Method for Executing End-Piece Order

Abstract

To provide a method for executing a fractional-based buy or sell order, and a method for executing a notional-based buy order.SOLUTION: A processing unit may: receive a fractional share component of a buy or sell order; provide the fractional share component to a first queue; provide the fractional share component to a second queue upon an execution of a whole share component; and perform the buy or sell order of the fractional share component employing, in part, a fractional share database. The processing unit may: receive an estimated fractional share component of a notional-based buy order; provide the estimated fractional share component to a first queue; recalculate a quantity of the estimated fractional share component; provide the recalculated, estimated fractional share component to a second queue upon an execution of an estimated whole share component; execute a buy of fractional shares from the fractional shares database if a sufficient quantity is stored; recalculate a second estimated fractional share component; and adjust the second estimated fractional share component according to the first amount.SELECTED DRAWING: Figure 1

Description

Technical Field

[0001] Cross - Reference to Related Applications This application claims priority to U.S. Provisional Patent Application No. 62 / 456,253, filed on February 8, 2017, entitled "Fractional Shares Trading System and Method", and U.S. Provisional Patent Application No. 62 / 547,174, filed on August 18, 2017, entitled "Hybrid Facilitation Account System and Methods", both of which are incorporated herein by reference.

[0002] The present invention relates to a method of reducing exposure to fractional inventory counts in real - time and removing implicit barriers to participation in notional (i.e., currency - based) buy or sell orders for securities. The present invention further relates to a system that ensures that a client does not over - sell or over - buy when trading at notional amounts, thereby providing more efficient order handling.

Background Art

[0003] Fractional shares are shareholdings that are less than a full share. Typically, fractional shares result from stock splits, dividend reinvestment funds (DRIPs), and similar corporate activities. Ordinarily, fractional shares cannot be acquired from the market and, while valuable to investors, may be difficult to sell.

[0004] Generally, a brokerage firm must manage its fractional inventory holdings in real time to maintain an inventory that is less than what is required to satisfy all existing orders. Existing methods are not designed around micro-investing. Share orders may need to be "bunched" or purchased and held to anticipate future needs as a fractional share inventory holding. Bunching orders is an inactive form of investment, not active and real-time, and thus does not meet the requirements of best execution.

[0005] Predicting the fractional share inventory needed to satisfy a dynamic number of orders by clients based on past trading activity increases the number of "off-exchange" proprietary orders and the number of securities for which the brokerage firm needs to take a position to facilitate the execution of block trade programs on behalf of its clients. This increases the firm's trading costs and its risk exposure in the inventory account to intraday price movements.

[0006] Generally, a brokerage firm must ensure that a client's assumed order does not exceed the amount of the buy or sell requested. Trading methods and systems are not configured for real-time micro-investing and thus cause problems when attempting to split a share into fractional parts while significantly increasing the costs for the brokerage firm and its clients.

[0007] Generally, brokerage firms are unable to provide real-time allocation for managed accounts at the micro-investment level. As described above, the odd-lot trading method may require the firm to either batch orders or purchase the odd-lot shareholdings. Deviations in portfolio allocation are not easily or efficiently accounted for in portfolio allocation. For example, a client with a desired portfolio having a 70% weight on a first equity and a 30% weight on a second equity deviates from the desired weights based on market fluctuations. Generally, rebalancing occurs at the end of the day or at predetermined intervals. At that point, the portfolio is rebalanced to approach the client's desired 70 / 30 portfolio, but is not exact due to the existence of odd-lot limitations.

[0008] Generally, brokerage firms have no way of accounting for "residual odd-lots" (i.e., the remaining fractional portion of shares that cannot be allocated to sub-accounts). Existing methods may require the fractional portion to remain in the brokerage firm's owned accounts until a full share can be accumulated and cannot be adjusted at the micro level. Even in that case, there may still be a remaining new fractional portion after a full share is sold.

Summary of the Invention

Means for Solving the Problems

[0009] Embodiments of the inventive concepts disclosed herein may be directed to ways of (1) providing improved systems and management of real-time fractional inventory, (2) improving systems and methods for trading fractional shares, (3) improving systems and methods for efficiently executing fractional share trades as related to assumed orders that occur while taking into account market price movements throughout the trading life cycle, (4) improving systems and methods for allocating fractional shares to managed accounts, and (5) improving systems and methods for conducting securities transactions at assumed amounts in such a way that buy or sell orders do not exceed the amounts for which they are requested.

[0010] In one aspect, embodiments of the inventive concept disclosed herein are directed to a method of executing fractional-based buy or sell orders. When appropriately configured, a fractional processing unit (FPU) may receive the fractional portion of a buy or sell order, provide the fractional portion to a first queue, provide the fractional portion to a second queue when the unit share portion is executed, and execute the buy or sell order of the fractional portion using a fractional database, at least in part.

[0011] In a further aspect, embodiments of the inventive concept disclosed herein are directed to a method of executing assumption-based buy orders. When appropriately configured, the FPU may receive the estimated fractional portion of an assumption-based buy order, provide the estimated fractional portion to a first queue, recalculate the quantity of the estimated fractional portion, provide the recalculated estimated fractional portion to a second queue when the estimated unit share portion is executed, execute the buy of fractions from the fractional database if sufficient quantity is stored, recalculate a second estimated fractional portion, and adjust the second estimated fractional portion according to a first amount.

[0012] In a further aspect, embodiments of the inventive concept disclosed herein are directed to a method of executing assumption-based sell orders. When appropriately configured, the FPU may receive the quantity of the executed unit share portion of an assumption-based sell order, calculate a second amount of the executed unit share portion, execute a first transaction if there is an oversold condition, and execute a second transaction if there is no oversold condition.

[0013] In a further aspect, embodiments of the inventive concepts disclosed herein are directed to a method of executing odd lot trades in a managed account. When appropriately configured, an account processing unit may receive a report indicating execution of a buy or sell order for a fund or security, determine an allocation of the executed fund or security, provide a first component of the executed fund or security that can be allocated according to an allocation listing to one or more first sub-accounts, and provide a second component of the executed fund or security that cannot be accounted for (e.g., a sweep account) to one or more second sub-accounts, such that the executed fund or security within the one or more second sub-accounts becomes available for purchase by the FPU.

Brief Description of the Drawings

[0014]

Figure 1

Figure 2

Figure 3

Figure 4

Figure 5

Figure 6

Figure 7

Figure 8

Embodiments for Carrying Out the Invention

[0015] In the following description, some specific details are presented so that the embodiments of the inventive concept disclosed in the present specification can be fully understood. Of course, those skilled in the art will understand that the embodiments of the inventive concept disclosed in the present specification can be implemented without using one or more of the specific details, or can be implemented in combination with other components, etc. In other cases, well-known implementations or operations are not illustrated or described in detail in order to avoid obscuring aspects of various embodiments of the inventive concept disclosed in the present specification.

[0016] Referring to FIG. 1 below, an embodiment of a quantity-based and assumption-based order execution system 100 suitable for implementing the inventive concept described in the present specification includes a first communication unit 110, a second communication unit 120, an order gateway 130, an execution management system (EMS) 140, a fractional processing unit (FPU) 150, and a market data source 160.

[0017] The first communication unit 110 and the second communication unit 120 may include one or more communication devices / systems, and each of the one or more communication devices / systems is configured to communicate with other parts of the system 100, including but not limited to the order gateway 130, the EMS 140, and the FPU 150, and is respectively used by the first and second participants. In some embodiments, the first and second participants can include, but are not limited to, individuals, enterprises, over-the-counter brokers who execute on the agency side of unit shares, and / or other financial institutions. Note that FIG. 1 shows a single first communication unit 110 of the first participant and a single second communication unit 120 of the second participant, but these can respectively represent two or more communication units of two or more participants having different positions. That is, the first communication unit 110 communicably coupled to the order gateway 130 and the first communication unit 110 communicably coupled to the EMS 140, as well as the second communication unit 120 communicably coupled to the order gateway 130 and the second communication unit 120 communicably coupled to the FPU 150, may be respectively owned and / or operated by different first and second participants having different positions.

[0018] The order gateway module 130 may include any module configured to receive quantity-based and / or assumption-based requests including buy and / or sell orders. In some embodiments, quantity-based orders can include orders for integer shares (e.g., 1 share, 50 shares, 200 shares, etc.), and fractional-based orders can include orders consisting of an integer part and a fractional part (e.g., 1.5000 shares, 50.6667 shares, 200.0001 shares, etc.). In some embodiments, assumption-based orders can be assumed to be presented at an assumed price (e.g., securities worth $500.00 USD (United States dollars)).

[0019] The order gateway module 130 will be able to function as the primary risk manager for all order types. In some embodiments, the order gateway module 130 will be able to execute a series of risk queries and checks based on various inputs and risk thresholds set by the broker firm. In some embodiments, the order gateway module 130 can be configured with a smart order routing system that determines whether to (a) reject the trade based on the risk management result and return a response to the first participant, (b) directly transfer the request to a second participant for execution, or (c) transfer the request to the FPU 150.

[0020] Refer to FIG. 2 below. The order gateway module 130 may include an order queue 132, a risk checker 134, and a partial router 136. The order queue 132 may be configured to initiate an onboarding process by receiving one or more orders provided by the first communication unit 110. The order queue 132 may be configured to process any or all of these orders in a first-in, first-out (FIFO) manner. In some embodiments, these orders may include quantity-based buy orders, quantity-based sell orders, assumption-based buy orders, and / or assumption-based sell orders. Once received, the order may be provided to a risk checker 134 that subjects the order to one or more internal risk checks.

[0021] The risk checker 134 may include a module configured to subject the order to a risk management plan that includes one or more internal risk checks. In some embodiments, the internal risk checks may include "account rules", "customer profile information", "approved securities list", and / or "conversion of assumed value and estimated quantity".

[0022] "Account rules" could include rules based on the types of accounts and permitted activities from a regulatory perspective. As an example, the rules could prohibit "short" trades from being executed in an individual retirement account (IRA).

[0023] "Customer profile information" could include information obtained from an internal database during the account onboarding process. In some embodiments, the customer profile information could be incorporated into a risk-based check to evaluate, for example, whether there is sufficient purchasing power in the account to execute the intended transaction.

[0024] "Approved securities list" could include the benchmark securities approved for trading on the trading platform. The list could be changed based on the counterparty, and some counterparties may only be able to offer a limited subset of the total number of securities included in the approved securities list.

[0025] "Conversion of assumed value and estimated quantity" could include instructions to convert an assumption-based order into an estimated number of shares and use that calculation to determine whether there are sufficient funds in the account. In some embodiments, real-time prices provided by the market data source 160 and / or NBBO (National Best Bid or Offer) prices may be used for the estimation.

[0026] The partial router 136 can include a module configured with instructions to discern whether an order should be rejected or permitted and present it for later execution. In some embodiments, the partial router 136 can report the rejection of an order to the EMS 140 (e.g., an unfavorable risk management result), and the EMS 140 can then report the rejection of the order to the first communication unit 110. In some embodiments, the fractional share quantity of a price-based order can be split into a unit share portion and a fractional share portion, and the unit share portion and the fractional share portion can be routed / provided to the second market participant 120 for agency execution and to the FPU 150 for principal execution, respectively. Agency transactions and principal transactions are trading methods well known to those skilled in the art. In some embodiments, the estimated share quantity of an assumption-based order can be split into an estimated unit share portion and an estimated fractional share portion, and the estimated unit share portion and the estimated fractional share portion can be routed / provided to the second market participant 120 and the FPU 150, respectively.

[0027] Referring back to FIG. 1, the EMS 140 may be configured to provide a report to the first communication unit 110. In some embodiments, the EMS 140 may be configured to receive responses provided by the order gateway module 130, the second participant 120, and / or the FPU 150.

[0028] Refer to FIG. 3 below. The FPU 150 may include a pending queue 152, an in-progress queue 154, a fractional balance 156, and / or a stub database 158. The FPU 150 may be configured as a primary engine that executes instructions for fractional trading. The FPU 150 and / or the APU (account processing unit) 510 (described later) may include any electronic data processing unit that executes software or computer instruction codes that can be permanently or temporarily stored in a digital memory storage device or a non-transitory computer-readable medium, including but not limited to random access memory (RAM), read-only memory (ROM), compact disc (CD), hard disk drive, floppy disk, solid state memory, secure digital card, and compact flash card. The FPU 150 and / or the APU 510 may be driven by the execution of software or computer instruction codes including algorithms developed for specific functions embodied in this specification. The FPU 150 and / or the APU 510 may be an application-specific integrated circuit (ASIC) customized for the embodiments disclosed in this specification. General examples of electronic data processing units are microprocessors, digital signal processors (DSPs), programmable logic devices (PLDs), programmable gate arrays (PGAs), and signal generators, but for the embodiments of this specification, the term "processor" is not limited to such processing units and is not intended to be construed narrowly. By way of example, the FPU 150 and / or the APU 510 may further include two or more electronic data processing units.In some embodiments, the FPU 150 and / or the APU 510 can be a processor(s) used by or in conjunction with any other system, including but not limited to the order gateway module 130, the EMS 140, and / or the managed account system 500 (described below).

[0029] In some embodiments, the terms "programmed" and "configured" are synonyms. The FPU 150 and / or the APU 510 may be electronically and / or communicatively coupled to a system and / or source to facilitate receipt of input data. In some embodiments, being operably coupled may be considered interchangeable with being electronically coupled. A direct connection is not required; instead, such receipt of input data and provision of output data can be provided as signals received and / or transmitted by the FPU 150 and / or the APU 510 via a bus, via a wireless network, or via a physical or virtual computer port. The FPU 150 and / or the APU 510 may be programmed or configured to perform the methods described in detail below. In some embodiments, the FPU 150 may be programmed or configured to receive data from various systems and / or units including but not limited to the second participant 120 and / or the market data source 160, and the APU 510 may be programmed or configured to receive data from various systems and / or units including but not limited to the EMS 140.

[0030] Referring again to FIG. 3, the hold queue 152 may be configured to receive one or more stub portions, including but not limited to stub portions and presumed stub portions, from the order gateway module 130. In some embodiments, the hold queue 152 may be configured to provide one stub portion to the in-progress queue 154. In some embodiments, the one stub portion could be located at the head of the queue if the hold queue 152 is configured to process stub portions in a FIFO manner.

[0031] The in-progress queue 154 could be configured to receive stub portions from the hold queue 152. In some embodiments, the stub portions within the in-progress queue 154 could be executed by the fractional balancer 156 as disclosed in detail below by way of example.

[0032] The fractional balancer 156 may be a module configured to execute stub portions (singular or plural) in a principal manner. In some embodiments, the fractional balancer 156 could be configured using parameters imposed by the user that may include controls to adjust and set inventory risk exposure. Substantially, the user may choose to hold a particular security in excess of one share in the stub database 158. This could enable the FPU 150 to trade more efficiently during high demand periods. The basis is to hold less than the amount required to execute current orders. Based on this parameter, the fractional balancer 156 may buy or sell shares held in the stub database 158.

[0033] Refer again to FIG. 1. Market data source 160 can include any source of market data representing a real-time market feed. Both order gateway 130 and FPU 150 can use the National Best Bid and Offer (NBBO) price feed when performing their respective functions to comply with the requirements of the Regulation National Market System (RegNMS) and / or any regulatory agency. RegNMS is a financial regulation promulgated and expressed in the United States (US) by the Securities and Exchange Commission (SEC) as a "series of initiatives designed to modernize and enhance the NMS for stocks." RegNMS is intended to ensure that investors receive execution at a discretionary price for their orders by promoting competition in the market.

[0034] Refer to FIGS. 4-6 below. Flowcharts 200-400 disclose examples of ways to execute fractional and / or assumption-based trading, and FPU 150 may be programmed or configured using instructions corresponding to the modules embodied in the flowcharts. In some embodiments, FPU 150 may be a processor or combination of processors, such as, by way of example, order gateway module 130 and / or EMS 140, or any other system suitable for performing tasks. Further, FPU 150 may be a processor of a module, such as, but not limited to, a printed circuit card having one or more input interfaces to facilitate two-way data communication of FPU 150, i.e., receipt and provision of data. As needed to implement the following modules embodied in the flowcharts, obtaining data is synonymous with and / or interchangeable with receiving and / or reading data, and providing data is synonymous with and / or interchangeable with making data available or supplying data.

[0035] FIG. 4 shows a flowchart 200 that discloses an example of a method for executing a fractional - based buy or sell order, and the FPU 150 may be programmed or configured using instructions corresponding to the modules embodied in the flowchart 200. The method of flowchart 200 starts at module 202 where the FPU 150 receives the fractional share portion provided by the order gateway module 130. In some embodiments, the first communication unit 110 may provide a fractional - based buy or sell order originating from a first participant to the order gateway module 130, and as a result, the order gateway module 130 may separate the order quantity into a fractional share portion and a corresponding unit - share portion, where the latter is provided to the second communication unit 120 for buy or sell execution of the unit - share portion in an agency manner by a second participant.

[0036] The method of flowchart 200 proceeds to module 204 where the FPU 150 provides the fractional share portion to the hold queue 152. In some embodiments, if the hold queue 152 is already populated with other fractional share portions received from previous orders, the FIFO method is applied to the hold queue 152 and the fractional share portion may be placed at the end of the hold queue 152.

[0037] The method of flowchart 200 proceeds to module 206 where the FPU 150 provides the fractional share portion to the in - progress queue 154 after the corresponding unit - share portion of the fractional share portion has been executed by the second communication unit 120 at a first price and / or after a first report regarding the execution has been generated and distributed to the first participant via the first communication unit 110 and provided to the EMS 140 for such distribution. The first price may be provided to the FPU 150. In some embodiments, the in - progress queue 154 may receive the fractional share portion when the fractional share portion reaches the head of the hold queue after a previous fractional share portion has been processed by the in - progress queue 154.

[0038] The method of flowchart 200 proceeds to module 208 or module 214 depending on whether the order is a buy order or a sell order. In the case of a buy order, the method of flowchart 200 proceeds to module 208, and in the case of a sell order, the method of flowchart 200 proceeds to module 214.

[0039] Upon proceeding to module 208, the fractional balance 156 may determine whether the fractional database 158 has a sufficient quantity to process the quantity of the fractional portion within the ongoing queue 154.

[0040] If there is a sufficient quantity, the method of flowchart 200 proceeds to module 210 where the fractional balance 156 executes the fractional portion at a first price. In some embodiments, the execution may be at the real-time NBBO (i.e., a second price) if there is price improvement (i.e., the NBBO price is lower than the first price). Next, the method of flowchart 200 moves to module 216.

[0041] If there is not a sufficient quantity, the method of flowchart 200 proceeds to module 212 where the fractional balance 156 determines the quantity of shares to buy from the market, receives the shares, and stores the shares in the fractional database 158. In some embodiments, the quantity of shares may be determined by summing the quantities in both the ongoing queue 154 and the pending queue 152. Next, the method of flowchart 200 moves to module 210.

[0042] Proceeding from module 206, the method of flowchart 200 proceeds to module 214 where the fractional balance 156 executes the fractional portion at a first price or, if there is improvement, at a second price.

[0043] The method of flowchart 200 proceeds to module 216 where the fractional balance 156 generates a second report regarding the execution of the odd lot portion. In some embodiments, the second report may be generated by the fractional balance 156 and provided to the EMS 140 so as to be later distributed to the first participant via the first communication unit 110. Next, the method of flowchart 200 ends.

[0044] FIG. 5 shows a flowchart 300 that discloses an example of a method for executing an assumption-based buy order, and the FPU 150 may be programmed or configured using instructions corresponding to the modules embodied in flowchart 300. The method of flowchart 300 begins at module 302 where the FPU 150 receives a first estimated odd lot portion provided by the order gateway module 130. In some embodiments, the first communication unit 110 may have provided the order gateway module 130 with an assumption-based buy order originating from the first participant, and as a result, the order gateway module 130 may have calculated the estimated quantity of the order and converted the estimated quantity into the first estimated odd lot portion and the corresponding estimated unit lot portion, the latter of which is provided to the second communication unit 120 for the sell execution of the estimated unit lot portion by the second participant.

[0045] The method of flowchart 300 proceeds to module 304 where the FPU 150 provides the first estimated odd lot portion to the hold queue 152. In some embodiments, if the hold queue 152 is already populated with other odd lot portions received from previous orders, the FIFO method is applied to the hold queue 152 and the first estimated odd lot portion may be placed at the end of the hold queue 152.

[0046] The method of flowchart 300 proceeds to module 306 where the FPU 150 recalculates the quantity of the first estimated stub portion after the corresponding estimated unit share portion of the stub portion has been executed by the second communication unit 120 at the first price and / or after a first report regarding the execution has been generated and distributed to the first participant via the first communication unit 110 and provided to the EMS 140. The first price may be provided to the FPU 150. In some embodiments, the recalculation may be performed at the real-time NBBO (i.e., the second price). In some embodiments, the recalculation may be performed when the estimated stub portion reaches the head of the hold queue 152 after the preceding stub portion has been processed by the in-progress queue 154.

[0047] The method of flowchart 300 proceeds to module 308 where the FPU 150 provides a second stub portion consisting of the recalculated quantity to the in-progress queue 154.

[0048] The method of flowchart 300 proceeds to module 310 where the fractional share balancer 156 determines whether the share database 158 has a quantity sufficient to process the quantity of the second stub portion in the in-progress queue 154.

[0049] If there is sufficient quantity, the method of flowchart 300 proceeds to module 312 where the fractional share balancer 156 executes the second stub portion at the first price or, if there is an improvement, at the real-time NBBO. Next, the method of flowchart 300 moves to module 316.

[0050] If there is insufficient quantity, the method of flowchart 300 proceeds to module 314 where the fractional share balancer 156 determines the quantity of shares (single or plural) to buy from the market, receives the shares (single or plural), and stores the shares (single or plural) in the share database 158. In some embodiments, the quantity of shares (single or plural) may be determined by summing the quantities in both the in-progress queue 154 and the hold queue 152. Next, the method of flowchart 300 moves to module 312.

[0051] Proceeding from module 312, the method of flowchart 300 proceeds to module 316 where the fractional balance 156 determines the amount of the second odd lot portion to be executed in module 312. In some embodiments, an adjustment factor may be determined if the amount is greater than the amount of the assumed-based buy order, and in such a case, to prevent over-buying, the amount of the second odd lot portion may be made equal to or slightly less than the amount of the assumed-based buy order by reducing the number of shares.

[0052] The method of flowchart 300 proceeds to module 318 where the fractional balance 156 generates a second report regarding the execution of the first estimated odd lot portion of module 302. In some embodiments, the second report may be generated by the fractional balance 156 and provided to the EMS 140 to be later distributed to the first participant via the first communication unit 110. Next, the method of flowchart 300 ends.

[0053] FIG. 6 shows a flowchart 400 that discloses an example of a method for executing an assumed-based sell order, and the FPU 150 may be programmed or configured using instructions corresponding to the modules embodied in flowchart 400. The method of flowchart 400 begins with module 402 where the FPU 150 receives the quantity of executed unit share portions provided by the order gateway module 130, and the executed unit share portions may be the quantity of unit share portions resulting from the conversion of an assumed-based sell order of the amount received via the first communication unit 110 and provided to the second communication unit 120 for execution at a first price.

[0054] The method of flowchart 400 proceeds to module 404 where the FPU 150 calculates the amount of the executed unit share portions. In some embodiments, the calculation may be performed at the real-time NBBO (i.e., the second price).

[0055] The method of flowchart 400 proceeds to module 406 where the FPU 150 determines whether the assumed-based sell order has been over-sold. In some embodiments, an over-sold condition may occur when the amount of the executed unit share portion exceeds the amount of the assumed-based sell order.

[0056] If an over-sold condition exists, the method of flowchart 400 proceeds to module 408 where the fractional balance 156 provides the quantity of the executed unit share portion corresponding to the over-sold amount to the odd-lot database 158. Next, the method of flowchart 400 moves to module 418.

[0057] If no over-sold condition exists, the method of flowchart 400 proceeds to module 410 where the fractional balance 156 recalculates the quantity of shares (singular or plural) corresponding to the difference between the amount of the assumed-based sell order and the calculated amount of the executed unit share portion. In some embodiments, the calculation may be performed at the real-time NBBO (i.e., the third price).

[0058] The method of flowchart 400 proceeds to module 412 where the fractional balance 156 determines whether the recalculated quantity of shares (singular or plural) meets the minimum quantity required for execution.

[0059] If the minimum quantity is met, the method of flowchart 400 proceeds to module 414 where the fractional balance 156 executes the sale of the recalculated quantity of shares (singular or plural) at the third price. Next, the method of flowchart 400 moves to module 418.

[0060] If the minimum quantity is not met, the method of flowchart 400 proceeds to module 416 where the fractional balance 156 cancels the execution for the recalculated quantity of shares (singular or plural) and returns the amount corresponding to the recalculated quantity of shares (singular or plural) to the EMS 140.

[0061] The method of flowchart 400 proceeds to module 418 where the fractional balance 156 generates a report regarding an execution performed in module 408 or 414 or a cancellation performed in module 416. In some embodiments, the report may be generated by the fractional balance 156 and provided to the EMS 140 to be later delivered to the first participant via the first communication unit 110. Next, the method of flowchart 400 ends.

[0062] Referring now to FIG. 7, a managed account system (MAS) 500 can be an account of individuals and / or entities, including but not limited to registered investment advisors (RIAs), and may include an account processing unit (APU) 510 communicatively coupled to an order gateway 130 and / or EMS 140, a trading advisor account 520, an allocation listing 530, a sub-account 540, and a sweep account 550. In some embodiments, the MAS 500 may be used by a first participant that owns and / or operates a first communication unit 110 communicatively coupled to the order gateway 130, the EMS 140, and / or the FPU 150 as shown in the figure.

[0063] The trading advisor account 520 may be a module configured to calculate the total amount of funds and / or securities available for trading by the sub-account 540. An individual and / or entity may generate an order in the trading advisor account 520. In some embodiments, the order may be a quantity-based order. In some embodiments, the order may be an assumption-based order. The trading advisor account 520 may be configured to provide the order to the order gateway 130 after the order is generated. The trading advisor account 520 may be configured to receive an execution report provided by the EMS 140 after the order is executed.

[0064] The allocation listing 530 may include a module configured to notify the trading advisor account 520 as to which of the sub-accounts 540 the fractional allocable funds and / or securities are allocated. The sub-account 540 may include a module configured to receive the allocable and fractional allocable funds and / or securities.

[0065] The sweep account 550 may include a module configured to receive the non-allocation or non-fractional allocable funds and / or securities. In some embodiments, the FPU 150 may be configured to buy or sell the fractional portions of the funds and / or securities from the sweep account 550 to reconcile the account. In some embodiments, these fractional portions may be bought or sold at scheduled intervals (e.g., at the end of the trading day, before the trading day begins, etc.), thereby reducing the fractional balance held in the sweep account 550 of the individual and / or entity to zero. Currently, companies do not have the ability to do this at the micro level and can only do this when complete shares have accumulated, but even then, there is a high likelihood that some fractional portions will remain.

[0066] FIG. 8 shows a flowchart 600 that discloses an example of a method for executing odd-lot trading, and the APU 510 may be programmed or configured using instructions corresponding to the modules embodied in the flowchart 600. The method of flowchart 600 is executed in response to a trading order being input to the communication unit of the order gateway 130 by the trading advisor account 520 for execution, and the trading advisor account 520 receives from the communication unit of the EMS 140 a report detailing the quantity of the executed funds and / or securities and the average price of the execution, starting with module 602. In some embodiments, the order may include a fractional-based buy or sell order, an assumption-based buy order, and / or an assumption-based sell order. In some embodiments, the communication units of the order gateway 130 and the EMS 140 may be the same unit. In some embodiments, the communication units of the order gateway 130 and the EMS 140 may be different units.

[0067] The method of flowchart 600 proceeds to module 604 where the APU 510 determines whether the funds and / or securities can be fractionally allocated, and if so, the funds and / or securities are allocated to the sub-account 540 based on the allocation listing 530. If there is a sufficient quantity of funds and / or securities that can be fractionally allocated by the FPU 150, the fractionally allocable component may be allocated to the sub-account 540, otherwise, the non-fractionally allocable component may be provided to the sweep account 550 as "residual odd-lots". For the fractionally allocable component, the method of flowchart 600 then proceeds to module 606 where the APU 510 provides the component of the funds and / or securities to the sub-account 540. For the non-fractionally allocable component, the method of flowchart 600 then proceeds to module 608 where the APU 510 provides the funds and / or securities to the sweep account 550, at which point the funds and / or securities become available for settlement by the FPU 150.

[0068] For purposes of illustration and not limitation, assume that a first participant (e.g., RIA) has four sub - accounts 540, each having an equal amount of funds available for trading. Assume that for the four accounts, hypothetical - based buy orders are submitted to order gateway 130 and, in response, a report indicating a quantity of 16.0019 shares is received in module 602. Assume that allocation listing 530 instructs a 100 percent allocation to each account and that FPU150 is configured to provide the smallest divisible share quantity of one ten - thousandth (or four decimal places). Then APU510 may allocate a quantity of 4.004 shares (i.e., a quantity that can be evenly distributed) to sub - accounts 540, and each of the four sub - accounts may receive 1.0001 shares. The remaining quantity of shares in the amount of 0.0003 shares (16.0019 - 16.0004) may not be evenly distributable to the smallest divisible share quantity according to the instructions of APU510, and thus, APU510 may provide this residual odd - lot to sweep account 550.

[0069] The method of flowchart 600 proceeds to module 610 where APU150 may buy the residual odd - lots within sweep account 550 and sell them to FPU150 which may be configured to clear sweep account 550. In the previous description, FPU150 would be able to purchase a quantity of 0.0003 shares. In some embodiments, this may be executed at scheduled intervals. In some embodiments, the buying and / or selling of residual odd - lots would increase and / or decrease the quantity of odd - lots in odd - lot database 158, respectively. Next, the method of flowchart 600 ends.

[0070] Each step of the method described above may be embodied in computer instruction code stored in a non-transitory computer-readable medium. The method may include one or more of the steps described in the specification, and the one or more steps may be executed in any desired order, including being executed simultaneously with each other. By way of example, two or more of the steps disclosed in the specification of the present application may be combined into a single step, and / or one or more of the steps may be executed as two or more sub-steps. Further, it will be natural for those skilled in the art having the benefit of the present disclosure that steps not explicitly disclosed or essentially non-existent in the specification of the present application may be incorporated into or added to the steps described in the specification of the present application, or may be replaced with one or more of the steps described in the specification of the present application.

[0071] As used in the specification of the present application, the term "embodiment" means an embodiment that serves to illustrate rather than limit.

[0072] It will be natural for those skilled in the art that the foregoing examples and embodiments are illustrative and not limitations on the broad scope of the inventive concept disclosed in the specification of the present application. All changes, substitutions, extensions, equivalents, and improvements thereto that will become apparent to those skilled in the art upon reading this specification and examining the drawings are intended to be included within the broad scope of the inventive concept disclosed in the specification of the present application. Accordingly, the appended claims are intended to cover all such changes, substitutions, extensions, equivalents, and improvements that fall within the broad scope of the inventive concept disclosed in the specification of the present application.

[0073] The present application discloses various implementations, and in particular, discloses the implementations shown in the following (1)-(32). (1) A method of executing a fractional-based buy or sell order, receiving, by a processing unit including at least one processor communicatively coupled to a non-transitory processor-readable medium storing code executable by the processor, the fractional portion of a buy or sell order consisting of odd-lot shares; providing the end-stock portion to a first queue; after a unit-stock portion of the buy or sell order corresponding to the end-stock portion is executed at a certain price, providing the end-stock portion to a second queue; in the case of a buy order, determining whether a sufficient quantity of end-stocks is stored in the end-stock database, and if a sufficient quantity exists, buying the end-stocks for the end-stock portion in the second queue from the end-stock database; performing a first transaction comprising: in the case of a sell order, selling the end-stocks for the end-stock portion in the second queue to the end-stock database performing a second transaction comprising: generating a report when the first transaction or the second transaction is completed; A method comprising:

[0074] (2) The buy or sell order is provided through a first communication unit of a first participant, The execution of the unit-stock portion is reported through a second communication unit of a second participant. The method according to (1).

[0075] (3) The step of buying the end-stocks is executed at the price at which the unit-stock portion is executed or, if there is an improvement in the price, at the real-time price. The method according to (1).

[0076] (4) The first transaction further comprises, if a sufficient quantity does not exist, determining the quantity of the stock portion to be purchased; purchasing the quantity of the stock portion; storing the purchased quantity of the stock portion in the end-stock database; executing the purchase of the end-stocks for the end-stock portion in the second queue from the end-stock database; and The method according to (1), comprising

[0077] (5) The method according to (4), wherein the quantity of the stock portion to be purchased is determined according to the quantity of the end stock portion in the first queue and the quantity of the stocks in the second queue.

[0078] (6) The method according to (4), wherein the purchase of the end stocks is executed at the price at which the unit stock portion was executed, or at the real-time price if there is an improvement in the price.

[0079] (7) The method according to (1), wherein the report is included in a buy or sell order report provided to the first communication unit of the first participant.

[0080] (8) The method according to (1), further comprising the step of purchasing at least one end stock of the sweep account from a managed account system used by the first participant and including an account processing unit The method according to (1), further comprising

[0081] (9) The method according to (8), wherein the account processing unit is configured to execute a method for executing an end stock transaction.

[0082] (10) A method for executing an assumed-based buy order, comprising: Receiving, by a processing unit including at least one processor communicatively coupled to a non-transitory processor-readable medium storing code executable by the processor, a first estimated end stock portion of an assumed-based buy order having a first amount, wherein The first estimated end stock portion consists of a calculated quantity, the receiving step; Providing the first estimated end stock portion to a first queue; Recalculating the calculated quantity of the estimated end stock portion; After the trading of the estimated unit share portion of the assumed-base buy order is executed, providing a second estimated odd-lot portion consisting of the recalculated quantity to a second queue; Determining whether a sufficient quantity of odd-lots is stored in the odd-lot database; If a sufficient quantity is stored, executing a buy of odd-lots from the odd-lot database; Determining a second amount of the second estimated odd-lot portion; Adjusting the second estimated odd-lot portion according to the first amount; Generating a report when the execution of the buy of odd-lots is completed; A method comprising the above.

[0083] (11) The assumed-base buy order is provided through a first communication unit of a first participant, The execution of the unit share portion is reported through a second communication unit of a second participant, the method according to (10).

[0084] (12) The quantity of the estimated odd-lot portion is recalculated according to the first amount and the real-time price, the method according to (10).

[0085] (13) The method further comprises, If there is not a sufficient quantity, determining the quantity of shares to purchase; Purchasing the quantity of shares; Before the execution of the buy of odd-lots, storing the quantity of shares purchased in the odd-lot database; The method according to (10) further comprising the above.

[0086] (14) The quantity of shares to purchase is determined according to the quantity of odd-lots in the first queue and the quantity of shares in the second queue, the method according to (13).

[0087] (15) The purchase of the stub shares is the method according to (13), where the unit share portion is executed at the price at which it was executed, or in the case of price improvement, at the real-time price.

[0088] (16) The method according to (10), where the report is included in a hypothetical-based buy order report provided to the first communication unit of the first participant.

[0089] (17) The step of purchasing at least one stub share of a sweep account from a managed account system used by a first participant and including an account processing unit further comprising the method according to (10).

[0090] (18) The method according to (17), where the account processing unit is configured to execute a method for executing stub share transactions.

[0091] (19) A method for executing a hypothetical-based sell order, comprising: receiving, by a processing unit including at least one processor communicatively coupled to a non-transitory processor-readable medium storing code executable by the processor, the quantity of the executed unit share portion of a hypothetical-based sell order having a first amount; calculating a second amount of the executed unit share portion; determining whether there is an oversold condition for the hypothetical-based sell order; if there is an oversold condition, providing, to a stub share database, the quantity of the executed unit share portion corresponding to the oversold amount and performing a first transaction consisting of: if there is no oversold condition, calculating the quantity of shares corresponding to the difference between the first amount and the second amount; performing the execution if the calculated quantity meets the minimum quantity for execution; and If the calculated quantity does not meet the minimum quantity for execution, cancel the execution step. Execute a second transaction consisting of A method including

[0092] (20) The method according to (19), wherein the assumed-based sell order is provided through a participant's communication unit.

[0093] (21) The method according to (19), wherein the calculation of the second amount is executed according to real-time prices.

[0094] (22) The method according to (19), wherein the existence of the oversold state is determined according to the first amount and the second amount.

[0095] (23) The method according to (19), wherein the calculation of the second transaction is executed according to real-time prices.

[0096] (24) The method Further includes the step of generating a report when the first transaction or the second transaction is completed, As a result, (24) The method according to (19), wherein the report is included in an assumed-based sell order report provided to the first communication unit of the first participant.

[0097] (25) The method Further includes the step of purchasing at least one odd lot of the sweep account from a managed account system including an account processing unit used by a first participant, The method according to (24).

[0098] (26) The method according to (25), wherein the account processing unit is configured to execute a method of executing an odd lot transaction.

[0099] (27) A method of executing an odd lot transaction, Receiving, by a first processing unit including at least one processor communicatively coupled to a non-transitory processor-readable medium storing processor-executable code, a report from a first communication unit to a second communication unit indicating execution of a buy or sell order for a fund or security provided by the first processing unit; Determining whether a component of the executed fund or security is divisible; Allocating at least one first divisible component to at least one first sub-account; If there is a second non-divisible component, providing the second component to at least one second sub-account, such that the fund or security in at least one second sub-account is made available for settlement by a second processing unit; A method comprising.

[0100] (28) The method according to (27), wherein the first communication unit and the second communication unit are the same communication unit.

[0101] (29) The method according to (27), wherein the determination is made according to the quantity of the smallest divisible share.

[0102] (30) The method according to (27), wherein the second processing unit is a fractional processing unit configured to purchase the fund or security in at least one second sub-account.

[0103] (31) The method according to (30), wherein the fractional processing unit is configured to execute at least one of a method of executing a fractional buy or sell order, a method of executing an assumed buy order, and a method of executing a odd-lot transaction.

[0104] (32) The method according to (31), wherein the funds or securities of at least one second sub-account are purchased at scheduled intervals.

Claims

1. 1. A method of executing a notional sell order, comprising: receiving, by at least one processor communicatively coupled to a non-transitory processor-readable medium having processor-executable code stored thereon, a quantity of an executed lot portion of a notional sell order having a first amount; calculating, by the at least one processor, a second amount of the executed lot portion; determining, by the at least one processor, a calculated quantity of shares representing a difference between the first amount and the second amount; executing the notional sell order with a fractional balancer based on user-imposed parameters if the calculated quantity meets a minimum quantity for execution, the at least one processor executing the notional sell order based on a fractional balancer based on user-imposed parameters, the user-imposed parameters including controls to adjust and set inventory risk exposure, the user-imposed parameters being associated with a fractional share database that holds less than the basis of a particular security and less than the amount used to execute the current order; canceling, by the at least one processor, the execution if the calculated quantity does not meet a minimum quantity for execution; The method includes:

2. The method of claim 1 , wherein the notional sell order is submitted at a notional value of the security.

3. The method of claim 1 , wherein the calculation of the second amount is performed in response to real-time prices.

4. 2. The method of claim 1, wherein the execution is performed if an oversold condition does not exist, and wherein the oversold condition is determined as a function of the first amount and the second amount.

5. The method of claim 1 , wherein the execution is performed in response to real-time prices.

6. The method comprises: generating, by the at least one processor, a report once the execution is complete, the report being included in a notional sell order report provided to a participant's communication unit; The method of claim 1 further comprising:

7. The method comprises: purchasing, by the at least one processor, at least one fractional share of a cleanup account from a managed account system used by a participant and including an account processing unit; The method of claim 1 further comprising:

8. The method of claim 7 , wherein the account processing unit is configured to perform a method for executing odd lot trades.

9. 1. A method of executing a notional sell order, comprising: receiving, by at least one processor communicatively coupled to a non-transitory processor-readable medium having processor-executable code stored thereon, a quantity of an executed lot portion of a notional sell order having a first amount; calculating, by the at least one processor, a second amount of the executed lot portion; determining, by the at least one processor, whether an oversold condition exists for the notional sell order; If there is no oversold condition, determining, by the at least one processor, a calculated quantity of shares representing a difference between the first amount and the second amount; executing, by the at least one processor, the notional sell order with a fractional balancer based on user-imposed parameters if the calculated quantity meets a minimum quantity for execution, wherein the user-imposed parameters are determined to select keeping less than the basis of a particular security in a fractional share database and less than that used to execute current orders; and canceling, by the at least one processor, the execution if the calculated quantity does not meet a minimum quantity for execution; executing, by said at least one processor, a transaction comprising: The method includes:

10. The method of claim 9 , wherein the notional sell order is provided through a communication unit of a participant.

11. The method of claim 9 , wherein the calculation of the second amount is performed in response to real-time prices.

12. The method comprises: generating, by the at least one processor, a report once the execution is complete, the report being included in a notional sell order report provided to a participant's communication unit; The method of claim 9 further comprising:

13. The method comprises: purchasing, by the at least one processor, at least one fractional share of a cleanup account from a managed account system used by a participant and including an account processing unit; The method of claim 9 further comprising:

14. The method of claim 13 , wherein the account processing unit is configured to perform a method for executing odd lot transactions.

15. one or more memories; one or more processors communicatively coupled to the one or more memories storing processor-executable code; wherein, when executing the processor-executable code, the one or more processors: receiving an executed unit share quantity of a notional sell order having a first amount; calculating a second amount of the executed unit share portion; Based on the first state, providing the amount of the executed share lot corresponding to the oversold amount to a fractional share database; executing a first transaction comprising: Based on the second state, calculating a quantity of shares representing the difference between said first amount and said second amount; executing the notional sell order with a fractional balancer based on user-imposed parameters if the calculated quantity meets a minimum quantity for execution, the user-imposed parameters being associated with the fractional share database holding less than a basis for a particular security and less than the fraction used to execute the current order; and canceling said execution if said calculated quantity does not meet a minimum quantity for execution; and executing a second transaction comprising:

4. An apparatus configured to:

16. The apparatus of claim 15 , wherein the calculation of the second amount is performed in response to real-time prices.

17. The one or more processors: generating a report upon completion of the first transaction or the second transaction, the report being included in a notional sell order report provided to a participant's communication unit; The apparatus of claim 15 further configured to:

18. The one or more processors: Running one or more internal risk checks by a risk checker The apparatus of claim 15 further configured to:

19. 20. The apparatus of claim 18, wherein the notional sell order is submitted at a notional value of the security.

20. The apparatus of claim 15 , wherein the notional sell order is provided through a communication unit of a participant.

Images