Bid/offer spread trading
View Patent ↗A bid/offer spread market is presented that allows a trader to increase liquidity in traded items. A bid/offer spread market maker may make a bid/offer spread market. This bid/offer spread market may be made available to any market participant. In response to the spread market, an aggressor may respond to a bid or an offer with a hit or a take, respectively. In response to the hit or the take, the aggressor or bid/offer spread market maker, respectively, may create a separate underlying market using the selected (bid or offer) spread within a specified amount of time. The other party, a bid/offer spread trader, may trade on the quoted price within a specified amount of time, at which point a trade has occurred.
1. A method comprising the steps of:
by a computer system, receiving a first order from a first party, in which the first order indicates a first spread with which to make a market for a financial instrument and a second spread at which to make a market for the financial instrument, and in which the first order includes an acceptance by the first party to participate in the market at the first spread and an acceptance by the first party to make a market at the second spread if the second party accepts the command;
by the computer system, receiving a second command from the second party, in which the second command comprises at least one of an acceptance of the first spread and an acceptance of the second spread;
if the second command comprises the acceptance of the first spread, requiring the first party to submit a third command indicating at least one of a buy and a sell of the financial instrument at a price reflecting the first spread, and
if the second command comprises the acceptance of the second spread, requiring the second party to submit a third command indicating at least one of a buy and a sell of the financial instrument at a price reflecting the second spread.
2. The method of claim 1 :
wherein the second command comprises the acceptance of the first spread; and
further comprising the step of blocking the first party from participating in a market if the third command indicating at least one of a buy and a sell of the financial instrument is not received from the first party within a limited period of time.
3. The method of claim 1 :
wherein the second command comprises the acceptance of the first spread; and
further comprising the step of charging a fee to the first party if the third command indicating at least one of a buy and a sell of the financial instrument is not received from the first party within a limited period of time.
4. The method of claim 1 :
wherein the second command comprises the acceptance of the first spread and
further comprising the step of automatically entering a default trading command from the first party if the third command indicating at least one of a buy and a sell of the financial instrument through the first market is not received from the first party within a limited period of time.
5. The method of claim 1 , in which the first spread and the second spread are the same.
6. The method of claim 1 , in which the second command comprises the acceptance of the first spread and the method further comprises:
requiring the second party to submit a fourth command indicating that the first market for the financial instrument should be made with the first spread.
7. The method of claim 6 , in which the fourth command includes an indication of a price around which the first market is should be made.
8. The method of claim 1 , wherein:
the second command comprises the acceptance of the second spread; and
requiring the second party to submit the third command includes charging a fee to the second party if the third command indicating at least one of a buy and a sell of the financial instrument through the second market is not received from the second party within a limited period of time.
9. The method of claim 1 , in which the second command comprises the acceptance of the second spread and requiring the second party to submit the third command includes
automatically entering a default trading command from the second party if the third command indicating at least one of a buy and a sell of the tradeable item through the second market is not received from the second party within a limited period of time.
10. The method of claim 1 , in which the second command comprises the acceptance of the second spread and requiring the second party to submit the third command includes blocking the second party from participating in a market if the third command indicating at least one of a buy and a sell of the financial instrument through the second market is not received from the second party within a limited period of time.
11. The method of claim 1 , in which the second command comprises the acceptance of the second spread and the method further comprises:
requiring the first party to submit a fourth command indicating that the second market for the financial instrument should be made using the second spread.
12. The method of claim 11 , in which the fourth command includes an indication of a price around which the second market should be made.
13. A non-transitory computer readable medium having stored thereon a plurality of instructions that when executed by one or more computers, cause one or more computer systems to perform a method comprising the steps of:
receiving a first order from a first party, in which the first order indicates a first spread with which to make a market for a financial instrument and a second spread at which to make a market for the financial instrument, and in which the first order includes an acceptance by the first party to participate in the market at the first spread and an acceptance by the first party to make a market at the second spread if the second party accepts the command; and
at the computer system, receiving a second command from the second party, in which the second command comprises at least one of an acceptance of the first spread and an acceptance of the second spread;
if the second command comprises the acceptance of the first spread, requiring the first party to submit a third command indicating at least one of a buy and a sell of the financial instrument at a price reflecting the first spread, and
if the second command comprises the acceptance of the second spread, requiring the second party to submit a third command indicating at least one of a buy and a sell of the financial instrument at a price reflecting the second spread.
14. The computer readable memory of claim 13 :
wherein the second command comprises the acceptance of the first spread; and
further comprising instructions to cause the computer(s) to block the first party from participating in a market if the third command indicating at least one of a buy and a sell of the financial instrument is not received from the first party within a limited period of time.
15. The computer readable memory of claim 13 :
wherein the second command comprises the acceptance of the first spread; and
further comprising instructions to cause the computer(s) to charge a fee to the first party if the third command indicating at least one of a buy and a sell of the financial instrument is not received from the first party within a limited period of time.
16. The computer readable memory of claim 13 :
wherein the second command comprises the acceptance of the first spread; and
further comprising instructions to cause the computer(s) to automatically enter a default trading command from the first party if the third command indicating at least one of a buy and a sell of the financial instrument through the first market is not received from the first party within a limited period of time.
17. The computer readable memory of claim 13 , wherein the fourth command includes an indication of a price around which the first market should be made.
18. The computer readable memory of claim 13 :
wherein the second command comprises the acceptance of the second spread; and
further comprising instructions to cause the computer(s) to require the first party to submit a fourth command indicating that the second market for the financial instrument should be made using the second spread.
19. The computer readable memory of claim 13 , wherein:
the fourth command includes an indication of a price around which the second market should be made.