Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Finance
Reexamination Certificate
1999-10-06
2003-01-07
Millin, Vincent (Department: 3624)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Finance
C705S035000, C705S03600T
Reexamination Certificate
active
06505175
ABSTRACT:
BACKGROUND OF THE INVENTION
1. Field of the Invention
The present invention generally relates to a system and method for tracking orders on an exchange floor. More specifically it relates to an integrated computer system for allocating, tracking and reporting orders and trades executed in the context of an exchange setting, such as the New York Stock Exchange (NYSE).
2. Description of the Related Art
There exist several types of financial markets in which securities, commodities, and other negotiable instruments are traded. An auction market, such as a stock exchange, is one such financial market. In an auction market, buyers and sellers congregate on an exchange floor and announce their respective bid prices (offer to buy) and ask prices (price acceptable to sell). A trade in any particular security will occur at no more than the highest price a buyer is willing to pay and at no less than the lowest price a seller is willing to accept.
Among the players on the floor of an exchange are specialist and floor brokers. A specialist calls out the best bid and ask prices received from the various brokers, ensures that trades are posted, facilitate trades, and acts to ensure liquidity. A floor broker roams the exchange floor and acts as an agent to transact orders on behalf of investors (buyers and sellers).
A typical transaction originates when an order is placed with an off-the-floor trading desk to buy or sell a particular security. The trading desk may then convey the order to a exchange clerk who notes the parameters of the order including whether the order is a buy or sell order, the symbol of the security, the quantity, the price, any special conditions associated with the order, and the time that the order is placed. The clerk then delivers the order to a floor broker for execution. Traditionally, orders are transcribed onto order slips that are delivered to floor brokers by pages or runners. A floor broker executes an order, notes the executed order on a slip of paper, and subsequently returns the notated slip of paper to the clerk via a runner.
In addition to buy and sell orders, investors may request a “look” from the floor of the exchange. In response to a “look” request, a broker notes his or her observations with respect to what is happening in the market for a particular security. The “look” information noted by the broker may vary depending on the particular broker and what he has observed. For example, “look” information may include recent buyer and seller identities, trade sizes and prices, appraisal of market interest, a broker's opinion and any other information that a broker may wish to provide.
There is currently a significant manual component to process an order once the order reaches the floor of an exchange. Typically, an order will be entered into a computerized order processing system of a trading establishment. For example, these orders can be entered by a trader
120
at a listed desk. The order is then routed to an order management system for exchange listed securities. The order is displayed via an order management system application in a trading booth that handles orders for the given security. An order ticket is then automatically printed in the booth.
A clerk takes the ticket from the printer and prepares it for handoff, pages a broker, and acknowledges the order in the order management system. The broker, upon being paged, returns to the booth to get the machine-printed ticket and briefly discusses any special handling instructions with the clerk. Alternately the broker may telephone the booth to get necessary information and write it on a piece of paper.
A broker must update running totals representing how many shares of a particular security to buy or sell incorporating on the new order. The broker executes a trade for all or part of the order. The broker must convey some or all of the details of the trade to the booth. The broker an convey the information over the phone or write the information on a piece of paper and walk it back to the booth. Alternatively, the broker can send the paper to the booth via an exchange runner.
A clerk typically records the verbal execution into an online management system and performs an allocation of a portion of the shares of a security amongst a variety of orders.
Contra breakdown tracking what was traded with whom eventually arrive in the booth on a piece of paper if they were not attached to the verbal. This information could have been penned by the broker or by a specialist. The clerk files the contra breakdowns in a special location, to be picked up by a firm runner. The contra breakdowns are taken to a bank of firm typists located near the exchange floor. The typists enter the information into a firm trading system, and this information is both used by the trading firm systems and it is sent to the exchange's order reconciliation system (OCS).
The contra information should be entered within an hour after the trade took place. The typists file the paper containing the verbal and written information. This paper is kept on hand for several days and is then archived.
It would be useful to have a system capable of achieving greater order processing efficiency. Orders need to be routed more quickly to brokers operating on the floor of the exchange, thereby leading to more timely customer service. In addition it would be useful to capture some of the order information digitally at the point of sale, whereby costly transcription errors can be reduced.
SUMMARY OF THE INVENTION
Accordingly, this invention provides an order centric method and system for tracking orders implemented on a trading floor exchange. The system automatically routes orders to a booth and a floor broker according to a symbol associated with the particular security being traded.
In one aspect of the invention, a method for processing an order for a security on the floor of an exchange includes representing a security with a symbol and allocating a set of symbols to a booth. In addition a set of symbols is allocated to a floor broker ID. An order, relating to a symbol is entered into a computer and transmitting to a computer server. The order is routed through the server to a computerized booth station associated with the booth to which the order symbol had been allocated. In addition, the order is routed through the server to the floor broker ID to which the symbol associated with the order has been allocated. Typically the floor broker ID is logged into a computerized handheld device.
In addition, a record of an action relating to the order can be sent to the server and logged into a memory at the server. The record can also be routed through the server to the booth station associated with the booth to which the order symbol had been allocated. Typically, multiple booths are utilized with a unique set of symbols allocated to each booth station. The set of symbols allocated to a floor broker ID is a unique subset of the set of symbols associated with a booth.
In another aspect of the invention, a heartbeat signal from the handheld device to the server within a predetermined time period. In one embodiment, any communication between the handheld device and the server suffices as a heartbeat. A floor broker can be automatically logged off of the server in the event the server does not receive a predetermined number of heartbeats. For example, the predetermined number of missed heartbeats can be two.
In another aspect, an order is for shares of a security stock described by a symbol and the system calculates an aggregate number of shares of stock for standing orders relating to a particular symbol. Additionally, the system can calculate an aggregate of pending orders that meet a threshold price. The orders can include buy orders or sell orders.
This invention can also include a computerized system for processing an order in a trading exchange. The system can include a computerized booth station and a handheld computing device linked by a computer server. Software operative with the computer server can route an order to a particular booth
Lavicka Matthew
Ngai David W.
Silverman Andrew F.
Clifford Chance (US) LLP
Goldman Sachs & Co.
Millin Vincent
Patel Jagdish N
LandOfFree
Order centric tracking system does not yet have a rating. At this time, there are no reviews or comments for this patent.
If you have personal experience with Order centric tracking system, we encourage you to share that experience with our LandOfFree.com community. Your opinion is very important and Order centric tracking system will most certainly appreciate the feedback.
Profile ID: LFUS-PAI-O-3064515