METHOD AND SYSTEM FOR COMPUTER-IMPLEMENTED TRADING OF SECONDARY MARKET DEBT SECURITIES

• US 20100057604A1
• Filed: 04/28/2009
• Published: 03/04/2010
• Est. Priority Date: 12/22/2000
• Status: Active Grant

• Current Assignee: MarketAxess Holdings Inc.
• Original Assignee: MarketAxess Holdings Inc.
• Inventors: MOSELEY, Rachel, SCHIFFMAN, Richard J., AGARWAL, Brijesh
• Granted Patent: US 8,165,955 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• 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
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

A computer-implemented method and system for trading of debt securities (bonds), where multiple dealers participate and compete on a single platform (100). Dealers and investors have respective interfaces (250, 230) for communicating. In one aspect, dealers announce new debt security issues (400), the investors communicate an indication of interest (IOI) (500) in purchasing the new debt security issues, and the issues are allocated to the investors. In another aspect, issues from multiple dealers are made available to investors on a secondary trading market in a searchable format (1000). In response to price inquires sent by investors (1200), the dealers provide offers (1300) which are briefly held and released to the investor concurrently to allow the investor to consider all offers together. In another aspect, the dealers post bid and offer terms for actively traded issues (1700) that are updated in real-time to avoid the need for the inquiry procedure.

Claims

1. A computer implemented method for negotiating the price for a traded security using a computer trading system, comprising:

electronically communicating by said computer trading system a security, and a bid or offer terms thereof, to investors from at least one dealer;

enabling an investor to provide an indication of interest in purchasing the security to at least one dealer;

enabling a plurality of dealers to provide a bid in response to the indication of interest;

storing a bid from each of the plurality of dealers for at least one period of time in a database accessible by said computer trading computer system;

electronically transmitting the stored bid received from each of the plurality of dealers to the plurality of investors at substantially the same time and electronically transmitting substantially simultaneously to the plurality of investors an available inventory of security issues on a standardized manner that are being offered and bid on by the plurality of dealers;

enabling the investor to accept, reject or provide a counter-offer to at least one bid; and

enabling selecting, by the plurality of investors, different inventories from the available inventory, using a plurality of filters for displaying of the different inventories comprising offers, bids, and actively-traded securities.

2. The method of claim 1, further comprising:

enabling the investor to select at least one dealer to which to submit an offer.

3. The method of claim 1, further comprising:

enabling the investor to indicate to at least one dealer an additional status of the offer.

4. The method of claim 3, wherein the additional status is an in competition status.

5. The method of claim 3, wherein the additional status is a time within which a response to the offer must be submitted.

6. The method of claim 1, wherein the limits are a time within which a response to the offer must be submitted.

7. The method of claim 1, further comprising the step of:

sorting the different inventories according to a plurality of fields including size, rating, issuer, ticker, coupon, maturity, spread, benchmark, dealer, and update time when details of an different inventories are updated by at least one of the plurality of the dealers and investors.

8. The method of claim 1, wherein said displaying step further comprising the steps of:

displaying simultaneously to the plurality of investors the available inventory of security issues on a standardized and sortable manner that are being offered and bid on by the plurality of dealers in a secondary resale market including issue identifier, coupon rate, details of each of the plurality of dealer bids and offers, the inside market, and the freshness of the indicated price, providing the plurality of investors information to determine in real-time which of the multiple dealers provides the best terms for a particular issue of interest.

9. The method of claim 1, further comprising the steps of:

receiving from the plurality of investors a request comprising a bid, or requesting an offer;

receiving from the plurality of investors inquiry details, inquiry size, SD, inquiry type where cash indicates a cash sale, and cross indicates an exchange of securities, and a benchmark;

receiving from the plurality of inventors at least one specific dealer to send the inquiry allowing the inventor to target the at least one specific dealer to negotiate the price for the traded security; and

receiving from the plurality of inventors a firm price signaling that the investor intends to trade immediately or an indication only, which is subject to subsequent agreement on the price of the issue.

10. The method of claim 1, further comprising the steps of:

transmitting to the plurality of dealers information to inform each of the plurality of dealers of competition between the plurality of dealers;

receiving a selection from the plurality of investors of the plurality of dealers;

displaying to the plurality of dealers selected by the plurality of investors details relating to the investor, including the investor identity and the investor inquiry;

displaying to the plurality of inventors responses to the inventor inquiry received from the plurality of dealers;

receiving from at least one of the plurality of dealers at least one of an acceptance of and offer, and acceptance of a bid and responses to the investor'"'"'s inquiry, and accept an offer or bid, and a counteroffer responsive to the spreads determined for the traded security.

11. The method of claim 1, further comprising the steps of:

receiving from at least one of the plurality of investors at least one of an acceptance of and offer, acceptance of a bid, and a counteroffer responsive to the spreads determined for the traded security;

when a counteroffer is received from at least one of the plurality of investors, receiving from at least one of the plurality of dealers a further offer or bid in response; and

repeating the negotiation between the plurality of dealers and the plurality of investors until at least one of the bid, offer and counteroffer is accepted.

12. The method of claim 11, further comprising the steps of:

displaying to the plurality of inventors the bids, offers and counter offers simultaneously for consideration by the plurality of investors; and

receiving an acceptance from at least one of the plurality of investors;

initiating spot negotiations between the at least one of the plurality of inventors and at least one of the plurality of dealers wherein the investor confirms the spot versus a benchmark;

receiving at least one of an acceptance and a re-spot of the benchmark from the at least one of the plurality of inventors via a counteroffer to complete the trade.

13. The method of claim 1, further comprising the steps of:

identifying from the available inventory of the available issues, most actively traded issues based on at least one of size of the traded security when it was originally issued,

designating the identified most actively traded issues in separate categories, including financials, industrials, utilities, international organizations.

14. The method of claim 13, wherein said identifying step further comprised the steps of:

identifying from the available inventory of the available issues, most actively traded issues based on at least one of size of the traded security when it was originally issued, and as a percentage of the number of issues; and

displaying the active issues responsive to relative activity, thereby providing an inventory of actively traded issues which are expected to have high liquidity.

15. The method of claim 1, wherein the indication of interest further comprises a firm offer or a subject to negotiation indication.

16. The method of claim 1, further comprising the steps of:

receiving a plurality of the available inventory from the plurality of dealers for display to and access by the plurality of investors; and

displaying to the plurality of investors an available inventory of security issues on a standardized and sortable manner that are being offered or bid on by the plurality of dealers in a secondary resale market.

17. The method of claim 1, further comprising the steps of:

selecting, by the plurality of investors, different inventories from the available inventory, comprising investment-grade US securities and Eurobond securities; and

trading by the plurality of investors of the different inventories from the available inventory.

18. A computer trading system for negotiating the price of a traded security, comprising:

a computer server system a trading interface and electronically receiving from and electronically receiving messages from a dealer with bid and/or offer terms for the security; and

a trading database, communicatively coupled to said computer server system, and storing bids from each of the plurality of dealers electronically received by said computer server system, and

wherein said computer server system performs the following functions;

electronically communicating by said computer trading system a security, and a bid or offer terms thereof, to investors from at least one dealer;

enabling an investor to provide an indication of interest in purchasing the security to at least one dealer;

enabling a plurality of dealers to provide the bid in response to the indication of interest;

storing the bid from each of the plurality of dealers for at least one period of time in a database accessible by said computer trading computer system;

electronically transmitting the stored bid received from each of the plurality of dealers to the plurality of investors at substantially the same time and electronically transmitting substantially simultaneously to the plurality of investors an available inventory of security issues that are being offered and the bid on by the plurality of dealers;

enabling the investor to accept, reject or provide a counter-offer to at least one bid; and

enabling selecting, by the plurality of investors, different inventories from the available inventory, using a plurality of filters for displaying of the different inventories comprising offers, bids, and actively-traded securities.

19. The system of claim 18, wherein said computer server system performs the following functions:

sorting the different inventories according to a plurality of fields including size, rating, issuer, ticker, coupon, maturity, spread, benchmark, dealer, and update time when details of an different inventories are updated by at least one of the plurality of the dealers and investors.

20. The system of claim 18, wherein said computer server system performs the following functions:

displaying simultaneously to the plurality of investors the available inventory of security issues on a standardized and sortable manner that are being offered and bid on by the plurality of dealers in a secondary resale market including issue identifier, coupon rate, details of each of the plurality of dealer bids and offers, the inside market, and the freshness of the indicated price, providing the plurality of investors information to determine in real-time which of the multiple dealers provides the best terms for a particular issue of interest.

21. The system of claim 18, wherein said computer server system performs the following functions:

receiving from the plurality of investors a request comprising a bid, or requesting an offer;

receiving from the plurality of investors inquiry details, inquiry size, SD, inquiry type where cash indicates a cash sale, and cross indicates an exchange of securities, and a benchmark;

receiving from the plurality of inventors at least one specific dealer to send the inquiry allowing the inventor to target the at least one specific dealer to negotiate the price for the traded security; and

receiving from the plurality of inventors a firm price signaling that the investor intends to trade immediately or an indication only, which is subject to subsequent agreement on the price of the issue.

22. The system of claim 18, wherein said computer server system performs the following functions:

transmitting to the plurality of dealers information to inform each of the plurality of dealers of competition between the plurality of dealers;

receiving a selection from the plurality of investors of the plurality of dealers;

displaying to the plurality of dealers selected by the plurality of investors details relating to the investor, including the investor identity and the investor inquiry;

displaying to the plurality of inventors responses to the inventor inquiry received from the plurality of dealers;

receiving from at least one of the plurality of dealers at least one of an acceptance of and offer, and acceptance of a bid and responses to the investor'"'"'s inquiry, and accept an offer or bid, and a counteroffer responsive to the spreads determined for the traded security.

23. The system of claim 18, wherein said computer server system performs the following functions:

receiving from at least one of the plurality of investors at least one of an acceptance of and offer, acceptance of a bid, and a counteroffer responsive to the spreads determined for the traded security;

when a counteroffer is received from at least one of the plurality of investors, receiving from at least one of the plurality of dealers a further offer or bid in response; and

repeating the negotiation between the plurality of dealers and the plurality of investors until at least one of the bid, offer and counteroffer is accepted.

24. The system of claim 23, wherein said computer server system performs the following functions:

displaying to the plurality of inventors the bids, offers and counter offers simultaneously for consideration by the plurality of investors; and

receiving an acceptance from at least one of the plurality of investors;

initiating spot negotiations between the at least one of the plurality of inventors and at least one of the plurality of dealers wherein the investor confirms the spot versus a benchmark;

receiving at least one of an acceptance and a re-spot of the benchmark from the at least one of the plurality of inventors via a counteroffer to complete the trade.

25. The system of claim 18, wherein said computer server system performs the following functions:

identifying from the available inventory of the available issues, most actively traded issues based on at least one of size of the traded security when it was originally issued,

designating the identified most actively traded issues in separate categories, including financials, industrials, utilities, international organizations.

26. The system of claim 25, wherein said computer server system performs the following functions:

identifying from the available inventory of the available issues, most actively traded issues based on at least one of size of the traded security when it was originally issued, and as a percentage of the number of issues; and

displaying the active issues responsive to relative activity, thereby providing an inventory of actively traded issues which are expected to have high liquidity.

27. The system of claim 18, wherein said computer server system performs the following functions:

receiving a plurality of the available inventory from the plurality of dealers for display to and access by the plurality of investors; and

displaying to the plurality of investors an available inventory of security issues on a standardized and sortable manner that are being offered or bid on by the plurality of dealers in a secondary resale market.

28. The system of claim 18, wherein said computer server system performs the following functions:

selecting, by the plurality of investors, different inventories from the available inventory, comprising investment-grade US securities and Eurobond securities; and

trading by the plurality of investors of the different inventories from the available inventory.

29. A computer implemented method for negotiating the price for a traded security using a computer trading system, comprising:

electronically transmitting by said computer trading system a security, and a bid or offer terms thereof, to a plurality of investors from at least one dealer;

electronically receiving from a plurality of investors to provide an indication of interest in purchasing the security to at least one dealer;

electronically receiving from a plurality of dealers to provide a bid in response to the indication of interest;

storing at least one bid from at least one of the plurality of dealers for at least one period of time in a database accessible by said computer trading computer system;

electronically transmitting the stored bid received from the at least one of the plurality of dealers to the plurality of investors at substantially the same time and electronically transmitting substantially simultaneously to the plurality of investors an available inventory of security issues on a standardized manner that are being offered and bid on by the plurality of dealers;

electronically receiving from at least one of the plurality of investors an acceptance, rejection or a counter-offer to at least one bid; and

electronically receiving from at least one of the plurality of investors, at least one selection from the available inventory, for displaying by the computer trading system of the different inventories comprising offers, bids, and actively-traded securities.