
determine a strike price for the match between the bid and the ask based on the relationship between the corresponding bid and ask prices;
if the corresponding ask quantity is fully depleted due to the ask being matched with the bid, remove the ask from the market without giving one or more buyers or one or more sellers any indication whether the ask was removed due to the ask being matched with the bid or due to a cancellation of the ask; and
if the corresponding ask quantity is only partially depleted due to the ask being matched with the bid, reduce the corresponding ask quantity in accordance with the partial depletion without giving one or more buyers or one or more sellers any indication that the corresponding ask quantity was reduced.