System and Method for Assigning Responsibility for Trade Order Execution

摘要

An embodiment of the present invention provides a system and method for a sponsoring organization to: (1) utilize a rules-based computer system to capture trade orders from sub-advisors (money management firms) in order to implement a pre trade compliance review process, thereby enabling the sponsoring organization to prevent the execution of trade orders by a sub advisor that violates securities laws and/or account restrictions; and (2) determine and assign, based on expected market impact of a trade order to buy or sell securities, whether responsibility (discretion over the decisions related to how, when and with whom a trade order is executed) for executing the trade order is assigned to the money management firm for an investment portfolio or to the sponsoring organization of that portfolio. Trade orders are categorized in real-time as “high touch” (significant effort and market impact) or “low touch” (insignificant effort and market impact).

主权项

1. A computer-implemented method of trade message routing among a sponsoring organization, an asset management firm, and a plurality of trading organizations, the method comprising:
receiving messages at an execution discretion assignment engine, the messages received through a computer-based order management system, the messages each containing data corresponding to a trade order from the asset management firm, and the data incorporating data from an account of the sponsoring organization in the order management system and including data of asset name and number of asset units, wherein at least one of the order management system and the execution discretion assignment engine provides a computer-based graphical user interface and associated software program to asset management firms, wherein the order management system is in communication with a plurality of first trading organizations designated by the asset management firm, and a plurality of second trading organizations designated by the sponsoring organization, and wherein the first and second trading organizations each operate a respective soft dollar administration system that records total brokerage costs, execution costs, and soft dollar costs associated with the asset management firm; for each message, suspending, by the order management system, the trade order associated with the each message to prevent the asset management firm from routing a trade order message associated with the trade order to a trading organization until receipt of a return report message corresponding to the trade order from the execution discretion assignment engine, the return report message instructing routing of the trade order to either the plurality of first trading organizations or the plurality of second trading organizations; determining, with the execution discretion assignment engine, for each message, whether the data corresponding to the trade order indicates a low touch order expected to have low market impact or a high touch order expected to have high market impact; when the data corresponding to the trade order indicates a high touch order:
formatting, by the execution discretion assignment engine, the each message as a high touch return report message instructing routing of the high touch order to the plurality of first trading organizations,routing the high touch return report message from the execution discretion assignment engine to the order management system, allowing the order management system to discontinue the suspending of the high touch order to allow execution of the high touch order, androuting, by the order management system and based on the high touch return report message, a high touch order message associated with the high touch order to a first trading organization of the plurality of first trading organizations, for execution of the high touch order by the first trading organization, and for determination, by the soft dollar administration system of the first trading organization, of a first total brokerage cost for the high touch order for the sponsoring organization's account in the order management system based on a sum of the recorded execution and soft dollar costs associated with the asset management firm; and when the data corresponding to the trade order indicates a low touch order:
formatting, by the execution discretion assignment engine, the each message as a low touch return report message instructing routing of the low touch order to the plurality of second trading organizations,routing the low touch return report message from the execution discretion assignment engine to the order management system, allowing the order management system to discontinue the suspending of the low touch order to allow execution of the low touch order,implementing instructions, by the order management system receiving the low touch return report message, that prevent, in the absence of override instructions, routing of a low touch order message associated with the low touch order to a first trading organization of the plurality of first trading organizations, androuting, by the order management system and based on the low touch return report message, the low touch order message associated with the low touch order to a second trading organization of the plurality of second trading organizations, for execution of the low touch order by the second trading organization, and for determination, by the soft dollar administration system of the second trading organization, of a second total brokerage cost for the low touch order for the sponsoring organization's account in the order management system based on the recorded execution cost associated with the asset management firm.