Hybrid trading system for concurrently trading through both electronic and open-outcry trading mechanisms

A method of allocating orders for the purchase or sale of securities or derivatives in an exchange configured for trading securities or derivatives by a combination of electronic and open-outcry trading mechanisms, the method comprising:

• receiving an incoming electronic order at a trade engine;
• matching and executing the incoming electronic order against an order resting on an electronic book if the order resting on the electronic book is from a public customer;
• receiving at least one remote electronic quote at the trade engine from at least one designated primary market maker positioned at a location remote from a floor of the exchange and at least one quote from a designated primary market maker positioned on the floor of the exchange;
• determining an allocation percentage of a remainder of the incoming electronic order for allocation among designated primary market makers based on a total number of market makers at a matching price of the incoming electronic order, wherein the total number of market makers at the matching price corresponds to a predetermined collective allocation percentage for the designated primary market makers;
• and
• allocating the remainder of the electronic order among the designated primary market makers by multiplying the predetermined collective allocation percentage by the remainder and dividing a result by the total number of designated primary market makers.

An automated exchange system for the purchase or sale of securities or derivatives in an exchange configured for trading securities or derivatives comprising:

• an electronic trade engine configured for receiving incoming orders generated by a market maker physically present at a floor of an exchange or a market maker at a location remote to the floor of the exchange;
• an electronic book configured for storing the incoming orders received by the electronic trade engine;
• a database comprising an allocation algorithm, the database in communication with the electronic trade engine;
• and
• a trade processor in communication with the database for analyzing and executing orders according to an allocation algorithm selected from the database, the trade processor comprising:
• a first set of instructions for determining a total number of market makers at a matching price of the incoming electronic order;
• a second set of instructions for determining a collective allocation percentage for the designated primary market makers based on the total number of market makers at the matching price;
• and
• a third set of instructions for allocating among the designated primary market makers a portion of the incoming electronic order remaining after execution against any public customer orders based on the collective allocation percentage.