Device and method for improving the speed and reliability of security trade settlements

• US 5,497,317 A
• Filed: 12/28/1993
• Issued: 03/05/1996
• Est. Priority Date: 12/28/1993
• Status: Expired due to Term

• Current Assignee: Omgeo LLC (The Depository Trust & Clearing Corporation)
• Original Assignee: Thomson Trading Services, Inc.
• Inventors: Hawkins, John G., Dean, Helen B., Cardwell, Phillip R., Doherty, Daniel B. V, Reeves, Peter T., Flaherty, Paul J., Paul, Loni J.
• Primary Examiner(s): Weinhardt, Robert A.
• Application Number:
  US08/174,231
• Time in Patent Office: 798 Days
• Field of Search: 364/408, 364/401, 235/379
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A security trade settlement device is provided. The device comprises a database having a plurality of delivery instruction sets, a database receiver for receiving an identifier, a database searcher for searching the database, and a database transmitter for transmitting the retrieved instruction set corresponding to the identifier. The device preferably also comprises a participant transmitter for transmitting the identifier and a participant receiver for receiving and outputting the retrieved, transmitted delivery instruction set. The database preferably also includes a plurality of account information sets which include a custodian delivery instruction set specified by the institution. In other aspects, the invention comprises methods of operating the database and the security trade settlement communication device.

Claims

1. A device for communicating security settlement information between an investor, a broker and a custodian, comprising:

first and second databases having software and hardware for storing and retrieving data according to unique identifiers;

a plurality of broker delivery instructions stored on said first database according to broker identifiers;

information about a plurality of investor accounts stored on said second database according to account identifiers;

a broker transmitter for transmitting a broker identifier to a first database receiver;

a first database transmitter for transmitting a broker delivery instruction retrieved from said first database with the received broker identifier to an investor receiver;

an investor transmitter for transmitting the broker delivery instruction received from the first database transmitter, said investor transmitter also for transmitting an account identifier to a second database receiver;

a second database transmitter for transmitting account information retrieved from said second database with the received account identifier;

a broker receiver for allocating traded security shares according to the account information received from said second database transmitter; and

a custodian receiver for initiating an exchange of funds and securities according to the broker delivery instruction received from said first database transmitter to settle the trade.

2. The device of claim 1 wherein the information about a plurality of investor accounts includes a custodian delivery instruction corresponding to the account for use by the broker to initiate an exchange of funds and securities to settle the trade.

3. The device of claim 1 including a plurality of custodian delivery instructions stored on said first database according to a unique custodian identifier, and wherein said first database includes means for generating a list of custodian identifiers from the stored custodian delivery instructions for use by the investor to specify a custodian for the investor account.

4. The device of claim 3 wherein said first database transmitter also transmits the list of custodian identifiers to the investor receiver.

5. The device of claim 4 wherein said investor transmitter also transmits a custodian identifier corresponding to an investor account to the first database receiver, and wherein said first database transmitter also transmits a custodian delivery instruction retrieved from said first database with the received custodian identifier to the second database receiver for storage on said second database.

6. The device of claim 3 including a custodian input device at a custodian location for generating a custodian delivery instruction to be stored on said first database.

7. The device of claim 6 including means for detecting storage of a custodian delivery instruction on the first database and for generating a message alerting the investor to storage of the custodian delivery instruction, and wherein said first database transmitter also transmits the message to the investor receiver.

8. The device of claim 1 including an investor input unit at an investor location for generating account information to be stored on said second database.

9. The device of claim 8 including means for detecting storage of information about an investor account on the second database and for generating a message alerting the broker to storage of the investor account information, and wherein said second database transmitter also transmits the message to the broker receiver.

10. The device of claim 1 including a broker input unit at a broker location for generating a broker delivery instruction to be stored on said first database.

11. The device of claim 10 including means for detecting storage of a broker delivery instruction on the first database and for generating a message alerting the custodian to storage of the broker delivery instruction, and wherein said first database transmitter also transmits the message to the custodian receiver.

12. A device for facilitating settlement of an investor'"'"'s security trades, comprising:

first and second databases having hardware and software for storing and retrieving data according to unique identifiers;

a plurality of custodian delivery instructions stored on said first database according to custodian identifiers;

an investor transmitter for transmitting information about an investor account to a second database receiver, and for transmitting a custodian identifier corresponding to the account information to a first database receiver;

a first database transmitter including means for retrieving and transmitting the custodian delivery instruction corresponding to the received custodian identifier to the second database receiver;

the second database receiver for receiving the investor account information from the investor transmitter and for receiving the custodian delivery instruction from the first database transmitter, the second database including means for combining the account information and the custodian delivery instruction for storage on said second database according to an account identifier;

the investor transmitter also for transmitting the account identifier;

a second database transmitter for retrieving and transmitting the account information and custodian delivery instruction corresponding to the received account identifier; and

a broker receiver for generating a confirmation message according to the received account information and for initiating an exchange of funds and securities according to the received custodian delivery instruction to settle the trade.

13. The device of claim 12 including a custodian input unit at a custodian location for generating a custodian delivery instruction to be stored on said first database.

14. The device of claim 13 including means for detecting storage of a custodian delivery instruction on the first database and for generating a message alerting the investor to the custodian delivery instruction, and wherein said first database transmitter also transmits the message to the investor receiver.

15. The device of claim 12 including means for detecting storage of information about an investor account on the second database and for generating a message alerting the broker to the investor account information, and wherein said second database transmitter also transmits the message to a broker receiver.

16. The device of claim 12 including a plurality of broker delivery instructions stored on said first database according to a unique broker identifier, and including means for detecting storage. Of a broker delivery instruction on said first database and for generating a message alerting the custodian to the broker delivery instruction, and wherein said first database transmitter also transmits the message to a custodian receiver.

17. A device for communicating security settlement information between a custodian and a broker, comprising:

a database having hardware and software for storing and retrieving data according to unique identifiers;

a plurality of custodian delivery instructions stored on said database according to identifiers;

an investor transmitter for transmitting an identifier;

a database receiver for receiving an identifier transmitted by said investor transmitter, and for retrieving the custodian delivery instruction corresponding to the received identifier;

a database transmitter for transmitting the custodian delivery instruction retrieved from said database; and

a broker receiver for receiving the custodian delivery instruction transmitted from the database transmitter and initiating an exchange of funds and securities in accordance with the custodian delivery instruction to settle the trade.

18. The device of claim 17 including a broker output unit at a broker location for displaying the received custodian delivery instruction.

19. The device of claim 17 wherein the custodian delivery instructions are stored and retrieved on said database together with information about investor accounts, and wherein the identifier comprises an account identifier.

20. The device of claim 19 (including) wherein said database includes a cross reference table of account identifiers and broker account numbers stored thereon, and wherein said database transmitter also transmits the broker account number retrieved from the cross reference table on said database with the received account identifier, and wherein said broker receiver also receives the broker account number to enable identification of the received account information.

21. The device of claim 20 including an investor input unit at an investor location for generating account information and corresponding custodian delivery instructions to be stored on said database.

22. The device of claim 21 including means for detecting storage of information about an investor account on the second database and for generating a message alerting the broker to the investor account information, and wherein said database transmitter also transmits the message to a particular broker, determined from the cross reference table.

23. A device for communicating security settlement information between a broker and a custodian, comprising:

a database having hardware and software for storing and retrieving data according to unique identifiers;

a plurality of broker delivery instructions stored on said database according to broker identifiers;

a broker transmitter for transmitting a broker identifier;

.

a database receiver for receiving a broker identifier transmitted by said broker transmitter, and for retrieving the broker delivery instruction corresponding to the received identifier;

a database transmitter for transmitting a broker delivery instruction retrieved from said database with the received broker identifier to an investor receiver;

an investor transmitter for transmitting the broker delivery instruction received from the database transmitter; and

a custodian receiver for receiving the broker delivery instruction transmitted from the investor transmitter and initiating an exchange of funds and securities in accordance with the broker delivery instruction to settle the trade.

24. The device of claim 23 including a custodian output unit at a custodian location for displaying the received broker delivery instructions.

25. The device of claim 23 wherein said database generates a list of broker names from the stored broker delivery instructions, and wherein said database transmitter also transmits the list of broker names, and wherein the investor receiver uses the received broker list for directing information about trades.

26. A method for communicating security settlement information between an investor, a broker and a custodian, comprising the steps of:

storing a plurality of broker delivery instructions on a first database according to broker identifiers;

storing information about a plurality of investor accounts on a second database according to account identifiers;

transmitting a broker identifier from a broker transmitter to a first database receiver;

retrieving a broker delivery instruction from the first database with the received broker identifier;

transmitting the retrieved broker delivery instruction with a first database transmitter to an investor receiver;

transmitting the broker delivery instruction received by the investor with an investor transmitter to a custodian receiver;

transmitting an account identifier with the investor transmitter to a second database receiver;

retrieving account information from the second database with the received account identifier;

transmitting the retrieved account information with a second database transmitter to a broker receiver;

generating a confirmation message according to the account information; and

initiating exchange of the funds and securities in accordance with the broker delivery instruction.

27. A method for facilitating settlement of an investor'"'"'s security trades, comprising the steps of:

storing a plurality of custodian delivery instructions on a first database according to custodian identifiers;

transmitting information about an investor account from an investor transmitter to a second database receiver;

transmitting a custodian identifier corresponding to the account information from an investor transmitter to a first database receiver;

retrieving the custodian delivery instruction corresponding to the received custodian identifier;

transmitting the received custodian delivery instruction from a first database transmitter to the second database receiver;

receiving the investor account information and the custodian delivery instruction at a second database receiver;

storing the received account information and the received custodian delivery instruction together on a second database according to an account identifier;

transmitting the account identification from the investor transmitter to the second database receiver;

retrieving the account information and custodian delivery instruction corresponding to the received account identifier;

transmitting the retrieved account information and custodian delivery instruction from a second database transmitter to a broker receiver;

allocating securities in accordance with the received account information; and

initiating exchange of securities and funds in accordance with the received custodian delivery instruction.

28. The method of claim 27 including the steps of detecting storage of account information on the second database, generating a message alerting the broker to the account information, and transmitting the message from a second database transmitter to a broker receiver.

29. A method for communicating security settlement information between a custodian and a broker, comprising the steps of:

storing a plurality of custodian delivery instructions on a database according to identifiers;

transmitting an identifier from an investor transmitter to a database receiver;

retrieving the custodian delivery instruction from the database with the received identifier;

transmitting the retrieved custodian delivery instruction from a database transmitter to a broker;

receiving at the broker the custodian delivery instruction transmitted from the database transmitter; and

initiating an exchange of funds and securities according to the custodian delivery instruction.

30. The method of claim 29 including the steps of detecting storage of a custodian delivery instruction on the database, generating a message alerting the investor to the custodian delivery instruction, and transmitting the message from the database transmitter to an investor receiver.

31. A method of communicating security settlement information between a broker and a custodian, comprising the steps of:

storing a plurality of broker delivery instructions on a database according to broker identifiers;

transmitting a broker identifier from a broker transmitter to a database receiver;

retrieving a broker delivery instruction from the database with the received broker identifier;

transmitting the retrieved broker identifier with a database transmitter to an investor receiver;

transmitting the broker delivery instruction with an investor transmitter to a custodian;

receiving at the custodian the broker delivery instruction transmitted from the investor transmitter; and

initiating an exchange of funds and securities according to the broker delivery instruction.

32. The method of claim 31 including the steps of detecting storage of a broker delivery instruction on the database, generating a message alerting the custodian to the broker delivery instruction, and transmitting the message from the database transmitter to the custodian receiver.