Trading with conditional offers for semi-anonymous participants

Abstract

According to one embodiment of the present invention, a method for generating conditional offers for semi-anonymous trading participants is provided. According to one embodiment of the present invention, a method comprises associating a trading entity with an identifier; acquiring trade history information including a history of trading transactions associated with said identifier; and receiving an offer from a Liquidity Provider based on said trade history information, said offer being only made to the trading entity associated with one of said identifiers.

1 .- 19 . (canceled) 
     
     
         20 . A method comprising:
 assigning a unique identifier to each of a plurality of trading entities, wherein the trading entities include liquidity providers and liquidity takers;   entering an order for a requested trade including the identifier and attributes of the order by a liquidity taker using a market order interface unit implemented at least partly in special purpose hardware and software, the market order interface being connected to an exchange having an exchange processor implemented at least partly in special purpose hardware and software;   acquiring trade history information from the market order interface unit using a trade history feed unit implemented at least partly in special purpose hardware and software at the exchange processor, the trade history information acquired including the identifier associated with a liquidity taker and a history of trading transactions by a liquidity taker associated with an identifier including information relating to past trades of the liquidity taker including prices before and after trades, wherein the exchange executes trades for trading items for fees charged to liquidity takers, and wherein a liquidity provider, and not the exchange, makes a profit from a bid/offer spread;   the exchange processor generating a profile of the liquidity taker using the trade history information, the profile being stored in a trade history profile database unit implemented at least partly in special purpose hardware and software;   determining whether future transactions associated with the liquidity taker are likely to generate a short-term profit or not for the liquidity provider using a profile analyzer that is implemented at least partly in special purpose hardware and software, wherein the profile analyzer uses data in the trade history profile database unit and one or more algorithms to compare the acquired prices of trading items at the time of execution with prices a predetermined period of time after the trade to determine if a liquidity provider is likely to have made a profit on the trade with the liquidity taker;   creating at least two categories of liquidity takers including a first category of liquidity takers for which the profile analyzer has determined that future transactions associated with the liquidity taker would likely to generate a short-term profit for a liquidity provider at a given price and a second category for which the profile analyzer has determined that future transactions associated with the liquidity taker would likely not generate a short-term profit for a liquidity provider at the given price;   a plurality of liquidity providers generating a plurality of conditional offers using an offer generator implemented at least partly in special purpose hardware and software, wherein the conditional offers include both offers to buy and offers to sell a trading item, the conditional offers being conditional on the category of the liquidity taker involved in the trade wherein separate offers for the same trading item at the same time are generated by at least one liquidity provider for trades involving liquidity takers in the first category and for trades involving liquidity takers in the second category, the conditional offers being more favorable for trades involving liquidity takers in the first category than for trades involving liquidity takers in the second category;   sending the generated offers to a trade matching system implemented at least partly in special purpose hardware and software; and   finding a best match between the orders for requested trades from liquidity takers and conditional offers from liquidity providers using the trade matching system where the category of the liquidity taker matches the category of the conditional offer, the exchange offering more favorable terms to liquidity takers in the first category than to liquidity takers in the second category, said exchange processing the requested trade by implementing a transaction between the liquidity taker and the liquidity provider for the purchase and sale of a trading item.   
     
     
         21 . The method according to  claim 20  wherein said step of acquiring trade history information comprises acquiring trade history information including a history of trading transactions that occurred within the exchange. 
     
     
         22 . The method according to  claim 21  wherein said step of acquiring trade history information comprises trade history information that is available through the exchange. 
     
     
         23 . The method according to  claim 20  wherein said step of acquiring trade history information comprises acquiring information on the prices of a trading item at a predetermined period of time after a trading transaction. 
     
     
         24 . The method according to  claim 20  further comprising transferring said trade history information to a liquidity provider. 
     
     
         25 . The method according to  claim 20  further comprising:
 the exchange allowing liquidity providers to offer financial incentives to the exchange for order flow from certain liquidity takers based on the liquidity taker's profile; and 
 the exchange compensating certain liquidity takers based on the liquidity taker's profile by lowering the fees to such liquidity takers, whereby liquidity providers can compete for more profitable order flow. 
 
     
     
         26 . The method according to  claim 25  where the financial incentives offered by the liquidity providers are selected from the group consisting of: accepting lower rebates and paying higher exchange access fees. 
     
     
         27 . The method according to  claim 20  wherein said step of generating a profile includes determining whether prices in transactions associated with the liquidity taker generally were up or down approximately one minute after the trade. 
     
     
         28 . The method according to  claim 20  wherein generating a profile further comprises:
 calculating a first variable (DIFF) equal to the execution prices of an identified liquidity taker with the prices a predetermined time later; 
 calculating a second variable (SIMPROF) equal to the average of the negative of the value of the first variable (DIFF) for the cases in which the identified liquidity taker sold and the actual value of DIFF for the cases in which the identified liquidity taker bought; and 
 determining if the transaction was profitable by determining if the second variable (SIMPROF) was positive and statistically significant. 
 
     
     
         29 . The method according to  claim 20  wherein generating a profile further comprises:
 calculating a variable (ACTPROF) equal to the actual profit that a liquidity provider earned from past transactions in which the identified liquidity taker sold or bought from the provider; and 
 determining if the transaction was profitable by determining if the variable (ACTPROF) was positive and statistically significant. 
 
     
     
         30 . The method according to  claim 20  wherein the conditional offers from the liquidity providers include offers that are selected from the group consisting of: offers to accept lower rebates for transactions involving liquidity takers in the first category, and offers to charge a lower bid/ask to spread for transactions involving liquidity takers in the first category. 
     
     
         31 . The method according to  claim 20  wherein the offers from the exchange to the liquidity takers include offers that are selected from the group consisting of: lower fees for transactions involving liquidity takers in the first category, and lower transaction prices for transactions involving liquidity takers in the first category. 
     
     
         32 . A computer program product for generating conditional offers, said computer program product comprising:
 a non-transitory computer usable medium having computer usable program code embodied therewith, said computer usable program code comprising:   computer usable program code configured to:   assign a unique identifier to each of a plurality of trading entities, wherein the trading entities include liquidity providers and liquidity takers;   enter an order for a requested trade including the identifier and attributes of the order by a liquidity taker using a market order interface unit implemented at least partly in special purpose hardware and software, the market order interface being connected to an exchange having an exchange processor implemented at least partly in special purpose hardware and software;   acquire trade history information from the market order interface unit using a trade history feed unit implemented at least partly in special purpose hardware and software at the exchange processor, the trade history information acquired including the identifier associated with a liquidity taker and a history of trading transactions by a liquidity taker associated with an identifier including information relating to past trades of the liquidity taker including prices before and after trades, wherein the exchange executes trades for trading items for fees charged to liquidity takers, and wherein a liquidity provider, and not the exchange, makes a profit from a bid/offer spread;   the exchange processor generating a profile of the liquidity taker using the trade history information, the profile being stored in a trade history profile database unit implemented at least partly in special purpose hardware and software;   determining whether future transactions associated with the liquidity taker are likely to generate a short-term profit or not for the liquidity provider using a profile analyzer that is implemented at least partly in special purpose hardware and software, wherein the profile analyzer uses data in the trade history profile database unit and one or more algorithms to compare the acquired prices of trading items at the time of execution with prices a predetermined period of time after the trade to determine if a liquidity provider is likely to have made a profit on the trade with the liquidity taker;   create at least two categories of liquidity takers including a first category of liquidity takers for which the profile analyzer has determined that future transactions associated with the liquidity taker would likely to generate a short-term profit for a liquidity provider at a given price and a second category for which the profile analyzer has determined that future transactions associated with the liquidity taker would likely not generate a short-term profit for a liquidity provider at the given price;   a plurality of liquidity providers generate a plurality of conditional offers using an offer generator implemented at least partly in special purpose hardware and software, wherein the conditional offers include both offers to buy and offers to sell, the conditional offers being conditional on the category of the liquidity taker wherein separate offers for the same trading item at the same time are generated by at least one liquidity provider for trades involving liquidity takers in the first category and for trades involving liquidity takers in the second category, the conditional offers being more favorable for trades involving liquidity takers in the first category than for trades involving liquidity takers in the second category;   send the generated offers to a trade matching system implemented at least partly in special purpose hardware and software; and   find a best match between the orders for requested trades from liquidity takers and conditional offers from liquidity providers using the trade matching system where the category of the liquidity taker matches the category of the conditional offer, the exchange offering more favorable terms to liquidity takers in the first category than to liquidity takers in the second category, said exchange processing the requested trade by implementing a transaction between the liquidity taker and the liquidity provider for the purchase and sale of a trading item.