Network and Method for Trading Derivatives

Abstract

A computer network and method for electronically trading derivatives. The system includes networks and methods where a control or network managing station in the network acts as a facilitator for the market makers and subscribers to make a trade at an Exchange. In another embodiment the network managing station consummates the trade between a market maker and a subscriber by matching binding quotes and orders and clears the trade at an Exchange. The computer network for electronically trading derivative comprises: (a) network managing station; (b) one or more market maker stations; (c) one or more subscriber stations; (d) one or more Exchanges. The network managing station connects market makers and subscribers for making real time indicative quotes, issuing requests for quotes, obtaining binding quotes and wherein the market maker and subscriber are in communication with an Exchange for sending binding quotes and orders to the Exchange for clearing and confirming transactions.

We claim: 
     
         1 . A system for electronically trading derivatives, comprising:
 a market maker station;   a subscriber station; and   a network managing station in communication over a network with the market maker station and the subscriber station;
 wherein the market maker station is configured to receive a request for and/or to provide an indicative quote and/or a binding quote; 
 wherein the subscriber station is configured to request and/or to receive the indicative quote and/or the binding quote, and is further configured to submit an order; and 
 wherein the network managing station is configured to match the order with the binding quote to form a matched trade, and is further configured to transmit the matched trade to an Exchange for clearing. 
   
     
     
         2 . The system of  claim 1  wherein the system further comprises a plurality of market maker stations and/or a plurality of subscriber stations. 
     
     
         3 . The system of  claim 1  wherein the system further comprises one or a plurality of Exchanges, each of which is configured to clear the matched trade. 
     
     
         4 . The system of  claim 1  wherein the subscriber station is further configured to actively query the market maker station for updated quotes at periodic intervals. 
     
     
         5 . The system of  claim 4  wherein the periodic intervals are set at the subscriber station. 
     
     
         6 . The system of  claim 4  wherein the periodic intervals are adjustable in response to factors. 
     
     
         7 . The system of  claim 6  wherein the factors are selected from the group consisting of movement in an underlying price, high volume, low volume, high volatility, low volatility, an indication from the subscriber station that a request for binding quote is imminent, an indication from the subscriber station that an order is imminent, and combinations thereof. 
     
     
         8 . The system of  claim 1  wherein the subscriber station is further configured to receive quote updates in real time that are pushed by the market maker station. 
     
     
         9 . The system of  claim 1  wherein the subscriber station comprises a combination of hardware and software, and wherein the hardware is selected from the group consisting of hand-held computing devices, PC workstations, and a combination thereof. 
     
     
         10 . The system of  claim 1  wherein the subscriber station comprises a gateway application that connects a subscriber's internal network to the network managing station. 
     
     
         11 . The system of  claim 1  wherein the market maker station comprises a combination of hardware and software, and wherein the hardware comprises a database comprising pricing data from which the indicative quote and the binding quote can be determined in response to the request. 
     
     
         12 . The system of  claim 1  wherein the network managing station comprises a combination of hardware and software, and wherein the network managing station is further configured provide a directory of participants receiving or providing quotes. 
     
     
         13 . A method for trading derivatives, the method comprising:
 receiving, via computer, a request for an indicative quote from a requestor for a product;   transmitting, via computer, the request for the indicative quote to a responder station;   receiving, via computer, an indicative quote from the responder in response to the request for the indicative quote for the product;   transmitting, via computer, the indicative quote to the requestor;   receiving, via computer, a request for a binding quote from the requestor for the product;   transmitting, via computer, the request for the binding quote to the responder station;   receiving, via computer, a binding quote from the responder in response to the request for the binding quote for the product;   transmitting, via computer, the binding quote to the requestor;   receiving, via computer, an order from the requestor for the product;   matching, via computer, the order from the requestor with the binding quote from the responder, thereby forming a matched trade; and   transmitting, via computer, the matched trade to an Exchange for clearing.   
     
     
         14 . The method of  claim 13  wherein the product is selected from the group consisting of futures, options, spreads, and combinations thereof. 
     
     
         15 . The method of  claim 13  wherein identity of the requestor and identity of the responder remain substantially anonymous. 
     
     
         16 . The method of  claim 13  wherein the requestor actively queries the responder for updated quotes at periodic intervals. 
     
     
         17 . The method of  claim 16  wherein the periodic intervals are set by the requestor. 
     
     
         18 . The method of  claim 16  wherein the periodic intervals are adjustable in response to factors. 
     
     
         19 . The method of  claim 18  wherein the factors are selected from the group consisting of movement in an underlying price, high volume, low volume, high volatility, low volatility, an indication from the subscriber station that a request for binding quote is imminent, an indication from the subscriber station that an order is imminent, and combinations thereof. 
     
     
         20 . The method of  claim 13  wherein the requestor receives quote updates in real time that are pushed by the responder. 
     
     
         21 . A system for electronically trading derivatives, comprising:
 one or a plurality of market maker stations;   one or a plurality of subscriber stations;   one or a plurality of Exchanges; and   a network managing station in communication over a network with the one or the plurality of market maker stations, the one or the plurality of subscriber stations, and the one or the plurality of Exchanges;
 wherein the market maker stations are independently configured to receive a request for and/or to provide an indicative quote and/or a binding quote; 
 wherein the subscriber stations are independently configured to request and/or to receive the indicative quote and/or the binding quote, and are independently further configured to submit an order; 
 wherein the network managing station is configured to match the order with the binding quote to form a matched trade, and is further configured to transmit the matched trade to an Exchange for clearing; and 
 wherein the Exchanges are independently configured to clear the matched trade.