SYSTEM, METHOD, AND APPARATUS FOR TRADING IN A DECENTRALIZED MARKET

• US 20070179881A1
• Filed: 02/01/2007
• Published: 08/02/2007
• Est. Priority Date: 02/02/2006
• Status: Active Grant

• Current Assignee: PrivateMarkets, Inc.
• Original Assignee: Volatility Management, LLC
• Inventors: Lord, Thomas
• Granted Patent: US 8,510,204 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

A method and system for facilitating the execution of transactions in a decentralized market are provided herein. The decentralized market includes a number of execution points each associated with and maintained in a secure environment by a single participant. Each participant is able to control the amount of data that is made publicly available, if at all, regarding any transactions that are conducted at that participant'"'"'s execution point.

Claims

1. A system for conducting transactions, comprising:

first server resources associated with a first trading party, the first server resources comprising;

an application layer;

an execution system; and

a messaging system;

second server resources associated with a second trading party, the second server resources in communication with the first server resources, and the second server resources comprising;

an application layer;

an execution system; and

a messaging system;

wherein the first trading party originates a transaction using the application layer of the first server resources, wherein the transaction comprises an offer having a number of parameters associated therewith, wherein the first trading party employs the messaging system of the first server resources to send the offer to the second server resources, and wherein automatic execution rights associated with the transaction are maintained exclusively by the execution system of the first server resources.

2. The system of claim 1, wherein at least one of the first and second server resources are temporarily allocated to the respective trading party from a server pool, and wherein the temporarily allocated server resources are returned to the server pool for allocation to another trading party after the transaction has at least one of expired, been rendered unavailable, been killed, and been executed.

3. The system of claim 1, wherein at least one of the first and second server resources are maintained by the respective first and second trading parties.

4. The system of claim 1, wherein the exclusive automatic execution rights of the execution system of the first server resources may be transferred to the execution system of the second server resources in response to the first trading party granting the second trading party a held order.

5. The system of claim 1, wherein messages transmitted between the messaging systems of the first and second server resources, including information related to the execution of the transaction, are maintained in confidentiality between the first and second parties.

6. The system of claim 1, wherein the execution system automatically executes the transaction based on executed parameters that comprise one of the following:

i) in the event that the second trading party accepts the offer from the first trading party, the executed parameters comprise the parameters associated with the original offer; and

ii) in the event that second trading party transmits a counteroffer to the first trading party, the executed parameters comprise parameters associated with an accepted counteroffer.

7. The system of claim 6, wherein the accepted counteroffer is transmitted by one of the first and second trading party.

8. The system of claim 1, further comprising a database for maintaining audit logs, wherein an audit log maintained for the first trading party comprises messages transmitted by the messaging system of the first server resources, and wherein an audit log maintained for the second trading party comprises message transmitted by the messaging system of the second server resources.

10. The method of claim 1, wherein said determining transaction details comprises at least one of determining a commodity, whether the transaction is to buy or sell the commodity, a price of the commodity, an amount of the commodity, and an offer expiration time.

9. A method of initiating a transaction in a decentralized market, comprising:

determining at least one participant that will be invited to participate in the transaction;

in response to determining the at least one participant, generating participant data;

determining transaction details;

in response to determining said transaction details, generating transaction data;

creating a message comprising at least one of said participant data and transaction data; and

sending said message to said at least one participant, wherein said message is transmitted from a single originating execution point to an execution point associated with the at least one participant and wherein information related to said transaction is maintained in a secure state at said originating execution point and only shared with the at least one participant that received the message.

11. The method of claim 9, wherein said determining transaction details comprises at least one of determining a commodity and an amount of the commodity, and wherein transmission of the transaction details is allowed without a determination of a price for purchase or sale of the commodity.

12. The method of claim 11, further comprising retaining an ability to create an executable transaction and offer expiration time after a price of the commodity is determined.

13. The method of claim 9, wherein said determining transaction details comprises determining that the transaction comprises a held transaction.

14. The method of claim 13, further comprising:

a first party granting the held transaction to a second party;

restricting the first party from accepting offers from any party other than the second party; and

allowing the second party to have the option of accepting the held transaction without risk of the held transaction being revoked for a predetermined amount of time.

15. The method of claim 14, wherein the first party comprises an originating party.

16. The method of claim 14, further comprising transferring an execution gate from the first party to the second party for the predetermined amount of time.

17. The method of claim 16, further comprising after the predetermined amount of time, transferring the execution gate back to the first party.

18. The method of claim 9, wherein said sending said message comprises encrypting the message prior to transmission.

19. The method of claim 9, wherein at least one of said originating execution point and said execution points of said at least one participant comprises at least one of a computer, server, and database.

20. The method of claim 9, further comprising maintaining an execution gate in association with an originating participant such that only the execution point associated with the originating participant is allowed to execute a transaction originated by the originating participant.

21. A system for conducting transactions between at least two parties, comprising:

a plurality of execution points each interconnected to each other through a communications network, wherein a first of said plurality of execution points is an originating execution point and a second of said plurality of execution points is an invited execution point, wherein said originating execution point initiates a transaction and sends information related to said transaction to said invited execution point, and wherein said information related to said transaction is maintained in confidentiality between said originating execution point and said invited execution point.

22. The system of claim 21, wherein the communication network comprises a one-to-one correspondence with execution points.

23. The system of claim 21, wherein the communication network provides for both centralized and decentralized communication between parties and between execution points.

24. The system of claim 21, wherein the plurality of execution points comprise at least one of a server, computer, and database.

25. The system of claim 21, wherein said invited execution point is operable to execute said transaction.

26. The system of claim 25, wherein the invited execution point is designated as an execution point of record in response to being granted a held order by the originating execution point.

27. The system of claim 21, wherein the originating execution point is designated as an execution point of record such that the originating execution point is the only execution point allowed to execute any trade associated with the transaction.

28. The system of claim 21, wherein information related to said transaction is shared with a subset of said invited execution points as determined by an operator of said originating execution point.

29. The system of claim 21, wherein at least one of the originating execution point and the invited execution point comprise resources allocated from a server pool to participants associated with the originating execution point and the invited execution point.

30. A method of creating a virtual private market, comprising:

an originator generating a trade offer;

the originator transmitting the trade offer to at least one counterparty, wherein the at least one counterparty is associated with a trade execution system; and

designating a trade execution system associated with the originator as an execution system of record, wherein the execution system of record is the only trade execution system allowed to automatically execute a trade associated with the trade offer in accordance with parameters of an accepted trade, and wherein the trade execution system associated with the originator is different from the trade execution system associated with the counterparty.

31. The method of claim 30, further comprising:

transferring a token from the trade execution system associated with the originator to the trade execution system associated with the counterparty;

designating the trade execution system associated with the counterparty as the execution system of record; and

restricting the trade execution system associated with the originator to execute a trade associated with the trade offer in a virtual private market.

32. The method of claim 31, wherein the token comprises a permission granting mechanism such that a trade execution system in possession of the token is permitted to execute a transaction associated with the token and wherein a trade execution system not in possession of the token is restricted from executing a transaction associated with the token.

33. The method of claim 30, further comprising linking the trade offer with a second trade such that if one of the trade offer and the second trade are executed the non-executed trade is rendered unexecutable in a virtual private market.

34. The method of claim 30, wherein the at least one counterparty comprises a first and second counterparty, the method further comprising:

executing a trade between the originator and the first counterparty;

transmitting messages between the originator and the first counterparty regarding the executed trade; and

restricting the second counterparty from receiving the messages regarding the executed trade.

35. The method of claim 30, further comprising maintaining an audit log for an individual member of the virtual private market that comprises a collection of the messages transmitted to and from the individual member of the virtual private market.

36. A method of executing a held order, comprising:

receiving a message over a communication network from an offeror, wherein the message comprises an offer for trade;

a counterparty transmitting a message to the offeror requesting a held order be granted;

the offeror granting the held order;

restricting the offeror from accepting offers from other counterparties; and

granting the counterparty permission to accept the offer for trade without risk of revocation for a predetermined period of time.

37. The method of claim 36, further comprising restricting the offeror from creating executable offers for other counterparties.

38. The method of claim 36, further comprising allowing the offeror to create indicative offers for other counterparties.

39. The method of claim 36, wherein the restrictions placed on the offeror are maintained for the predetermined period of time.

40. The method of claim 36, wherein the offer for trade comprises an offer to at least one of buy and sell a commodity.