Linked displayed market and midpoint matching system
An automated system for matching orders to buy and sell securities including a displayed market where orders are executed at a BBO price and where information about the market is made available to investors and a midpoint matching market for matching buy and sell orders at a predetermined price, namely, the midpoint between the national best bid and offer. The displayed market and the midpoint matching market are linked so that orders submitted to the displayed market are exposed to the midpoint matching market and can be executed at an improved price if a contra order is available on the midpoint matching market.
1. A system for trading securities comprising:
an interface adapted to receive first and second orders, wherein each of the first and second orders includes an order handling instruction;
a processor connected with the interface; and
a memory connected with the processor for storing processing instructions, wherein the processor executes processing instructions to perform a first process for matching the first and second orders at a predetermined price against previously received orders stored in a hidden reserve book, wherein the orders remain hidden while they are matched;
the processor executes processing instructions to perform a second process for trading orders on a displayed market; and
the processor executes processing instructions to perform a third process for exposing the second order received by the interface to the first process and, if the second order is not completely matched, exposing the second order to the displayed market of the second process,
wherein, the first order includes an instruction to match the first order only with other orders stored on the hidden reserve book.
2. The system of claim 1 , wherein, in response to the order handling instruction of the first order, if the first order does not match with another order on the hidden reserve book, the first order is stored on the hidden reserve book.
3. The system of claim 1 , wherein, in response to the order handling instruction of the first order, if the first order does not completely match with orders stored on the hidden reserve book, the first order is cancelled.
4. The system of claim 1 , wherein, in response to the order handling instruction of the first order, if the first order is partially matched with orders stored on the hidden reserve book, an unmatched portion of the first order is cancelled.