Network-Based Trading System And Method

• US 20070061230A1
• Filed: 11/01/2006
• Published: 03/15/2007
• Est. Priority Date: 05/19/1999
• Status: Abandoned Application

• Current Assignee: Kioba Processing, LLC (IP Investments Group LLC)
• Original Assignee: Kioba Processing, LLC (IP Investments Group LLC)
• Inventors: Kim-E, Miral
• Application Number:
  US11/555,523
• Publication Number:
  US 20070061230A1
• Time in Patent Office: Days
• US Class Current: 705/35
• 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
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A network based trading system and method are provided which combine economies-of-scale enjoyed by institutional investors and mutual funds with direct ownership of securities to permit individual investors to participate in the bond market in a cost effective manner. Through team investing, institutional economies-of-scale are created for individuals by allowing groupings of individuals to buy and sell bonds as a “team,” thereby executing one cost-efficient trade in the institutional market rather than many smaller trades in the inefficient retail market. Also, through customer-to-customer (C2C) trading, customers are allowed to negotiate a trade directly with one another as an alternative to selling in the inter-dealer market. The system and method also incorporate an automatic risk assessment and trade approval routine for evaluating a proposed trade of a financial instrument which was received from a customer in an electronic form.

Claims

1-8. -8. (canceled)

9. A system for facilitating securities trading comprising:

a computer;

software executing on said computer for allowing the formation of a team comprising a plurality of team members;

software executing on said computer for enabling team members to determine a quantity of a financial instrument to be purchased in a single trade by the team;

software executing on said computer for obtaining a financial commitment from each of the team members;

software executing on said computer for automatically purchasing in a single trade the quantity of the financial instrument, the quantity having a total cost which is no greater than the sum of the obtained financial commitments;

software executing on said computer for charging an account of each of the team members in an amount up to each team member'"'"'s respective financial commitment; and

software executing on said computer for crediting the account of each of the team members with a share of ownership proportionate to the amount charged to each team member'"'"'s account of the quantity of the financial instrument purchased.

10. The system for facilitating securities trading of claim 9 further comprising a teams database accessible by said computer, said teams database having information regarding a plurality of existing teams stored thereon, including an indication of each team'"'"'s investment objectives, and wherein the software executing on said computer for allowing the formation of a team comprising a plurality of team members comprises:

software executing on said computer for receiving from a customer an indication of customer investment objectives;

software executing on said computer for determining if the indication of customer investment objectives matches the investment objectives of an existing team;

software executing on said computer for allowing the customer to join an existing team which has investment objectives which match the customer investment objectives; and

software executing on said computer for allowing the customer to create a new team if the customer investment objectives do not match the investment objectives of any of the existing teams.

11. The system for facilitating securities trading of claim 10 wherein the investment objectives comprise indications of the type of financial instrument issuer, the credit quality of the financial instrument, the maturity date of the financial instrument, and the purpose of the investment.

12. The system for facilitating securities trading of claim 9 further comprising software executing on said computer for allowing anonymous communication between team members.

13. The system for facilitating securities trading of claim 9 further comprising:

a customer rules database accessible by said computer;

a set of customer risk assessment rules stored on said customer rules database;

software executing on said computer for receiving customer information from each of the team members, for retrieving said set of customer risk assessment rules from said customer rules database, and for assigning a customer risk rating to each of the team members based upon the received customer information and said set of customer risk assessment rules;

a trade rules database accessible by said computer;

a set of trade risk assessment rules stored on said trade rules database;

software executing on said computer for determining trade details of the financial instrument, for retrieving said set of trade risk assessment rules from said trade rules database, and for assigning a trade risk rating to the proposed trade based upon the trade details and said set of trade risk assessment rules; and

software executing on said computer for automatically approving membership in the team for each team member if the customer risk rating for each team member and the trade risk rating bear a predetermined relationship to one another.

14. The system for facilitating securities trading of claim 13 wherein the customer risk rating and the trade risk rating comprise numerical indications of associated risk.

15. The system for facilitating securities trading of claim 14 wherein the predetermined relationship between the customer risk rating and the trade risk rating for receiving automatic approval of membership in the team is that the customer risk rating be no greater than the trade risk rating.

16. The system for facilitating securities trading of claim 13 further comprising:

a customer risk rating database accessible by said computer; and

software executing on said computer for storing the customer risk rating assigned to the customer on said customer risk rating database, and for retrieving the stored customer risk rating for the customer each time that customer attempts to join a team, such that the customer risk rating for each customer must only be assigned once.

17. The system for facilitating securities trading of claim 13 wherein the customer risk rating is indicative of the financial resources of and the investment experience of the customer.

18. The system for facilitating securities trading of claim 13 wherein the trade risk rating is indicative of the underlying economic risks associated with the financial instrument.

19. The system for facilitating securities trading of claim 13 further comprising software executing on said computer for automatically generating and transmitting to the customer a warning regarding membership in the team if the customer risk rating and the trade risk rating do not bear a predetermined relationship to one another, and for automatically approving membership in the team if an override indication is received from the customer.

20-37. -37. (canceled)

38. A method for facilitating securities trading comprising the steps of:

providing a computer;

allowing the formation of a team comprising a plurality of team members;

determining a quantity of a financial instrument to be purchased in a single trade by the team;

obtaining a financial commitment from each of the team members;

automatically purchasing in a single trade the quantity of the financial instrument, the quantity having a total cost which is no greater than the sum of the obtained financial commitments;

charging an account of each of the team members in an amount up to each team member'"'"'s respective financial commitment; and

crediting the account of each of the team members with a share of ownership proportionate to the amount charged to each team member'"'"'s account of the quantity of the financial instrument purchased.

39. The method for facilitating securities trading of claim 38 further comprising the step of providing a teams database accessible by the computer, the teams database having information regarding a plurality of existing teams stored thereon, including an indication of each team'"'"'s investment objectives, and wherein the allowing the formation of a team comprising a plurality of team members step comprises the steps of:

receiving from a customer an indication of customer investment objectives;

determining if the indication of customer investment objectives matches the investment objectives of an existing team;

allowing the customer to join an existing team which has investment objectives which match the customer investment objectives; and

allowing the customer to create a new team if the customer investment objectives do not match the investment objectives of any of the existing teams.

40. The method for facilitating securities trading of claim 38 further comprising the step of allowing anonymous communication between team members.

41. The method for facilitating securities trading of claim 38 further comprising the steps of:

providing a customer rules database accessible by the computer;

storing a set of customer risk assessment rules on the customer rules database;

receiving customer information from each of the team members, retrieving the set of customer risk assessment rules from the customer rules database, and assigning a customer risk rating to each of the team members based upon the received customer information and the set of customer risk assessment rules;

providing a trade rules database accessible by the computer;

storing a set of trade risk assessment rules on the trade rules database;

determining trade details of the financial instrument, retrieving the set of trade risk assessment rules from the trade rules database, and assigning a trade risk rating to the proposed trade based upon the trade details and the set of trade risk assessment rules; and

automatically approving membership in the team for each team member if the customer risk rating for each team member and the trade risk rating bear a predetermined relationship to one another.

42. The method for facilitating securities trading of claim 41 wherein the customer risk rating and the trade risk rating comprise numerical indications of associated risk and wherein said automatically approving step comprises the step of approving membership in the team for each team member if the customer risk rating for each team member is no greater than the trade risk rating.

43. The method for facilitating securities trading of claim 41 further comprising the steps of:

providing a customer risk rating database accessible by the computer;

storing the customer risk rating assigned to the customer on the customer risk rating database; and

retrieving the stored customer risk rating for the customer each time that customer attempts to join a team, such that the customer risk rating for each customer must only be assigned once.

44. The method for facilitating securities trading of claim 41 further comprising the steps of:

automatically generating and transmitting to the customer a warning regarding membership in the team if the customer risk rating and the trade risk rating do not bear a predetermined relationship to one another; and

automatically approving membership in the team if an override indication is received from the customer.

45-58. -58. (canceled)