Trading using intermediate entities

Abstract

Systems and methods for facilitating trades between two trading entities are disclosed. A computer system may match a bid of a first trading entity for an item with an offer of a second trading entity for the item. The first and second trading entities may each have a credit relationship with the third trading entity. In response to the matching, the computer system may record indications of trades of the item between the first trading entity and a third trading entity, and between the third trading entity and another trading entity such as the second trading entity. The trades may be booked back-to-back such that a net position to the third trading entity in the item is zero. When the first and second trading entities are connected by a plurality of intermediate entities, the computer system may record indications of one or more additional trades of the item.

What is claimed is: 
     
         1 . A method, comprising:
 a computer system matching a bid of a first trading entity with an offer of a second trading entity, wherein the bid and offer are for a foreign exchange item;   in response to the matching, the computer system recording indications of trades of the foreign exchange item between the first trading entity and a third trading entity and between the third trading entity and the second trading entity.   
     
     
         2 . The method of  claim 1 , wherein the foreign exchange item is a currency pair, and wherein the trades is performed such that a net position effect to the third trading entity in the currency pair is zero. 
     
     
         3 . The method of  claim 1 , wherein the bid and offer each specify a currency pair, and wherein the trades include:
 a first trade in which the third trading entity purchases a quantity of the currency pair from the first trading entity; and   a second trade in which the third trading entity sells the quantity of the currency pair to the second trading entity.   
     
     
         4 . The method of  claim 1 , wherein the first and second trading entities are clients of the third trading entity. 
     
     
         5 . The method of  claim 1 , wherein a price of the offer is computed by the computer system based on a price of the bid. 
     
     
         6 . The method of  claim 1 , wherein a price of the offer is computed by marking up a price of the bid. 
     
     
         7 . The method of  claim 1 , wherein a price of the offer is computed by marking up a price of the bid according to a trading privilege. 
     
     
         8 . The method of  claim 1 , wherein the bid and offer are matched based on the computer system:
 receiving the bid from the first trading entity;   computing the offer based on the bid and based on the third trading entity having a credit relationship with the first trading entity and the second trading entity;   conveying the computed offer to the second trading entity; and   receiving a selection of the offer from the second trading entity.   
     
     
         9 . The method of  claim 1 , wherein the trades are spot trades for a currency pair. 
     
     
         10 . The method of  claim 1 , wherein the offer is computed specifically for the second trading entity. 
     
     
         11 . The method of  claim 1 , further comprising the computer system permitting computer systems of trading entities to submit bids and offers and hit bids and offers via machine-to-machine communication. 
     
     
         12 . The method of  claim 1 , further comprising the computer system providing an API to trading entities. 
     
     
         13 . The method of  claim 1 , wherein the API permits computer systems of the trading entities to automatically submit bids and offers and automatically hit bids and offers. 
     
     
         14 . A method, comprising:
 a computer system matching a bid of a first trading entity with an offer of a second trading entity, wherein the bid and offer are for a currency pair;
 after the matching, the computer system:
 booking back-to-back trades of the currency pair, including a trade between the first trading entity and a third trading entity and a trade between the third trading entity and a fourth trading entity; 
 booking a further trade of the currency pair that involves the fourth trading entity. 
 
   
     
     
         15 . The method of  claim 14 , wherein the further trade is between the fourth trading entity and the second trading entity, wherein the back-to-back trades and the further trade are performed such that a net position effect to the third and fourth trading entities is zero with respect to the currency pair. 
     
     
         16 . The method of  claim 14 , further comprising the computer system presenting the offer to the second trading entity based on a credit path between the first and second trading entities that includes the third trading entity. 
     
     
         17 . A method, comprising:
 a computer system of a first trading entity sending information to a central computer system indicating that the first trading entity is willing to act as a credit bridge between entities with which the first trading entity has a credit relationship;   wherein the information sent by the computer system of the first trading entity permits the central computer system to generate a limit order book for a second trading entity that has a credit relationship with the first trading entity, wherein the limit order book includes a bid or offer for an item from a third trading entity that also has a credit relationship with the first trading entity; and   wherein, in response to the central computer system receiving an indication from the second trading entity to accept the bid or offer from the third trading entity, the central computer system is configured to book a trade of the item between the third trading entity and the first trading entity, and a trade of the item between the first trading entity and the second trading entity.   
     
     
         18 . The method of  claim 17 , wherein the item is a currency pair, and wherein the booked trades have no net position effect on the first trading entity with respect to the currency pair. 
     
     
         19 . The method of  claim 17 , wherein the bid or offer in the limit order book of the second trading entity is customized for the second trading entity. 
     
     
         20 . The method of  claim 17 , wherein the central computer system does not store information indicating that the second and third trading entities are credit-extending entities.