Computer implemented and/or assisted methods and systems for providing guaranteed, specified and/or predetermined execution prices in a guaranteed, specified and/or predetermined timeframe on the purchase or sale of, for example, listed options
Methods and systems are provided which enable options broker-dealers to guarantee execution of an option trade order within a specified time window. By providing means to quantify and mitigate the effects of several factors which contribute to options market inefficiency (e.g., market structure, regulatory constraints, and “market misbehavior”), these methods and systems eliminate or at least reduce the level of broker-dealer risk inherent in offering an execution speed guarantee, while optionally simultaneously providing better execution quality for investors.
1. A computer implemented method of executing an order for a listed options contract at at least one of a guaranteed, specified and predetermined execution price and within at least one of a guaranteed, specified and predetermined timeframe offered to the investor submitting the order using an investor computer, the method comprising at least one of implemented and assisted by the computer and at least one of the sequential, sequence independent and non-sequential steps of:
electronically receiving the order initiated by the investor computer for the listed options contract by a first member computer trading system of a rapid execution consortium (REC), wherein the REC comprises a first options broker-dealer and a second options broker-dealer and said first and second broker-dealers having step-up capability for a substantial portion of all listed options classes for automated execution by at least one of the first member computer trading system associated with the first broker-dealer and a second member computer trading system associated with the second broker-dealer of the order for the listed options contract;
determining by the first member computer trading system whether the first broker-dealer of the REC can execute the order received from the investor computer at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor submitting the order; and
when the first member computer trading system determines that the first broker-dealer of the REC can execute the order at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor, electronically transmitting by the first member computer trading system an instruction for electronically executing the order for the investor.
2. The method of claim 1 , further comprising, when the first member computer trading system determines that the first broker-dealer cannot execute the order received from the investor computer system at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor submitting the order, electronically transmitting the order to the second member computer trading system of the second options broker-dealer of the REC for electronic execution at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor submitting the order.
3. The method of claim 1 , wherein the REC comprises a plurality of options broker-dealers, wherein the first member computer trading system determines that at least one of the plurality of options broker-dealers has agreed to execute the order at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor submitting the order.
4. The method of claim 1 , wherein the first member computer trading system determines that the first and second broker-dealers are each affiliated with a market maker.
5. The method of claim 1 , further comprising electronically receiving by the first member computer trading system notification of the order being executed by the market maker the order.
6. A computer system for executing an order for a listed options contract at at least one of a guaranteed, specified and predetermined execution price and within at least one of a guaranteed, specified and predetermined timeframe offered to the investor submitting the order using an investor computer, the system comprising:
a first member computer trading system of a rapid execution consortium (REC) electronically receiving the order initiated by the investor computer for the listed options contract, wherein the REC comprises a first options broker-dealer and a second options broker-dealer and said first and second broker-dealers having step-up capability for a substantial portion of all listed options classes for automated execution by at least one of the first member computer trading system associated with the first broker-dealer and a second member computer trading system associated with the second broker-dealer of the order for the listed options contract,
wherein said first member computer trading system determines whether the first broker-dealer of the REC can execute the order received from the investor computer at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor submitting the order; and
when the first member computer trading system determines that the first broker-dealer of the REC can execute the order at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor, electronically transmitting by the first member computer trading system an instruction for electronically executing the order for the investor.
7. The system of claim 6 , further comprising, when the first member computer trading system determines that the first broker-dealer cannot execute the order received from the investor computer system at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor submitting the order, electronically transmitting the order to the second member computer trading system of the second options broker-dealer of the REC for electronic execution at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor submitting the order.
8. The system of claim 6 , wherein the REC comprises a plurality of options broker-dealers, wherein the first member computer trading system determines that at least one of the plurality of options broker-dealers has agreed to execute the order at the guaranteed, specified and/or predetermined execution price and timeframe offered to the investor submitting the order.
9. The system of claim 6 , wherein the first member computer trading system determines that the first and second broker-dealers are each affiliated with a market maker.
10. The system of claim 6 , wherein said first member computer trading system electronically receives the notification of the order being executed by the market maker.