Market liquidity incentive systems and methods

Abstract

A system and method determine rewards or other incentives for market participants submitting orders for financial instruments on a financial exchange. The system and method determine if orders submitted by one or more market participants are eligible for a reward or other incentive by identifying orders that are at a best bid or offer for a corresponding financial instrument. The system and method determine a number of eligible orders submitted by each of the one or more market participants and applies a reward or other incentive to a particular market participant with the most eligible orders or greatest aggregate size of eligible orders.

What is claimed is: 
     
         1 . A market liquidity incentive system for an electronic financial exchange comprising:
 a memory; and   a processor coupled to the memory and configured to: 
 process market data for resting shares on a book for the electronic financial exchange, the market data comprising order data for resting shares from one or more market participants, corresponding prices for the resting shares, and best bids to buy and best offers to sell for one or more financial instruments; 
 analyze the order data and the best bids to buy and best offers to sell and increment a counter value of a counter for the one or more market participants that have a number of resting shares exceeding a threshold; 
 determine one or more of the market participants that has a counter value exceeding the threshold; 
 communicate, through a computer network, with a server configured to obtain information indicative of a reward; 
 determine a reward for the one or more market participants based on an instrument identification of the particular financial instrument and a class type associated with the instrument identification; 
 apply the reward to the one or more market participants; and 
 transmit and disseminate the order data to a remote device. 
   
     
     
         2 . The system of  claim 1 , wherein determining the reward for the one or more market participants comprises retrieving one or more incentive rules, the one or more incentive rules further comprising a threshold number of orders executed for the one or more financial instruments. 
     
     
         3 . The system  claim 2 , wherein determining the reward for the one or more market participants further comprises applying an additional reward upon the one or more market participants exceeding the threshold number of orders corresponding to the one or more financial instruments. 
     
     
         4 . The system of  claim 1 , wherein processing market data comprises selecting a portion of the market data, the portion of the market data corresponding to a selected period comprising one or more selected times. 
     
     
         5 . The system of  claim 4 , wherein the one or more selected times comprises at least one of a time, a time point, a time increment, and a one-second time increment. 
     
     
         6 . The system of  claim 4 , wherein the one or more selected times is during a trading day. 
     
     
         7 . The system of  claim 4 , wherein the selected period comprises at least one of a trading day, the trading day with regular trading hours, the trading day with extended trading hours, the trading day with auction hours, a week with one or more trading days, a month with one or more trading days, an hour, multiple hours, and a period with respect to trades. 
     
     
         8 . The system of  claim 1 , wherein the counter comprises a plurality of counter characteristics, each of the counter characteristics are provided for a market participant. 
     
     
         9 . The system of  claim 8 , wherein the plurality of counter characteristics comprises one or more of (i) a count, (ii) a parameter, or (iii) an attribute, for the market participant. 
     
     
         10 . The system of  claim 1 , the order data for resting shares comprises a total number of resting shares from one or more orders of the one or more financial instruments. 
     
     
         11 . The system of  claim 1 , wherein the threshold comprises the greatest total number of resting shares from one or more orders for a particular financial instrument at the financial instrument’s best bid to buy or best offer to sell. 
     
     
         12 . The system of  claim 1 , where to determine the one or more market participants that has a counter value exceeding the threshold comprises analyzing counter values assigned to each market participant for the time period. 
     
     
         13 . The system of  claim 1 , wherein to determine the reward comprises identifying a tier level of the particular financial instrument based on the class type. 
     
     
         14 . The system of  claim 1 , wherein to increment the counter value comprises determining the total number of resting shares from the one or more orders for the particular financial instrument that were at the financial instrument’s best bid to buy or best offer to sell at the one or more selected times. 
     
     
         15 . The system of  claim 1 , further comprising comparing counter values for the one or more market participants. 
     
     
         16 . The system of  claim 1 , wherein to analyze the order data and the best bids to buy and the best offers to sell comprises comparing the order data for one or more market participants to the best bids to buy and the best offers to sell. 
     
     
         17 . The system of  claim 1 , wherein to analyze the order data comprises determining one or more financial instruments and best bid or offer data corresponding to the one or more financial instruments, the best bid or offer data comprising one or more of (i) best bid to buy data, or (ii) best offer to sell data. 
     
     
         18 . The system of  claim 1 , wherein to analyze the order data and the best bids to buy and the best offers to sell comprises determining the best bids to buy from the order data and the best bid or offer data. 
     
     
         19 . The system of  claim 1 , wherein to analyze the order data and the best bids to buy and the best offers to sell comprises determining the best bids to sell from the order data and the best bid or offer data. 
     
     
         20 . The system of  claim 1 , wherein to analyze the order data comprises determining a portion of the order data corresponding to orders displayed at the electronic financial exchange. 
     
     
         21 . The system of  claim 1 , wherein the memory comprises the counter. 
     
     
         22 . The system of  claim 1 , wherein to analyze the order data comprises determining a portion of the order data corresponding to orders that can be displayed at the electronic financial exchange. 
     
     
         23 . A market liquidity incentive system comprising:
 a memory; and   a processor coupled to the memory and configured to: 
 process market data for resting shares on an electronic financial exchange’s book, the market data comprising order data for resting shares, from one or more market participants corresponding prices for the resting shares, and best bids to buy and best offers to sell for one or more financial instruments; 
 analyze the order data and the best bids to buy and best offers to sell and increment a counter value of a counter for a market participant that has a number of resting shares exceeding a threshold; 
 determine one or more the market participants that have a counter value exceeding the threshold; 
 communicate, through a computer network, with a server configured obtain information indicative of a reward; 
 determine the reward based on an instrument identification of the particular financial instrument and a class type associated with the instrument identification; 
 apply the reward to one or more market participants; and 
 transmit and disseminate the order data to a remote device. 
   
     
     
         24 . A market liquidity incentive method executed by at least one processor of an electronic financial exchange, the method comprising:
 processing market data for resting shares on a book for the electronic financial exchange, the market data comprising order data for resting shares from one or more participants, corresponding prices for the resting shares, and best bids to buy and best offers to sell for one or more financial instruments;   incrementing a counter value of a counter for the one or more market participants that have a number of resting shares exceeding a threshold;   determining one or more of the market participants that have a counter value exceeding the threshold;   communicating, through a computer network, with a server configured to obtain information indicative of a reward;   determining the reward based on an instrument identification of the particular financial instrument and a class type associated with instrument identification;   applying the reward to the one or more market participants; and   transmitting and disseminating the order data to a remote device.   
     
     
         25 . A non-transitory, computer-readable storage medium having instructions stored thereon, that when executed by at least one processor, cause the at least one processor to:
 process market data for resting shares on an electronic financial exchange’s book, the market data comprising order data for resting shares from one or more market participants, corresponding prices for the resting shares, and best bids to buy and best offers to sell for one or more financial instruments;   increment a counter value of a counter for a market participant that has a number of resting shares exceeding a threshold;   determine one or more of the market participants that have a counter value exceeding the threshold;   communicate, through a computer network, with a server configured to obtain information indicative of a reward;   determine the reward based on an instrument identification of the particular financial instrument and a class type associated with the instrument identification;   apply the reward to one or more market participants; and   transmit and disseminate the order data to a remote device.   
     
     
         26 . The system of  claim 25 , wherein the server obtaining information indicative of the reward comprises accessing a reward amount table comprising one or more reward amounts. 
     
     
         27 . The system of  claim 25 , wherein the server configured to obtain information indicative of the reward comprises accessing a database comprising a reward eligible indicator that indicates whether an order price of each of the one or more orders is a reward eligible order price.