System and Method for Making Positions Held by a Trader Fungible

Abstract

Positions held by a trader are made fungible by selecting a first position in a first futures contract that is deliverable and selecting a second position in a second futures contract, wherein the first and second futures contracts are traded in a first and second market, respectively. Offsetting the first and the second positions eliminates a delivery obligation of the trader.

1 . A computer implemented method for making contract positions in a first and second contract traded in different markets offsetable, the contract positions having not expired, being associated with a delivery requirement, and comprising a first long position in a first contract, a first short position in a second contract, a second short position in the first contract, and a second long position in the second contract, the method comprising:
 identifying a request from a trader for the first long position of the first contract and the first short position of the second contract, wherein the first long position and the first short position cannot be offset because they are traded in different markets; and   offsetting the first long position against the second short position and the first short position against the second long position, wherein delivery obligations associated with the first long position and second short position of the first contract, and the second long position and the first short position of the second contract, are eliminated by the offsetting.   
     
     
         2 . The method of  claim 1 , wherein the first short position and the second long position are for products traded in a second market and the sum of all open long positions in the second market is identical to the sum of all open short positions in the second market after offsetting. 
     
     
         3 . The method of  claim 1 , wherein the second long position is held by a second trader. 
     
     
         4 . The method of  claim 3 , wherein the second short position is held by a third trader. 
     
     
         5 . The method of  claim 1 , wherein the request has a priority associated therewith. 
     
     
         6 . The method of  claim 5 , wherein the priority is associated with a time when the request was received. 
     
     
         7 . The method of  claim 1 , wherein the products underlying the first long position and the first short position are identical. 
     
     
         8 . The method of  claim 1 , wherein the step of offsetting comprises the step of allocating a quantity of the first long position to an identical quantity of the second short position. 
     
     
         9 . The method of  claim 1 , wherein the step of offsetting comprises the step of eliminating a portion of the first long position. 
     
     
         10 . A computer program product for making contract positions in a first and second contract traded in a first and second markets offsetable, the contract positions having not expired, being associated with a delivery requirement, and comprising a first long position in a first contract, a first short position in a second contract, a second short position in the first contract, and a second long position in the second contract, the computer program product embodied on a computer-readable medium and comprising code that, when executed, causes the computer to perform the following:
 identify a request from a trader for the first long position of the first contract and the first short position of the second contract, wherein the first long position and the first short position cannot be offset because they are traded in different markets; and   offset the first long position against the second short position and the first short position against the second long position, wherein the offset eliminates the delivery obligations associated with the first long position and second short position of the first contract, and the second long position and the first short position of the second contract.   
     
     
         11 . The computer program product of  claim 10 , wherein the first short position and the second long position are for products traded in a second market and the sum of all open long positions in the second market is identical to the sum of all open short positions in the second market after the offset. 
     
     
         12 . The computer program product of  claim 10 , wherein the second long position is held by a second trader. 
     
     
         13 . The computer program product of  claim 12 , wherein the second short position is held by a third trader. 
     
     
         14 . The computer program product of  claim 10 , wherein the request has a priority associated therewith. 
     
     
         15 . The computer program product of  claim 14 , wherein the priority is associated with a time when the request was received. 
     
     
         16 . The computer program product of  claim 10 , wherein the products underlying the first long position and the first short position are identical. 
     
     
         17 . The method of  claim 10  wherein the first market is characterized by a first contract specification and the second market is characterized by a second contract specification different from the first contract specification. 
     
     
         18 . The method of  claim 17  wherein the first contract specification comprises a first delivery method and the second contract specification comprises a second delivery method different from the first delivery method. 
     
     
         19 . The method of  claim 17  wherein the first contract specification comprises a first lot size method and the second contract specification comprises a second lot size different from the first lot size. 
     
     
         20 . A system for making contract positions in a first and second contract traded in a first and second markets offsetable, the contract positions having not expired, being associated with a delivery requirement, and comprising a first long position in a first contract, a first short position in a second contract, a second short position in the first contract, and a second long position in the second contract, the system comprising:
 at least one memory operable to store data representing the first long position, the first short position, the second long position, and the second short position; and   a processor operable to cause the system to:
 identify a request from a trader for the first long position of the first contract and the first short position of the second contract; and 
 offset the first long position against the second short position and the first short position against the second long position, wherein the offset eliminates the delivery obligations associated with the first long position and second short position of the first contract, and the second long position and the first short position of the second contract.