System and method to instantaneously settle a securities transaction over a network

• US 20050192888A1
• Filed: 10/29/2004
• Published: 09/01/2005
• Est. Priority Date: 10/31/2003
• Status: Abandoned Application

• Current Assignee: Bill Henley, Bridget O'Flaherty, James P. Lennane, John Serences, John Swann, Kyle Shelton
• Original Assignee: Bill Henley, Bridget O'Flaherty, James P. Lennane, John Serences, John Swann, Kyle Shelton
• Inventors: Serences, John, Swann, John, Shelton, Kyle, Henley, Bill, O'Flaherty, Bridget, Lennane, James P.
• Application Number:
  US10/977,697
• Publication Number:
  US 20050192888A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 20/02 involving a neutral party, e.g. certification authority, notary or trusted third party [TTP]
• CPC Class Codes: G06Q 20/023 the neutral party being a clearing house
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 30/00 Commerce
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

Methods and apparatus for instantaneously settling the transaction of securities over a network are disclosed. In one example, the trading system holds all users'"'"' money and securities and users are only able to exchange securities within the trading system. The trading system checks the users'"'"' accounts before initiating a buy or sell order thereby facilitating the instantaneous settlement of the transaction upon matching the orders which occur within the system.

Claims

1. A method of conducting instantaneous and simultaneous settlement supporting trading of securities, the method comprising:

tracking an account of a first entity, wherein the account of the first entity includes ownership of a publicly traded security;

tracking an account of a second entity, wherein the account of the second entity includes a measure of that entity'"'"'s consideration;

facilitating a contemporaneous exchange of the first entity'"'"'s ownership of the security and the measure of the second entity'"'"'s consideration between the two entities upon agreement on price and quantity, wherein said exchange and simultaneous settlement occurs in real-time;

2. A method as defined in claim 1, wherein the first and second entities receive a trade and settlement confirmation indicating that the trade and settlement are complete in all respects.

3. A method as defined in claim 1, wherein the contemporaneous exchange does not utilize an external settlement agency.

4. A method as defined in claim 1, wherein the first entity'"'"'s ownership of the security has been verified.

5. A method as defined in claim 1, wherein the first entity'"'"'s right to offer the security is verified.

6. A method as defined in claim 1, wherein the account of the first entity contains the identification of and number of shares of the security held by the first entity.

7. A method as defined in claim 1, wherein the second entity'"'"'s consideration has been verified.

8. A method as defined in claim 1, wherein the account of the second entity contains a representation of the second entity'"'"'s consideration.

9. A method as defined in claim 1, wherein the measure of the second entity'"'"'s consideration includes immediately available transferable funds from either the second entity'"'"'s account or from another source guaranteeing immediately available transferable funds.

10. A method as defined in claim 1, wherein at least one computer stores the account of the first entity.

11. A method as defined in claim 1, wherein at least one computer stores the account of the second entity.

12. A method as defined in claim 1, wherein at least one computer stores the account of both the first and second entities.

13. A method as defined in claim 1, wherein each entity accesses its respective account over a network using a personal computer or other network connected device.

14. A method as defined in claim 1, wherein each entity accesses its respective account over a network using a securities trading system.

15. A method as defined in claim 14, wherein the securities trading system contains the account of the first entity and the account of the second entity.

16. A method as defined in claim 14, wherein one of the first entity and the second entity comprises a broker/dealer.

17. A method as defined in claim 14, wherein the securities trading system charges at least one entity an amount of money proportional to the value of the securities exchanged.

18. A method as defined in claim 14, wherein the securities trading system charges at least one entity an amount of money proportional to the value of the second entity'"'"'s consideration given in exchange for the first entity'"'"'s security.

19. A method as defined in claim 14, wherein the securities trading system charges at least one entity a fixed amount of money for each exchange of the security and currency between the first and second entities.

20. A method as defined in claim 14, wherein the securities trading system charges at least one entity a fee to use the securities trading system.

22. A method as defined in claim 1, wherein the first and second entities receive a trade and settlement confirmation indicating that the trade and settlement are complete in all respects.

37. An apparatus as defined in claim 1, wherein the first and second entities receive a trade and settlement confirmation indicating that the trade and settlement are complete in all respects.

90. A method as defined in claim 1, wherein the second entity'"'"'s consideration includes immediately available transferable funds from either the second entity'"'"'s account or from another source guaranteeing immediately available transferable funds.

91. A method as defined in claim 1, wherein the communication of the buy and sell offers occurs over a network.

92. A method as defined in claim 91, wherein the communication of the buy and sell offers occurs using a securities trading system.

21. A method of conducting instantaneous and simultaneous settlement of securities, the method comprising:

maintaining a system for holding accounts of at least a first entity and a second entity;

exchanging an security from an entity outside of the system with the account of at least one of the first and second entities;

exchanging immediately available transferable funds from an entity outside of the system with the account of at least one of the first and second entities;

facilitating a contemporaneous exchange of the security and immediately available transferable funds between the first and second entities within the system upon agreement on price and quantity, wherein said exchange between the first and second entities occurs in real-time.

23. A method as defined in claim 21, wherein the contemporaneous exchange does not utilize an external settlement agency.

24. A method as defined in claim 21, wherein the first entity'"'"'s ownership of the security has been verified.

25. A method as defined in claim 21, wherein the first entity'"'"'s right to offer the security is verified.

26. A method as defined in claim 21, wherein the account of at least one of the first and second entities contains the identification of and number of shares of the security held by each entity.

27. A method as defined in claim 21, wherein at least one computer stores the account of the first entity.

28. A method as defined in claim 21, wherein at least one computer stores the account of the second entity.

29. A method as defined in claim 21, wherein at least one computer stores the account of both the first and second entities.

30. A method as defined in claim 21, wherein each entity accesses its respective account over a network using a personal computer or other network connected device.

31. A method as defined in claim 21, wherein each entity accesses its respective account over a network using a securities trading system.

32. A method as defined in claim 31, wherein one of the first entity and the second entity comprises a broker/dealer.

33. A method as defined in claim 31, wherein the securities trading system charges at least one entity an amount of money proportional to the value of the immediately available transferable funds exchanged between the first and second entities.

34. A method as defined in claim 30, wherein the securities trading system charges at least one entity a fixed amount of money for each exchange of the security and immediately available transferable finds between the first and second entities.

35. A method as defined in claim 30, wherein the securities trading system charges at least one entity a fee to use the securities trading system.

36. An apparatus for instantaneous and simultaneous settlement supporting trading of securities, the apparatus comprising:

a tracker of an account of a first entity, wherein the account of the first entity includes a security;

a tracker of an account of a second entity, wherein the account of the second entity includes a measure of the second entity'"'"'s consideration;

a facilitator for a contemporaneous exchange of the first entity'"'"'s security and the measure of the second entity'"'"'s consideration upon agreement on price and quantity, wherein said exchange occurs in real-time.

38. An apparatus as defined in claim 36, wherein the facilitator does not utilize an external settlement agency.

39. An apparatus as defined in claim 36, wherein a verifier verifies the first entity'"'"'s ownership of the security.

40. An apparatus as defined in claim 36, wherein a verifier verifies that the first entity is allowed to offer the security for sale.

41. An apparatus as defined in claim 36, wherein the account of the first entity contains the identification of and number of shares of the security held by the first entity.

42. An apparatus as defined in claim 36, wherein a verifier verifies the second entity'"'"'s consideration.

43. An apparatus as defined in claim 36, wherein the account of the second entity contains a representation of the second entity'"'"'s consideration.

44. An apparatus as defined in claim 36, wherein the measure of the second entity'"'"'s consideration includes immediately available transferable finds from either the second entity'"'"'s account or from another source guaranteeing immediately available transferable funds.

45. An apparatus as defined in claim 36, wherein at least one computer stores the account of the first entity.

46. An apparatus as defined in claim 36, wherein at least one computer stores the account of the second entity.

47. An apparatus as defined in claim 36, wherein at least one computer stores the account of both the first and second entities.

48. An apparatus as defined in claim 36, wherein each entity accesses its respective account over a network using a personal computer or other network connected device.

49. An apparatus as defined in claim 36, wherein each entity accesses its respective account over a network using a securities trading system.

50. An apparatus as defined in claim 49, wherein one of the first entity and the second entity comprises a broker/dealer.

51. An apparatus as defined in claim 49, wherein a biller charges at least one entity a fee to use the securities trading system.

52. A machine accessible medium, storing machine readable instructions, the instructions being structured to cause an apparatus to:

present a link allowing a first entity to offer to sell at least one share of an security for value;

recognize that the link has been selected;

recognize the identification of, the number of shares of, and the value of the security offered for sale by the first entity;

receive a representation of the identification of, number of shares of, and the value of an securities selected by the first entity;

in response to receiving the representation of the identification of, number of shares of, and the value of the security selected by the first entity, verify that the first entity has an ownership interest in the selected number of shares of the selected security;

in response to verification that the first entity has an ownership interest in the selected number of shares of the selected security, display on a personal computer over a network the selected number of shares of and the value of the selected security offered for sale by the first entity;

present a link allowing a second entity to select to buy at least one share of the security offered for sale by the first entity;

recognize that the link has been selected;

recognize the number of shares selected;

receive a representation of the identification of, number of shares of, and the value of the security selected by the second entity;

in response to receiving the representation of the identification of, number of shares of, and the value of the security selected by the second entity, verify that the second entity has sufficient consideration to buy the number of shares of the security at the displayed value;

in response to verification that the second entity has sufficient consideration to buy the number of shares of the security at the displayed value, initiate the contemporaneous real-time exchange of the number of the first entity'"'"'s shares of the security selected with the second entity for an amount of the second entity'"'"'s consideration;

display the identification of and the value of the remaining number of shares of the selected security offered for sale by the first entity after removing the number of shares of the first entity'"'"'s security exchanged with the second entity;

53. The machine accessible medium as defined in claim 52, wherein first and second entities receive a trade and settlement confirmation indicating that the trade and settlement are complete in all respects.

54. The machine accessible medium as defined in claim 52, wherein the machine accessible medium does not utilize an external settlement agency.

55. The machine accessible medium as defined in claim 52, wherein the value of the security is determined by the first entity.

56. The machine accessible medium as defined in claim 52, wherein the value of the security is determined by the market price of the security.

57. The machine accessible medium as defined in claim 52, wherein the apparatus stores information regarding each entity'"'"'s consideration and rights to sell shares of securities.

58. The machine accessible medium as defined in claim 52, wherein the account of the first entity contains the identification of and number of shares of the security owned by the first entity.

59. The machine accessible medium as defined in claim 52, wherein the consideration in the account of the second entity contains the amount of the second entity'"'"'s consideration.

60. The machine accessible medium as defined in claim 52, wherein the consideration is immediately available transferable funds from either the second entity'"'"'s account or from another source guaranteeing immediately available transferable funds.

61. The machine accessible medium as defined in claim 52, wherein at least one computer stores the account of the first entity.

62. The machine accessible medium as defined in claim 52, wherein at least one computer stores the account of the second entity.

63. The machine accessible medium as defined in claim 52, wherein at least one computer stores the account of both the first and second entities.

64. The machine accessible medium as defined in claim 52, wherein each entity accesses its respective account over a network using a personal computer or other network connected device.

65. The machine accessible medium as defined in claim 52, wherein each entity accesses its respective account over a network using a securities trading system.

66. The machine accessible medium as defined in claim 65, wherein one of the first entity and the second entity comprises a broker/dealer.

67. The machine accessible medium as defined in claim 65, wherein the securities trading system charges at least one entity an amount of money proportional to the value of the consideration exchanged between the first and second entities.

68. The machine accessible medium as defined in claim 65, wherein the securities trading system charges at least one entity a fixed amount of money for each exchange of the security and consideration between the first and second entities.

69. The machine accessible medium as defined in claim 65, wherein the securities trading system charges at least one entity a fee to use the securities trading system.

70. A machine accessible medium, storing machine readable instructions, the instructions being structured to cause an apparatus to:

present a link allowing a first entity to offer to buy at least one share of an security for value;

recognize that the link has been selected;

recognize the identification of, the number of shares of, and the value of the security offered to be bought by the first entity;

receive a representation of the identification of, number of shares of, and the value of an securities selected by the first entity;

in response to receiving the representation of the identification of, number of shares of, and the value of the security selected by the first entity, verify that the first entity has sufficient consideration to buy the number of shares of the security at the offered value;

in response to verification that the first entity has sufficient consideration to buy the number of shares of the security at the offered value, display on a personal computer over a network the selected number of shares of and the value of the selected security offered to be bought by the first entity;

present a link allowing a second entity to select to sell at least one share of the security offered to be bought by the first entity;

recognize that the link has been selected;

recognize the number of shares selected;

receive a representation of the identification of, number of shares of, and the value of the security selected by the second entity;

in response to receiving the representation of the identification of, number of shares of, and the value of the security selected by the second entity, verify that the second entity has sufficient consideration to buy the number of shares of the security at the offered value;

in response to verification that the second entity has sufficient consideration to buy the number of shares of the security at the offered value, initiate the contemporaneous real-time exchange of an amount of the first entity'"'"'s consideration for the number of securities selected by the second entity;

display the identification of and the value of the remaining number of shares of the selected security offered to be bought by the first entity after removing the number of shares of the second entity'"'"'s security exchanged with the first entity;

71. The machine accessible medium as defined in claim 70, wherein first and second entities receive a trade and settlement confirmation indicating that the trade and settlement are complete in all respects.

72. The machine accessible medium as defined in claim 70, wherein the machine accessible medium does not utilize an external settlement agency.

73. The machine accessible medium as defined in claim 70, wherein the apparatus stores information regarding each entity'"'"'s consideration and rights to sell shares of securities.

74. The machine accessible medium as defined in claim 70, wherein the consideration in the account of the first entity contains the amount of the first entity'"'"'s consideration.

75. The machine accessible medium as defined in claim 70, wherein the consideration is immediately available transferable funds from either the second entity'"'"'s account or from another source guaranteeing immediately available transferable funds.

76. The machine accessible medium as defined in claim 70, wherein the account of the second entity contains the identification of and number of shares of the security owned by the second entity.

77. The machine accessible medium as defined in claim 70, wherein at least one computer stores the account of the first entity.

78. The machine accessible medium as defined in claim 70, wherein at least one computer stores the account of the second entity.

79. The machine accessible medium as defined in claim 70, wherein at least one computer stores the account of both the first and second entities.

80. The machine accessible medium as defined in claim 70, wherein each entity accesses its respective account over a network using a personal computer or other network connected device.

81. The machine accessible medium as defined in claim 70, wherein each entity accesses its respective account over a network using a securities trading system.

82. The machine accessible medium as defined in claim 81, wherein one of the first entity and the second entity comprises a broker/dealer.

83. The machine accessible medium as defined in claim 81, wherein the securities trading system charges at least one entity an amount of money proportional to the value of the consideration exchanged between the first and second entities.

84. The machine accessible medium as defined in claim 81, wherein the securities trading system charges at least one entity a fixed amount of money for each exchange of the security and consideration between the first and second entities.

85. The machine accessible medium as defined in claim 81, wherein the securities trading system charges at least one entity a fee to use the securities trading system.

86. A computerized method of conducting instantaneous and simultaneous settlement supporting trading of securities, the method comprising:

managing an order book of buy and sell offers for a security via a first program;

communicating the buy and sell offers from the first program to a second program;

displaying the buy and sell offers to a first user and a second user via the second program;

facilitating the first user to enter a sell offer of the security into the order book;

communicating the first user'"'"'s sell offer from the second program to the first program;

confirming the first user'"'"'s ability to enter the sell offer;

listing the first user'"'"'s sell offer in the order book upon confirmation that the first user has the ability to enter the sell offer;

facilitating the second user to accept the first user'"'"'s sell offer in exchange for consideration;

communicating the second user'"'"'s acceptance of the sell offer from the second program to the first program;

confirming the second user'"'"'s ability to accept the sell offer;

upon confirmation that the second user has the ability to accept the sell offer, immediately initiating the simultaneous settlement of the transaction by transferring;

(i) the security from the first user'"'"'s account to the second user'"'"'s account and;

(ii) consideration from the second user'"'"'s account to the first user'"'"'s account;

updating the order book in response to the settlement of the transaction.

87. A method as defined in claim 86, wherein the first and second entities receive a trade and settlement confirmation indicating that the trade and settlement are complete in all respects.

88. A method as defined in claim 86, wherein the simultaneous settlement of the transaction does not utilize an external settlement agency.

89. A method as defined in claim 86, wherein the display of the second program comprises hypertext markup language, JavaScript, Java Server Pages, Java Applets, or Servlets.