System and methods for pricing and allocation of commodities or securities

• US 20070083457A1
• Filed: 06/30/2006
• Published: 04/12/2007
• Est. Priority Date: 03/08/2000
• Status: Active Grant

• Current Assignee: W.R. Hambrecht + Co., Inc. (WR Hambrecht + Co. LLC)
• Original Assignee: W.R. Hambrecht + Co., Inc. (WR Hambrecht + Co. LLC)
• Inventors: Ocheret, Charles, Hayes, Jordan, Hansson, Othar, Goldberg, Robert, Gerrish, Cliff, Evelyn, Michael
• Granted Patent: US 7,647,270 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

Systems and methods for conducting an auction of securities on the Web. The system and methods provide a bid mechanism whereby bidders are rewarded for priority of anonymously revealing their bids and provide an allocation of the securities which allows winning bidders to pay a single market-clearing price that sells out the securities. In addition, the systems and methods allow all participants to monitor the auction in real time.

Claims

1. A computer implemented method for conducting an auction of securities on the Web, comprising:

providing a bid mechanism whereby bidders are rewarded for priority of anonymously revealing their bids;

providing an allocation of the securities which allows winning bidders to pay a single market-clearing price that sells out the securities; and

providing a system whereby all participants can monitor the auction in real time.

2. The method of claim 1 wherein the securities comprise equity or debt securities.

3. The method of claim 1 wherein the securities comprise commodities.

4. The method of claim 1 wherein the bid mechanism comprises an open Dutch auction process.

5. The method of claim 1 wherein the allocation of the securities which allows winning bidders to pay a single market-clearing price that sells out the securities comprises the additional acts of:

conducting an open Dutch auction for a specific security auction deal by means of a openbook system web-based system, wherein a quantity of securities to be auctioned is designated a deal size;

at the end of the auction arranging approved bids from lowest to highest final bid price or spread component of a non-competitive bid;

designating bids as acceptable bids, all approved bids starting with a lowest final bid or lowest spread component for a non-competitive bid until an aggregate quantity of securities requested by the approved bids is greater that or equal to the deal size,

designating as a clearing spread the lowest spread component that results in the aggregate quantity of securities requested by the approved bids being greater that or equal to the deal size;

arranging all acceptable bids in order from earliest to latest time stamp value; and

allocating the securities to the acceptable bidders according to rules agreed upon prior to beginning the auction.

6. An apparatus for conducting an auction of securities on the Web, comprising:

a computer system, connected to Internet communications devices whereby bidders at remote terminals can communicate with the computer system;

a bid mechanism means coupled to the computer system for rewarding bidders for priority of anonymously revealing their bids;

an allocation means coupled to the bid mechanism means for allocation of the securities which allows winning bidders to pay a single market-clearing price that sells out the securities; and

a display means at the remote terminals, coupled to the computer system via the Internet whereby all participants can monitor the auction in real time.

7. The apparatus of claim 6 wherein the securities comprise debt securities.

8. The apparatus of claim 6 wherein the securities comprise commodities.

9. The apparatus of claim 6 wherein the bid mechanism comprises an open Dutch auction process.

10. In a network having a user node including a browser program coupled to said network, said user node providing requests for information and providing bidding input commands on said network, a network node comprising:

an openbook system auction server node responsive to a request from said user node to participate in a securities auction as a qualified bidder, whereby the openbook system auction server node provides a bid mechanism through which bidders are rewarded for priority of anonymously revealing their bids provides an allocation of securities which allows winning bidders to pay a single market-clearing price that sells out the offered securities, and provides a system whereby all participating users can monitor the securities auction at the user node.

11. An openbook system auction server node in accordance with claim 10, wherein said securities comprise debt securities.

12. An openbook system auction server node in accordance with claim 10, wherein said securities comprise commodities.

13. An openbook system auction server node in accordance with claim 10, wherein the bid mechanism comprises an open Dutch auction process.

14. An openbook system auction server node in accordance with claim 10 wherein new competitive bids and new non-competitive bids will be marked with a time stamp at a time when a confirmation of a bid is received by the openbook system.

15. An openbook system auction server node in accordance with claim 10, wherein the allocation of the securities which allows winning bidders to pay a single market-clearing price that sells out the securities comprises:

a first code mechanism for conducting an open Dutch auction for a specific security auction deal, wherein a quantity of securities to be auctioned is designated a deal size;

a second code mechanism coupled to the first code mechanism for arranging approved bids from lowest to highest final bid price or spread component of a non-competitive bid, the arranging being performed at the end of the auction;

a third code mechanism coupled to the second code mechanism for designating, as acceptable bids, all approved bids starting with a lowest final bid or lowest spread component for a non-competitive bid until an aggregate quantity of securities requested by the approved bids is greater that or equal to the deal size;

a fourth code mechanism coupled to the third code mechanism for designating as a“

clearing spread”

, the lowest spread component that results in the aggregate quantity of securities requested by the approved bids being greater that or equal to the deal size;

a fifth code mechanism coupled to the fourth code mechanism for arranging all acceptable bids in order from earliest to latest time stamp value; and

a sixth code mechanism coupled to the fifth code mechanism for allocating the securities to the acceptable bidders according to rules agreed upon prior to beginning the auction.

16. A computer program product stored on a computed useable medium, comprising:

computer readable program means for causing the computer to;

conduct an auction of securities on the Web;

provide a bid mechanism whereby auction bidders are rewarded for priority of anonymously revealing their bids;

provide an allocation of the securities which allows winning bidders to pay a single market-clearing price that sells out the securities; and

provide a system whereby all participants can monitor the auction in real time.

17. The computer program product of claim 16 wherein the securities comprise equity securities or debt securities.

18. The computer program product of claim 16 wherein the securities comprise commodities.

19. The computer program product of claim 16 wherein the bid mechanism comprises an open Dutch auction process.

20. The computer program product of claim 16 wherein:

a public price comprises a public price expressed in currency; and

a private price comprises a private price expressed in currency.

21. The computer program product of claim 20 wherein the private price is equal to or higher than the public price.

22. The computer program product of claim 16 wherein the one or more code segments are further configured to:

associate with a particular competitive bid a time stamp that is representative of a date and a time at which the particular competitive bid is received, and use the time stamp in the allocation of securities.

23. The computer program product of claim 22 wherein using the time stamp in the allocation of securities comprises allocating securities to an earlier received competitive bid before allocating securities to a later received competitive bid.

24. The computer program product of claim 22 wherein the one or more code segments are further configured to:

receive a modification for the particular competitive bid, with the modification providing a new private price that exceeds the protected range,

associate with the particular competitive bid an updated timestamp that is representative of a date and a time at which the modification is received, and

using the updated time stamp in the allocation of securities.

25. The computer program product of claim 16 wherein:

the bid mechanism comprises a bid mechanism for receiving at least one competitive bid and at least one non-competitive bid having a desired quantity of securities and no price limitation; and

the allocation of the securities comprises an allocation of the securities which allows winning bidders to pay a single market-clearing price that sells out the securities, the allocation allocating securities to non-competitive bids before allocating securities to competitive bids.