Electronic trading system

• US 20070226122A1
• Filed: 08/31/2006
• Published: 09/27/2007
• Est. Priority Date: 11/02/2005
• Status: Active Grant

• Current Assignee: PREVENTIA INC.
• Original Assignee: Private Trading Systems PLC
• Inventors: Burrell, C. Austin, Bandy, Nigel, Ramsden, Terry
• Granted Patent: US 8,165,952 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 20/3821 Electronic credentials
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• 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
• CPC Class Codes: G06Q 50/188 Electronic negotiation

Abstract

An electronic trading system facilitates electronic trades of fungible trading elements. Fungible trading elements are electronically displayed and the system facilitates the trading operations. A risk factor for a particular transaction may be determined and based on this risk factor, the electronic trading system may elect straight through processing (STP) operations to conclude a trade. Otherwise the risk factor may indicate avoiding the STP and allowing other settlement means. The electronic trading system also include the dematerialization of the trading elements, therefore verifying ownership prior to exchange and as such as more robust and secure trading platform.

Claims

1. An electronic trading system comprising:

an exchange processing device operative to;

electronically display a plurality of fungible trading elements;

facilitate trading operations for a selected element of the trading elements; and

assessing a risk factor for the trade operations;

a back office coupled to the exchange processing device operative to provide settlement operations related to the settlement of the trade operations of the exchange processing device; and

a custodian coupled to the back office operative to;

verify ownership of the selected trade element, including authenticating a dematerialization of the trading element; and

exchange ownership assignment of the trading element in response to a settlement command from the back office, if the risk factor is below a threshold value, performing the exchange in a straight through processing manner.

2. The electronic trading system of claim 1 further comprising:

a gateway disposed between the exchange processing device office and operative to facilitate communication therebetween.

3. The electronic trading system of claim 1, the custodian further operative to:

dematerialize, if needed, each of the fungible trading elements prior to inclusion with the plurality of fungible trading elements.

4. The electronic trading system of claim 1, wherein verifying ownership of the selected trade element includes using a Swift interface, the custodian operative to provide an validation command to the exchange processing device.

5. The electronic trading system of claim 1, further comprising:

the exchange processing device operative electronically receive at least one buy offer relating to the selected element, the buy offer including an exchange asset; and

the custodian operative to verify ownership of the exchange asset by a party submitting the buy offer.

6. The electronic trading system of claim 1 wherein if the risk factor is above the threshold limit, assigning the exchange to supervisory review prior to completion.

7. The electronic trading system of claim 1 further comprising:

an investor interface coupled to the exchange processing device such at least one investor may interact on the electronic trading system through the interface.

8. The electronic trading system of claim 1 wherein the trading element includes at least one of:

instrument, investment, security and asset.

9. The electronic trading system of claim 1, wherein when the custodian exchanges ownership assignment, if the trading element including an accounting benefit, at least one of the custodian and back office is operative to offset a purchase price by a pro-rated return.

20. The electronic trading system of claim 1, wherein verifying ownership of the selected trade element includes using a Swift interface, the custodian operative to provide an validation command to the exchange processing device.

10. A method for electronic trading comprising:

electronically displaying a plurality of fungible trading elements;

facilitating trading operations for a selected element of the trading elements;

assessing a risk factor for the trade operations;

verifying ownership of the selected trade element, including authenticating a dematerialization of the trading element; and

exchanging ownership assignment of the trading element in response to a settlement command from the back office, if the risk factor is below a threshold value, performing the exchange in a straight through processing manner.

11. The method of claim 10 further comprising:

dematerializing, if needed, each of the fungible trading elements prior to inclusion with the plurality of fungible trading elements.

12. The method of claim 10, wherein the step of verifying ownership of the selected trade element includes using a Swift interface and generating a validation command to verify ownership and continue the exchange of ownership assignment.

13. The method of claim 10, further comprising:

electronically receiving at least one buy offer relating to the selected element, the buy offer including an exchange asset; and

verifying ownership of the exchange asset by a party submitting the buy offer.

14. The method of claim 10 further comprising:

prior to exchanging ownership assignments, determining the risk factor associated with the exchange;

comparing the risk factor to a predetermined threshold; and

if the risk factor is above the threshold limit, assigning the exchange to supervisory review prior to completion.

15. The method of claim 10 further comprising:

electronically receiving investor commands relating to the trading operations through an investor interface.

16. The method of claim 10 wherein the trading element includes at least one of:

instrument, investment, security and asset.

17. The method of claim 10, wherein during the exchanging of ownership assignments, if the trading element includes an accounting benefit, the method further comprising offsetting a purchase price by a pro-rated return.

18. An electronic trading system comprising:

a plurality of exchange processing devices operative to;

electronically display a plurality of fungible trading elements, including trading elements for sale and for purchase; and

processing a trade command for facilitating trade operations between a buyer and a seller relating to a trading element; and

assessing a risk factor for the trade operations;

a gateway device in communication with the plurality of exchange processing devices, operative to receive a settlement command from one of the exchange processing devices, where the settlement command relates to settling a trade of the trade command between the buyer and the seller;

a back office in communication with the gateway operative to provide settlement operations relating to the settlement command; and

a custodian in communication with the back office, operative to;

verify ownership by the seller of the trading element, including authenticating a dematerialization of the trading element; and

exchange ownership assignment of the trading element from the seller to the buyer in response to a settlement command from the back office, and if the risk factor is below a threshold value, performing the exchange in a straight through processing manner.

19. The electronic trading system of claim 18, the custodian further operative to:

dematerialize, if needed, each of the fungible trading elements prior to inclusion with the plurality of fungible trading elements.

21. The electronic trading system of claim 18 further comprising:

an investor interface coupled to each of the plurality of exchange processing devices such that the buyer and seller may access and communicate with exchange processing devices through the interface.

22. The electronic trading system of claim 21, when the trade command relates to an offer to buy, further comprising:

the exchange processing device further operative to generate a verification request verifying the buyer has the financial asset to satisfy the buy offer;

the custodian operative to perform a verification operation relating to the buyer'"'"'s financial asset; and

the exchange processing device authorizing the processing of the trade command upon verification by the custodian.

23. The electronic trading system of claim 18 wherein if the risk factor is above the threshold limit, assigning the exchange to supervisory review prior to completion.

24. The electronic trading system of claim 18 wherein the trading element includes at least one of:

instrument, investment, security and asset.

25. The electronic trading system of claim 18, wherein when the custodian exchanges ownership assignment, if the trading element including an accounting benefit, at least one of the custodian and back office is operative to offset a purchase price by a pro-rated return.

26. The electronic trading system of claim 18 wherein the custodian is disposed within the back office.