System and method for trading options

A computerized system for trading currency options, the system comprising:

• (a) a system server;
• (i) the system server operating a protocol for entering runs of offers to sell and bids to buy options, entering offers to sell specific interest currency options and bids to buy specific interest currency options, dealing on offers to sell currency options or bids to buy currency options and improving on outstanding offers to sell currency options or bids to buy currency options by a first tier of users;
• (ii) the system server operating a protocol for entering runs of offers to sell currency options and bids to buy currency options, dealing on offers to sell currency options or bids to buy currency options and improving on offers to sell currency options or bids to buy currency options by a second tier of users, the system server operating a protocol to preclude second tier users from entering offers to sell specific interest currency options and bids to buy specific interest currency options;
• and
• (iii) the system server operating a protocol for dealing on offers to sell or bids to buy options by a third tier of users, the system server operating a protocol to preclude third tier users from entering runs of offers to sell currency options and bids to buy currency options, entering offers to sell specific interest currency options and bids to buy specific interest currency options and improving on offers to sell or bids to buy options;
• and
• (iv) the system server operating a protocol for receiving a user's quote for an offer to sell or a bid to buy an option contract, the option contract for a currency pair having a current market price, the quote previously defined in a run, and receiving a period of time defined by the user corresponding to the quote, the system server operating a protocol to withdraw the quote if the corresponding period of time expires;
• and
• (v) the system server operating a protocol for receiving a user's quote for an offer to sell or a bid to buy an option contract, the option contract for a currency pair having a current market price, the quote previously defined in a run, and receiving a defined value for the currency pair provided by the user corresponding to the quote, the system server operating a protocol to compare the user's defined value for the currency pair to the current market price for the currency pair, and withdraw the user's quote if the user's defined value for the currency pair equals the current market price for the currency pair;
• and
• (b) workstations for receiving offer and bid information on currency options from users and for displaying offer and bids information on currency options to users;
• and
• (c) a communication link that receives and transmits communications between the users of the system and the system server, including communications to users that are parties to a completed system transaction providing information concerning the completed transaction,
• wherein a run is a dealer's set of prices to buy and sell tenors for options in a particular currency pair,
• wherein the option contract is a currency option contract, and
• wherein a currency pair is a pair of currencies which trade for cash settlement among professional dealers in an inter-bank market.

A method for trading of currency option contracts on a computer system comprising:

• (a) providing by a computer system to a plurality of users offers to sell and bids to buy options, wherein the plurality of users comprises a first tier of users, a second tier of users, and a third tier of users;
• (b) receiving by the computer system from the first tier of users (i) a set of runs of offers to sell and bids to buy options and (ii) a first set of commands to deal on offers to sell or bids to buy options and (iii) a first set of improvements to offers to sell or bids to buy options;
• (c) receiving by the computer system from the second tier of users (i) a second set of commands to deal on offers to sell or bids to buy options and (ii) a second set of improvements to offers to sell or bids to buy options;
• (d) receiving by the computer system from the third tier of users a third set of commands to deal on offers to sell or bids to buy options;
• (e) receiving by the computer system a user's quote for an offer to sell or a bid to buy an option contract, the option contract for a currency pair having a current market price, the quote previously defined in a run,
• wherein the option contract is a currency option contract,
• wherein a currency pair is a pair of currencies which trade for cash settlement among professional dealers in an inter-bank market;
• (f) receiving by the computer system a period of time defined by the user corresponding to the quote;
• (g) withdrawing by the computer system the quote if the corresponding period of time expires;
• (h) receiving by the computer system a defined value for the currency pair provided by the user corresponding to the quote;
• (i) comparing by the computer system the user's defined value for the currency pair to the current market price for the currency pair;
• (j) withdrawing by the computer system the user's quote if the user's defined value for the currency pair equals the current market price for the currency pair;
• (k) engaging by the computer system in a sell or buy transaction in accordance with the first, second, or third commands to deal on offers to sell or bids to buy options;
• and
• (l) transmitting by the computer system information concerning a transaction to all users party to the transaction,
• wherein a run is a dealer's set of prices to buy and sell tenors for options in a particular currency pair.