SYSTEMS AND METHODS FOR OPTIMAL PRICING AND ALLOCATION WITH CANCELING/MODIFYING OF INDICATIONS OF INTEREST FOR A SET OF EQUITY INSTRUMENTS TO BE OFFERED

• US 20130226769A1
• Filed: 03/14/2013
• Published: 08/29/2013
• Est. Priority Date: 03/05/2004
• Status: Abandoned Application

• Current Assignee: Barry Forman
• Original Assignee: Barry Forman
• Inventors: Avery, N. Caleb
• Application Number:
  US13/829,563
• Publication Number:
  US 20130226769A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/00 Commerce
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0601 Electronic shopping [e-shopping]
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• 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

Abstract

A method and system for the determination of optimal pricing and allocation of securities in an open, competitive environment. The method and system may also be used in developing pre-markets of other items that are difficult to price and allocate in a competitive manner, such as the underwriting/securitization of contracts for property; future revenue/earning streams from an asset and/or group of assets; underwritten insurance portfolios, intellectual property and other goods and services. The system of price optimization and allocation is accomplished by interactive feedback of information using a display and including competitive participation of individual members of the public (and/or their agents) or institutional buyers over a data network e.g., the Internet, uncovering the nature and identification of demand in a self-organizing fashion. Demand emerges through participants'"'"' interaction with the system and with each other, via a graphically-supported, interactive reservation process.

Claims

1. A computer-implemented method for generating an order book of reservations for potential equity instrument purchasers in a set of equity instruments to be offered by an issuer for later sale comprising the steps of:

(a) storing, in one or more computers, one or more databases comprising equity instrument offering information relating to a plurality of units of an equity instrument offering of one or more types at one or more prices that are available for reservation, wherein

(i) each of said units of the equity instrument offering is intended to be offered as an equity instrument for later sale to the potential equity instrument purchasers, and

(ii) for at least one of the types having at least one of the prices, a plurality of units is available for reservation;

(b) transmitting, from the one or more computers to a first plurality of participant computers, each of which is associated with a respective potential equity instrument purchaser, first status information comprising at least an identification of units of the equity instrument offering at each type and each price that are available;

(c) receiving, at the one or more computers from a first participant computer associated with a first potential equity instrument purchaser, a first request to reserve a first group of one or more of said units of the equity instrument offering;

(d) determining, at the one or more computers, using the first request, a first reservation comprising units within the first group that are available for reservation;

(e) updating the one or more databases in the one or more computers to reflect the first reservation;

(f) transmitting, from the one or more computers to at least a second plurality of participant computers, each of which is associated with a respective potential equity instrument purchaser, second status information that identify at least the following;

(i) units within the plurality of units of the equity instrument offering that are available for request for reservation, and

(ii) the first reservation as being reserved;

(g) receiving, at the one or more computers from a second participant computer associated with a second potential equity instrument purchaser, a second request to reserve a second group of one or more units of the equity instrument offering;

(h) determining, at the one or more computers, using the second request, a second reservation comprising units within the second group that are available for reservation;

(i) updating the one or more databases in the one or more computers, to reflect the second reservation;

(j) transmitting, from the one or more computers to at least a third plurality of participant computers, each of which is associated with a potential equity instrument purchaser, third status information that identify at least the following;

(i) units within the plurality of units of the equity instrument offering that are available for request for reservation,

(ii) the first reservation as being reserved, and

(iii) the second reservation as being reserved;

(k) terminating, upon an occurrence of a condition, the transmission of status information that identify a plurality of equity instrument units that are intended to be offered for later sale; and

(l) generating the order book that comprises reservations that are stored in the one or more databases in the one or more computers.

2. The method of claim 1, further comprising, prior to step (k), the steps of:

(1) receiving, at the one or more computers from a third participant computer associated with a third potential equity instrument purchaser, a third request to reserve a third group of one or more units of the equity instrument offering;

(2) determining, at the one or more computers, using the third request, a third reservation comprising units within the third group that are available for reservation;

(3) modifying, using the one or more computers, at least one of the first reservation or the second reservation;

(4) updating the one or more databases in the one or more computers, to reflect the third reservation and the modification of at least one of the first reservation or the second reservation;

(5) transmitting, from the one or more computers to at least a fourth plurality of participant computers, each of which is associated with a potential equity instrument purchaser, fourth status information that identify at least the following;

(i) units within the plurality of runts of the equity instrument offering that are available for request for reservation,

(ii) the status of the first reservation,

(iii) the status of the second reservation, and

(iv) the third reservation as being reserved.

3. The method of claim 1, wherein prior to the first reservation, there is a plurality of reservations.

4. The method of claim 1, wherein between the first reservation and the second reservation, there is a plurality of reservations.

5. The method of claim 1, wherein between the second reservation and the condition, there is a plurality of reservations.

6. The method of claim 2, wherein between the second reservation and the third reservation, there is a plurality of reservations.

7. The method of claim 2, wherein between the third reservation and the condition, there is a plurality of reservations.

8. The method of claim 1, further comprising the step of setting a threshold price for requests for reservations.

9. The method of claim 1, wherein the number of units of a particular type of the equity instrument offering available at a particular price is limited to fewer units than the total number of units of the equity instrument offering.

10. The method of claim 1, wherein the first reservation is predetermined as being binding.

11. The method of claim 1, wherein the second reservation is predetermined as being binding.

12. The method of claim 1, wherein the first reservation is predetermined as being nonbinding.

13. The method of claim 1, wherein the second reservation is predetermined as being nonbinding.

14. The method of claim 2, wherein the third reservation is predetermined as being binding.

15. The method of claim 2, wherein the third reservation is predetermined as being nonbinding.

16. The method of claim 1, further comprising, prior to step (b), the steps of:

(1) receiving, at the one or more computers, from the first participant computer, first participant information associated with the first potential equity instrument purchaser; and

(2) registering the first potential equity instrument purchaser as an authorized user based at least in part on the first participant information.

17. The method of claim 1, further comprising, prior to step (g), the steps of:

(1) receiving, at the one or more computers, from the second participant computer, second participant information associated, with the second potential equity instrument purchaser; and

(2) registering the second potential equity instrument purchaser as an authorized user based at least in part on the second participant information.

18. The method of claim 2, farther comprising, prior to step (l), the steps of:

(A) receiving, at the one or more computers, from the third participant computer, third participant information associated with the third potential equity instrument purchaser; and

(B) registering the third potential equity instrument purchaser as an authorized, user based at least in part on the third participant information.

19. The method of claim 1, further comprising the step of accepting, at the one or more computers from the first participant computer, the first request based at least in part on a predetermined set of suitability requirements.

20. The method of claim 1, further comprising the step of accepting, at the one or more computers from the second participant computer, the second request based at least in part on a predetermined set of suitability requirements.

21. The method of claim 2, further comprising the step of accepting, at the one or more computers from the third participant computer, the third request based at least in part on a predetermined set of suitability requirements.

22. The method of claim 1, wherein the issuer is a single issuer.

23. The method of claim 1, wherein the issuer comprises a plurality of issuers.

24. The method of claim 1, wherein the issuer is a representative of an issuer.

25. The method of claim 24, wherein the representative is an underwriter.

26. The method of claim 1, wherein the equity instruments, when offered for later sale, comprise secondary offering equity instruments.

27. The method of claim 1, wherein the equity instruments, when offered for later sale, comprise shelf-offering equity instruments.

28. The method of claim 1, wherein the equity instruments, when offered for later sale, comprise international equity instruments.

29. The method of claim 1, wherein the equity instruments, when offered for later sale, comprise convertible equity instruments.

30. The method of claim 1, wherein the one or more types comprise options on equity instruments.

31. The method of claim 1, wherein the one or more types comprise warrants on equity instruments.

32. The method of claim 1, wherein the one or more types comprise a restricted set of equity instruments.

33. The method of claim 1, wherein the one or more types comprise overallotments of equity instruments.

34. The method of claim 1, wherein the one or more types comprise equity instruments available for reservation by a predetermined investor class.

35. The method of claim 34, wherein the predetermined investor class comprises one or more institutional investors.

36. The method of claim 34, wherein the predetermined investor class comprises one or more retail investors.

37. The method of claim 34, wherein the equity instruments for the predetermined investor class have a predetermined price.

38. The method of claim 34, wherein the number of units of equity instruments for the predetermined investor class is fixed.

39. The method of claim 34, wherein the equity instruments for the predetermined investor class have one or more prices calculated, based on the prices of other reservations outside the predetermined investor class.

40. The method of claim 1, wherein the first reservation comprises all of the units of the first group.

41. The method of claim 1, wherein the first reservation comprises fewer than all of the units of the first group.

42. The method of claim 1, wherein the second reservation comprises all of the units of the second group.

43. The method of claim 1, wherein the second reservation comprises fewer than all of the units of the second group.

44. The method of claim 2, wherein the third reservation comprises all of the units of the third group.

45. The method of claim 2, wherein the third reservation comprises fewer than all of the units of the third group.

46. The method of claim 1, wherein the condition is the expiration of a predetermined time.

47. The method of claim 1, wherein the condition is the expiration of a second predetermined time.

48. The method of claim 1, wherein the condition is no more reservation requests are received from the potential equity instrument purchasers for a predetermined period of time.

49. The method of claim 1, wherein the condition is receipt at the one or more computers of a termination request from an issuer computer indicating the offering should be terminated.

50. The method of claim 1, wherein the first group of units in the equity instrument offering comprise a first specific quantity of units of a first type of equity instrument at one or more first specific prices.

51. The method of claim 1, wherein the first group of units in the equity instrument offering comprises a first specific quantity of units of a first type of equity instrument at one or more first specific prices and a second specific quantity of units of the first type of equity instrument at one or more second specific prices.

52. The method of claim 1, wherein the first group of units in the equity instrument offering comprises a first specific quantity of units of a first type of equity instrument at one or more first specific prices and a second specific quantity of units of a second type of equity instrument at one or more second specific prices.

53. The method of claim 1, wherein the second group of units in the equity instrument offering comprises a first specific quantity of units of a first type of equity instrument at one or more first specific prices.

54. The method of claim 1, wherein the second group of units in the equity instrument offering comprises a first specific quantity of units of a first type of equity instrument at one or more first specific prices and a second specific quantity of units of the first type of equity instrument at one or more second specific prices.

55. The method of claim 1, wherein the second group of units in the equity instrument offering comprises a first specific quantity of units of a first type of equity instrument at one or more first specific prices and a second specific quantity of units of a second type of equity instrument at one or more second specific prices.

56. The method of claim 2, wherein the third group of units in the equity instrument offering comprises a first specific quantity of units of a first type of equity instrument at one or more first specific prices.

57. The method of claim 2, wherein the third group of units in the equity instrument offering comprises a first specific quantity of units of a first type of equity instrument at one or more first specific prices and a second specific quantity of units of the first type of equity instrument at one or more second specific prices.

58. The method of claim 2, wherein the third group of units in the equity instrument offering comprises a first specific quantity of units of a first type of equity instrument at one or more first specific prices and a second specific quantity of units of a second type of equity instrument at one or more second specific prices.

59. The method of claim 1, further comprising, prior to step (k), the step of:

transmitting, from the one or more computers to the first participant computer, a first reservation status message relating to the status of the first reservation.

60. The method of claim 1, further comprising, prior to step (k), the step of:

transmitting, from the one or more computers to the second participant computer a second reservation status message relating to the status of the second reservation.

61. The method of claim 2, further comprising, prior to step (l), the step of:

transmitting, from the one or more computers to the third participant computer a third reservation status message relating to the status of the second reservation.

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

allocating, using the one or more computers, the units of the equity instrument offering based at least in part on reservations in the order book.

63. The method of claim 62, wherein the step of allocating is based at least in pail on one or more of the following:

the quantity of units, the price, or the value of each reservation.

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

(1) determining, from the one or more computers, if one or more of the first reservation and the second reservation comprise a total quantity of units in excess of a predetermined number; and

(2) allocating, using the one or more computers, units among one or more of the first reservation and the second reservation.

65. The method of claim 64, wherein the step of allocating further comprises the step of providing additional units within the equity instrument offering.

66. The method of claim 64, wherein the step of allocating further comprises the step of canceling at least part of a reservation.

67. The method of claim 1, further comprising the step of setting the price for each unit in the order book at the price of its corresponding reservation.

68. The method of claim 64, further comprising the step of setting the price for each unit in the order book at the price of its corresponding reservation.

69. The method of claim 62, wherein all units of the equity instrument offering are set at a single price.

70. The method of claim 69, wherein the single price for at least some of the units is different than the price of at least one of the reservations.

71. The method of claim 62, further comprising the step of pricing units at different prices to different potential equity instrument purchasers.

72. The method of claim 1, further comprising the step of setting a price of the units as a function of aspects of all the reservations in the order book.

73. The method of claim 72, wherein the function is based on an average of the prices of the reservations in the order book.

74. The method of claim 72, wherein the function is based on adjusting the average of the prices to set terms of the equity instrument price.

75. The method of claim 74, wherein the average is a weighted average.

76. The method of claim 1, further comprising the step of rewarding potential equity instrument purchasers whose requests for reservation are early in time.

77. The method of claim 76, wherein the reward comprises a favorable price.

78. The method of claim 76, wherein the reward comprises an additional allocation of the units.

79. The method of claim 76, wherein the reward comprises post-sale price support.

80. The method of claim 1, further comprising the step of not accepting a request for reservation that foils to meet a predetermined condition.

81. The method of claim 1, wherein a commission on the later-sale of the units is a function of the value of the units of the order book.