System and methods for processing open-end mutual fund purchase and redemption orders at centralized securities exchanges and other securities trading and processing platforms

• US 20100057608A1
• Filed: 11/07/2009
• Published: 03/04/2010
• Est. Priority Date: 11/19/1999
• Status: Active Grant

• Current Assignee: James Mcpherson
• Original Assignee: James Mcpherson
• Inventors: McPherson, James
• Granted Patent: US 8,615,461 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 system for processing traditional open-end mutual fund purchase and redemption orders at a server at designated Exchange(s) for receiving order messages from at least one of a plurality of Brokers and Member Firms, the server having at least one processor and memory for storing routines operable to process individual or aggregated order messages, preferably based on a prioritized set of business rules, and/or match the purchase and redemption orders, reformat the orders, and transmit the reformatted orders to at least one of a plurality of Fund/Securities Clearing Agents, Funds/Transfer Agents and Depositaries for confirmation, and clearing and settlement of issuance and redemption orders for mutual fund shares, as well as payment of mutual fund dividends.

Claims

1. A computer implemented method for processing traditional open-end mutual fund order messages at a designated securities Exchange, including purchase and redemption orders of shares of an open-end mutual fund, the open-end mutual fund being listed or hosted at the exchange for processing, and having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares, the method comprising the steps of:

receiving, from Member Firms, order messages associated with purchase and/or redemption orders for shares of the open-end mutual fund listed or hosted at the Exchange in Exchange Equity Order Entry Format at at least one of a plurality of first servers communicably connected to the designated Exchange;

processing, by Member Firm, the received purchase and redemption order messages for the open-end mutual fund shares as individual orders or as an aggregation of multiple orders;

reformatting the individual or aggregated orders to Fund Order Entry Format at the at least one first server; and

transmitting the reformatted orders from the at least one first server to at least one of a plurality of second servers at Fund/Securities Clearing Agents for confirmation, clearing and settlement including issuance and redemption of the open-end mutual fund shares by the open-end mutual fund.

2. The computer implemented method of claim 1, wherein the step of transmitting further comprises the step of forwarding the reformatted orders from the at least one second server to at least one third server of at least one individual Funds and Transfer Agents for processing and confirmation.

3. The computer implemented method of claim 1, wherein the step of transmitting comprises sending said reformatted orders periodically from the at least one first server, as single, batch and/or multi-batch messages.

4. The computer implemented method of claim 1, wherein the step of transmitting comprises sending said reformatted orders throughout the business day from the at least one first server, as single, batch and/or multi-batch messages.

5. The computer implemented method of claim 1, wherein the step of processing the orders includes applying a set of business rules to the orders.

6. The computer method of claim 5, wherein the set of business rules comprises processing orders per fund per Member Firm based on when new purchase or redemption orders of a predetermined amount are received, and processing orders when a predetermined number of orders are received.

7. The computer implemented method of claim 5, wherein the set of business rules further comprises processing orders per fund per Member Firm based on when gross purchase and redemption orders of a predetermined amount are received, and processing orders when gross purchase and redemption orders of a predetermined number of shares are received.

8. The computer implemented method of claim 5, wherein the set of business rules further comprises processing orders per fund per Member Firm based on a predetermined time interval, processing orders when gross orders to purchase or redeem a predetermined amount of shares are received, and processing orders at end of day.

9. The computer implemented method of claim 5, further comprising the step of prioritizing the set of business rules.

10. A computer implemented method for continuously processing traditional open-end mutual fund order messages, including purchase and redemption orders, of a plurality of open-end mutual funds listed at a securities Exchange, each said open-end mutual fund having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares;

the method comprising the steps of;

receiving purchase and redemption orders in Exchange Equity Order Entry Format at a first server of an Exchange from a second server at at least one Member Firm;

matching and executing the orders for each open-end mutual fund by Member Firm at the first server of the Exchange, each said open-end mutual fund being listed on the Exchange; and

reformatting the matched and executed orders to Fund Order Entry Format at the first server; and

transmitting the reformatted orders to servers at at least one of a plurality of Fund/Securities Clearing Agents, Funds/Transfer Agents and Depositaries for clearing and settlement;

transmitting the matched and executed orders from the first server of the Exchange to servers at at least one of a plurality of ordering Member Firms for confirmation;

11. The computer implemented method of claim 10, wherein the step of transmitting the reformatted orders from the first server comprises forwarding the orders continuously in real-time to servers at the at least one of a plurality of Fund/Securities Clearing Agents, Funds/Transfer Agents and Depositaries.

12. The computer implemented method of claim 10, further comprising the step of tabulating the matched and executed orders.

13. A computer implemented system for processing traditional open-end mutual fund order messages at a designated securities Exchange, including purchase and redemption orders of shares of an open-end mutual fund, the open-end mutual fund being listed or hosted at the exchange for processing, and having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares, the system comprising:

a first server communicably coupled to the Exchange and operable to;

receive, from Member Firms, order messages associated with purchase and/or redemption orders for open-end mutual fund shares in Exchange Equity Order Entry Format;

process, by Member Firm, the received purchase and redemption order messages for the open-end mutual fund shares as individual orders or as an aggregation of multiple orders;

reformat the individual or aggregated orders to Fund Order Entry Format at the at least one first server; and

transmit the reformatted orders from the at least one first server to at least one of a plurality of second servers at Fund/Securities Clearing Agents for confirmation, clearing and settlement including issuance and redemption of the open-end mutual fund shares by the open-end mutual fund.

14. The computer implemented system of claim 13, wherein the reformatted orders are sent from the at least one second server throughout the business day, as single, batch and/or multi-batch messages.

15. The computer implemented system of claim 13, wherein the reformatted orders are sent periodically from the at least one first server, as single, batch and/or multi-batch messages.

16. The computer implemented system of claim 13, wherein the reformatted order are sent at the end of the business day from the at least one first server, as single, batch and/or multi-batch messages.

17. The computer implemented system of claim 13, wherein the step of processing includes applying a set of business rules to the orders.

18. The computer implemented system of claim 17, wherein the set of business rules comprises processing orders per fund per Member Firm based on when new purchase or redemption orders of a predetermined amount are received, and processing orders when a predetermined number of orders are received

19. The computer implemented system of claim 17, wherein the set of business rules comprises processing orders per fund per Member Firm based on when gross purchase and redemption orders of a predetermined amount are received, and processing orders when gross purchase and redemption orders of a predetermined number of shares are received.

20. The computer implemented system of claim 17, wherein the set of business rules comprises processing orders per fund per Member Firm based on a predetermined time interval, processing orders when gross orders to purchase or redeem a predetermined amount of shares are received, and processing orders at end of day.

21. The computer implemented system of claim 17, wherein the set of business rules determine hierarchy and timing for processing the orders.