Multiple quote risk management

Abstract

The disclosed systems and methods relate to allowing trading of over the counter (“OTC”) foreign exchange (“FX”) contracts on a centralized matching and clearing mechanism, such as that of the Chicago Mercantile Exchange's (“CME”'s) futures exchange system (the “Exchange”). The disclosed systems and methods allow for anonymous transactions, centralized clearing, efficient settlement and the provision of risk management/credit screening mechanisms to lower risk, reduce transaction costs and improve the liquidity in the FX market place. In particular, the disclosed embodiments increase speed of execution facilitating growing demand for algorithmic trading, increased price transparency, lower cost of trading, customer to customer trading, and automated asset allocations, recurring trades as well as clearing and settlement efficiencies.

1 . A method comprising:
 storing an amount of risk of a market participant in a risk account having a risk balance;   allocating, by a processor, an amount of the risk balance according to an actionable quote associated with the market participant;   determining, by the processor, if the risk balance is less than a predetermined level because of the allocated amount of risk; and   generating a message for the market participant, wherein the message is based on whether the risk balance has reached the predetermined level.   
     
     
         2 . The method of  claim 1 , further comprising:
 blocking a transaction when the risk balance is less than the predetermined level.   
     
     
         3 . The method of  claim 1 , further comprising:
 allowing a transaction when the risk balance is greater than the predetermined level.   
     
     
         4 . The method of  claim 1 , further comprising:
 re-allocating the amount of risk to the risk account after an elapse of a period of time.   
     
     
         5 . The method of  claim 1 , further comprising:
 allocating an initial balance in the risk account according to a credit rating of the market participant, historical data associated with the risk account, or regulations.   
     
     
         6 . The method of  claim 1 , further comprising:
 estimating a maximum liability of the market participant, wherein the risk balance is based on the maximum liability.   
     
     
         7 . The method of  claim 1 , wherein the allocated amount of risk is fixed. 
     
     
         8 . The method of  claim 1 , wherein the allocated amount of risk is variable based on terms of the actionable quote. 
     
     
         9 . The method of  claim 8 , wherein the allocated amount of risk is variable based governmental regulation. 
     
     
         10 . The method of  claim 1 , further comprising:
 monitoring fluctuation of the risk balance; and   indicating when the fluctuation exceeds a threshold.   
     
     
         11 . An apparatus comprising:
 a database configured to store an amount of risk of a market participant in a risk account having a risk balance;   a risk allocation processor configured to allocate an amount of the risk balance according to an actionable quote associated with the market participant and configured to determine if the risk balance is less than a predetermined level because of the allocated amount of risk; and   a monitor processor configured to generate a message based on whether the risk balance has reached the predetermined level.   
     
     
         12 . The apparatus of  claim 11 , further comprising:
 a transaction handling processor configured to take an action in accordance with whether the risk balance has reached the predetermined level.   
     
     
         13 . The apparatus of  claim 12 , wherein the transaction handling processor is configured to block a transaction when the risk balance is less than the predetermined level. 
     
     
         14 . The apparatus of  claim 12 , wherein when the transaction handling processor is configured to allow a transaction when the risk balance is greater than the predetermined level. 
     
     
         15 . The apparatus of  claim 11 , wherein the risk allocation processor is configured to re-allocate the amount of risk to the risk account after an elapse of a period of time. 
     
     
         16 . The apparatus of  claim 11 , wherein the amount of the risk balance is variable based on terms of the actionable quote. 
     
     
         17 . A computer readable medium comprising instructions that when executed are configured to:
 store an amount of risk of a market participant in a risk account having a risk balance;   allocate, by a processor, an amount of the risk balance according to an actionable quote associated with the market participant; and   determine, by the processor, if the risk balance is less than a predetermined level because of the allocated amount of risk; and   generate data based on whether the risk balance has reached the predetermined level.   
     
     
         18 . The method of  claim 17 , the instructions further configured to:
 blocking a transaction when the risk balance is less than the predetermined level.   
     
     
         19 . The method of  claim 17 , the instructions further configured to:
 allowing a transaction when the risk balance is greater than the predetermined level.   
     
     
         20 . The method of  claim 17 , the instructions further configured to:
 re-allocating the amount of risk to the risk account after an elapse of a period of time.