Bond trading system

• US 5,915,209 A
• Filed: 10/03/1997
• Issued: 06/22/1999
• Est. Priority Date: 11/21/1994
• Status: Expired due to Term

• Current Assignee: BGC Partners LP (BGC Group, Inc.)
• Original Assignee: BGC Partners Incorporated (BGC Group, Inc.)
• Inventors: Lawrence, David
• Primary Examiner(s): CUMMING, WILLIAM D
• Application Number:
  US08/943,995
• Time in Patent Office: 627 Days
• Field of Search: 364/408, 395/237, 455/31.2
• US Class Current: 340/3.7
• CPC Class Codes: G06Q 30/08 Auctions

Abstract

The invention provides a computer-implemented municipal bond trading system having a capability to conduct a private electronic auction of bid wanteds between a central brokers'"'"' broker and multiple prospective remote bidders and to maintain a reference database of accurate bond lot descriptions and identifications, notably, CUSIP (trademark) numbers.

Claims

1. A computer-implemented bond trading system embodied on a computer-readable medium, the system enabling a broker to effect a sales transaction of a bond on behalf of a seller to a high-bidding buyer in a private auction conducted without disclosing the seller'"'"'s identity to the buyer, and without revealing bids to other bidders in a broker-conducted private auction of a bond lot to multiple prospective buyers wherein the system comprises:

a) a broker computer system for electronically distributing a bid wanted form to the prospective buyers to solicit bids for the bond lot at prices determined by the buyers, each said bid wanted form having;

i) bond lot identification information identifying a bond lot to be sold;

ii) an auction deadline for receipt of bids on the bond lot to be sold, the deadline being not more than two days after electronic distribution of the bid wanted form; and

iii) no seller identification information; and

b) means for receiving the solicited bids for the bond lot, from the prospective buyers at the broker station, in secrecy and prior to the auction deadline;

wherein the broker computer system electronically determines a high bid for the auctioned bond lot from the received bids, the high bid being the bid with the highest price, whereby the sales transaction selling the bond lot to the high bidder at the high bid price can be effected.

2. A system according to claim 1 providing for approval of the high bid by the seller before completing the sales transaction without disclosure of the high bidder'"'"'s identity to the seller.

3. A system according to claim 1 wherein the sales transaction is system-implemented.

4. A system according to claim 1 wherein the prospective buyers receive bid wanted forms from, and return bids to, the broker via a WAN.

5. A system according to claim 4 wherein each prospective buyer employs a software component of the system, to perform buyer functions of the system, the component being implemented on the buyer'"'"'s computer station without employing dedicated hardware.

6. A system according to claim 1 wherein the seller transmits offers of bond lots to be sold to the broker and receives high bids to be approved from the broker via a WAN and employs a software component of the system to perform seller functions of the system.

7. A system according to claim 1 employed to distribute the bid wanted form to at least one hundred prospective buyers within not more than one hour.

8. A system according to claim 1 wherein the bond lot is a corporate security lot, a municipal bond lot or a dollar bond lot.

9. A system according to claim 1 wherein multiple bond lots for which bids are solicited are listed on the bid wanted form.

10. A system according to claim 1 wherein the bid wanted form identification information comprises a CUSIP (trademark) number and description and one or more of, state of origin, maturity, par amount, yield particulars, concession particulars, net yields, dollar price, gross price and net dollar price whereby the bond lot is uniquely identified.

11. A system according to claim 1 wherein the priced bids received by the broker comprise a yield, dollar or other amount to indicate the price bid for the bond lot and a bidder identifier to identify the prospective buyer.

12. A system according to claim 1 wherein the system is networked to the prospective buyers and provides timed alerts to warn of approaching auction deadlines.

13. A system according to claim 1 wherein the bid wanted form comprises a current and authenticated bond lot description retrieved electronically from a reference database.

14. A system according to claim 1 wherein the additionally to the public information provided in the bid wanted form, the bond lot is system-supplied with private information, relating to a trader'"'"'s activities regarding the bond lot.

15. A system according to claim 1 comprising a remote trader module for use by sellers and prospective buyers, the remote trader module enabling buying or selling traders to maintain their own inventory records on their personal computers with bond lot information segregated between public and private information.

16. A computer-implemented bond trading system having a program embodied on a computer-readable medium enabling a broker to complete a bond-sale transaction to high bidders on behalf of prospective sellers, said bond trading system comprising:

a) a bid wanted entry module to create electronic bid wanted forms, each said bid wanted form having a bond identifier, a bond lot description, par value, and an auction timetable specifying a deadline for receipt of bids on the bond lot;

b) bid wanted broadcast means to broadcast said bid wanted forms to prospective buyers, in accordance with said auction timetable; and

,

c) bid entry means to receive bids in accordance with said auction timetable and determine a high bidder;

wherein a transaction comprising acceptance of a high bid by a seller is system implemented and wherein the system further comprises

d) a buyers file of prospective buyers, said buyers file having a fax address for each said buyer;

e) a broadcast preparation module to select and tag said bid wanted forms for broadcast and to specify a relative broadcast time for completion of broadcasting to said prospective buyers; and

f) a fax broadcast service communication module including a fax broadcast service address to send said selected bid wanteds to said fax broadcast service for broadcast to said prospective buyers by said broadcast time.