Execution of multiparty trades on a computerized trading system
View Patent ↗An anonymous trading system includes a prime broker facility that allows a third party to trade on behalf of an institution. A deal is executed between the third party and a counter-party and a further deal is then executed between the third party and the party on whose behalf it has traded. The second deal may be for the same amount as the first deal or may be altered to include the third party's fee for conducting the first deal. Clients of the third party have prices available to them for trades made via the third party which are displayed at their trader terminals. The client sees that a better price is available though the third party than by dealing direct and selects to conduct a deal through the third party.
1. A computerized trading system adapted to receive quotes to buy and/or sell a fungible from multiple trading entities and to execute trades between the trading entities, the computerized trading system comprising a plurality of programmed computers and at least one memory which maintains information concerning which trade entities will trade with other trade entities as a function of whether each trade entity provides credit to other trade entities, the computerized trading system being adapted to:
receive and store electronic information concerning quotes received from traders, each quote including a bid to buy or an offer to sell the fungible at a quoted price and an amount;
send electronic information to a first trading entity about the best quote received from a second trading entity with whom the first trading entity does not have credit to accept the quote, the best quote being the highest price to buy or the lowest price to sell the fungible;
receiving an electronic request from the first trading entity to accept the best quote from the second trading entity; and
executing a pair of trades in response to the request, a first trade between a second trading entity and a third trading entity who has credit to accept the best quote, and a second trade between the first trading entity and the third trading entity, both trades being for the price and amount of the best quote, one trade being on the sell side, the other being on the buy side, whereby the third trading entity has effectively made a trade on behalf of the first trading entity.
2. A system according to claim 1 , wherein each trading entity is a trading floor having a deal code which identifies that trading floor, wherein the third trading entity uses a prime broker deal code to identify itself for trades executed on behalf of other trading entities trading on the system.
3. A system according to claim 2 , further comprising a computer system associated with the third trading entity which sends the prime broker deal code to the second trading entity on completion of the first trade to identify the first trading entity on whose behalf the trade was made.
4. A system according to claim 1 , further comprising a credit allocator associated with the third trading entity for assigning credit limits for trades between the third trading entity and other trading entities with which the third trading entity is willing to trade, the credit allocator assigning a portion of the credit limit assigned to a given trading entity to trades conducted on behalf of the given trading entity.
5. A system according to claim 1 , wherein each of the trading entities is a respective trading floor, and where each trading floor has one or more displays showing the best price offered by other trading entities.
6. A system according to claim 1 , further comprising a deal ticket generator for generating and sending to the third trading entity and the second trading entity a deal ticket with information about the first trade, and generating and sending to the third trading entity and the first trading entity a deal ticket with information about the second trade.
7. A system according to claim 1 , further comprising a matching engine for matching quotes received by the system according to matching rules including quote price and time, the matching engine comprising software for varying the matching rules to match quotes submitted by the third trading entity trading on its own behalf with orders submitted by the first trading entity in preference to other earlier quotes at the same price.
8. A system according to claim 1 , wherein the third trading entity has credit to deal with the first trading entity.
9. A system according to claim 1 , wherein the fungible being traded is a financial instrument.
10. A system according to claim 1 , wherein the fungible being traded is a foreign currency.