System and method for managing trading orders received from market makers

Abstract

According to one embodiment, a method of managing trading is provided. A first offer for a particular instrument in a particular market is received from a first market maker at a first offer price. A first bid for the same particular instrument in the same particular market is received from a second market maker at a first bid price, the first bid price being higher than or equal to the first offer price. As a result of the first bid price being higher than or equal to the first offer price, the first offer price is automatically increased to a price higher than the first bid price such that a trade is not executed between the first offer and the first bid. In some embodiments, such method may be used to protect market makers from unwanted trades caused by inherent latency in the market makers' pricing engines and/or networks.

1 - 128 . (canceled) 
     
     
         129 . A system for protecting against unwanted trades caused by a latency in a market maker's terminal, in which the system comprises:
 a trading platform that is communicatively coupled to a plurality of market maker terminals, in which the trading platform receives:
 a first order for a financial instrument from a first market maker terminal; and 
 after a delay, a second order that matches the first order from a second market maker terminal, in which the delay is due to a latency that is detected in the first market maker terminal; 
   a trading module that automatically adjusts a price of the first order due to a set of rules regarding the detected latency, in which the adjusted price prevents the second order from matching with the first order.   
     
     
         130 . The system of  claim 129 , in which the set of rules comprises:
 determining that the second order offering a bid price that is higher than or equal to an offer price of the first order; and   in response to the determination, triggering a command to prevent a match between the first order and the second order.   
     
     
         131 . The system of  claim 130 , in which the command to prevent the match between the first order and the second order comprises:
 increasing the offer price of the first order to exceed the bid price of the second order.   
     
     
         132 . The system of  claim 129 , in which the set of rules further comprises:
 determining that the delay has caused the price of the first order and a price of the second order no longer be accurate; and   in response to the determination, triggering a command to prevent a match between the first order and the second order.   
     
     
         133 . The system of  claim 129 , in which the set of rules further comprises:
 determining that the second order has an offer price that is lower than or equal to a bid price of the first order; and   in response to the determination, triggering a command to prevent a match between the first order and the second order.   
     
     
         134 . The system of  claim 133 , in which the command to prevent the match between the first order and the second order comprises:
 decreasing the bid price of the first order to be lower than the offer price of the second order.   
     
     
         135 . The method of  claim 129 , in which the set of rules further comprises:
 determining that the second market maker belongs to a category of market makers that are to be avoided; and   in response to the determination, triggering a command to prevent a match between the first order and the second order.   
     
     
         136 . The system of  claim 135 , in which the category comprises electronic feeds. 
     
     
         137 . The system of  claim 129 , in which the trading platform further receives:
 a third order from a third market maker terminal, in which the third order matches the first order.   
     
     
         138 . The system of  137 , in which the trading module determines that the third market maker belongs to a category in which a match is permissible; and
 in response to the determination, the trading module triggers a command to execute a trade between the first order and the third order.   
     
     
         139 . The system of  claim 138 , in which the category comprises human traders. 
     
     
         140 . The system of  claim 137  further comprises:
 a timer that is triggered in response to receiving the third order, in which the timer expires after a period of time, 
 
     
     
         141 . The system of  claim 140 , in which the trading platform receives, before the period of time has expired, a request from the first market maker terminal to adjust the price of the first order in order to avoid executing a trade between the first order and the third order.