Method and apparatus for trading securities electronically

• US 6,029,146 A
• Filed: 08/21/1996
• Issued: 02/22/2000
• Est. Priority Date: 08/21/1996
• Status: Expired due to Term

• Current Assignee: Citibank NA (Citigroup Incorporated)
• Original Assignee: Crossmar Inc (Citigroup Incorporated)
• Inventors: Fitzpatrick, Rick, Jacobs, Dave M., Hawkins, John G.
• Primary Examiner(s): Cosimano, Edward R.
• Application Number:
  US08/700,836
• Time in Patent Office: 1,280 Days
• Field of Search: 235/379, 395/200.33, 705/30, 705/35, 705/37, 709/203
• US Class Current: 705/35
• 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

Abstract

The Broker to Broker Matching Electronic Trading Confirmation system confirms and settles trade orders placed between brokers from various regions of the world. It automatically matches the originating broker'"'"'s orders with the executing broker'"'"'s confirmations, generates and sends settlement instructions to the broker'"'"'s corresponding clearing agents, and allows those clearing agents to monitor orders before the orders are executed, minimizing risk and improving settlement rates.

Claims

1. A system for transmitting electronic information for trading securities among brokers in a securities transaction, comprising:

a database, the database storing standing delivery instructions relating to at least a first broker;

a data communication device for at least receiving an order message in a secure financial network format from the first broker, wherein the order message comprise a buy order or a sell order for trading securities, forwarding the order message in the secure financial network format to a second broker, receiving a confirmation message verifying execution of the order message in the secure financial network format from the second broker and forwarding the confirmation message in the secure financial network format to the first broker, forwarding a first notification message in the secure financial network format to a first clearing agent, and forwarding a second notification message in the secure financial network format to a second clearing agent, wherein the first and second notification messages comprise settlement instructions for settling the transaction; and

a processor coupled to the data communication device and the database, the processor for automatically constructing the first notification message in the secure financial network format using data elements from the corresponding order and confirmation messages and the corresponding stored standing delivery instructions, and automatically constructing the second notification message in the secure financial network format using data elements from the corresponding order and confirmation messages and the corresponding stored standing delivery instructions.

2. A system as recited in claim 1, further comprising the processor for accessing the database and retreiving the stored standing delivery instructions corresponding to the order message from the first broker and appending the retrieved standing delivery instructions to the order message, and the data communication device for forwarding the appended standing delivery instructions along with the order message to the second broker.

3. A system as recited in claim 1, further comprising:

a public network in communication with the data communication device, wherein the public network is adapted for transmission of at least one message selected from the group consisting of the order message, the confirmation message, the first notification message and the second notification message; and

a secure financial network in communication with the data communication device, wherein the secure financial network is adapted for transmission of at least one message selected from the group consisting of the order message, the confirmation message, the first notification message and the second notification message.

4. A system for electronically trading securities, the system being compatible with a secure financial network, comprising:

a database storing standing delivery instructions relating to at least a first broker, a second broker, a first clearing agent and a second clearing agent;

a server, the server including;

a data communication device for receiving an order message in a secure financial network format from the first broker and forwarding the order message in the secure financial network format to the second broker, receiving a confirmation message in the secure financial network format from the second broker and forwarding the confirmation messages in the secure financial network format to the first broker, forwarding a first notification message in the secure financial network format to the first clearing agent, forwarding a second notification message in the secure financial network format to the second clearing agent, wherein the server stores the order, confirmation and notification messages until retrieved by an appropriate recipient; and

a processor coupled to the data communication device and the database, the processor for matching the order message with the confirmation message, preparing the first notification message in the secure financial network format using data elements from the order and confirmation messages and the stored standing delivery instructions, preparing a second notification message in the secure financial network format using data elements from the order and confirmation messages and the stored standing delivery instructions;

at least two broker workstations, each broker workstation including;

a data communication device coupled to the data communication device of the server, the data communication device for transmitting and receiving the order message in the secure financial network format, transmitting and receiving the confirmation message in the secure financial network format, and receiving the notification message in the secure financial network format;

a first graphical user interface for receiving from the first broker the order message to buy or sell securities and for directing the order message to the second broker;

a second graphical user interface for receiving from the second broker the confirmation message indicating that the order message was executed and for directing the confirmation message to the first broker; and

a third graphical user interface for receiving from either the first or second broker a set of the standing delivery instructions; and

at least two clearing agent workstations, each clearing agent workstation being coupled to the server, and including a fourth graphical user interface for receiving from the respective first or second clearing agent a connection request to the server and downloading the respective first or second notification message.

5. The system according to claim 4, wherein the first and second graphical user interfaces include formats for permitting a broker to override the standing delivery instructions.

6. The system according to claim 4, wherein the broker workstations automatically dial the server at pre-defined intervals.

7. The system according to claim 4, wherein the server further comprises means, when the clearing agent logs into the server, for sending the clearing agent the notification message of the transaction, and applying a time stamp indicating the time when the clearing agent downloads the notification message.

8. The system according to claim 4, wherein the server further comprises means for receiving the order message, means for stamping the order message with a time code, means for assigning a reference number to the order message and means for adding to the order message the first broker'"'"'s standing delivery instructions.

9. The system according to claim 4, wherein the standing delivery instructions stored in the database include at least one set of data selected from the group consisting of a first broker'"'"'s user identification, a second broker'"'"'s user identification, a place of settlement, a country of settlement, a method of settlement, and a security type.

10. The system according to claim 4, wherein the at least two broker workstations and the server each comprise means for receiving from the first or second broker a request to override the standing delivery instructions stored in the database by receiving from the first or second broker settlement data on the order message or the confirmation message.

11. The system according to claim 4, wherein at least one of the at least two broker workstations includes:

means for receiving from the second broker the confirmation message that verifies that the order message was executed;

means for saving the confirmation message locally; and

means for sending the confirmation message to the server.

12. The system according to claim 4, wherein the first graphical user interface enables receiving a password from the first broker, wherein receiving the password causes the server to assign an internet protocol address to the broker workstation used by the first broker, and to create and store a user password and internet protocol address as the user'"'"'s encrypted key, each of which is stored in the broker workstation used by the first broker.

13. The system according to claim 4, wherein each broker workstation is adapted to display:

the order message having both mandatory and optional fields, wherein the mandatory fields include at least one field selected from the group consisting of quantity, reference number, instrument, creation date, time limit, price limit, security type, counter party and type of safekeeping, and wherein the optional fields include at least one field selected from the group consisting of routing code, stop price, charges and override standing delivery instructions;

the confirmation message including both mandatory and optional fields, wherein the mandatory fields include at least one field selected from the group consisting of order quantity, reference number, instrument, settlement amount, trade price, price type, security type, trade date, settle date, and counter party, and wherein the optional fields include at least one field selected from the group consisting of charge tax, charge write, charge stamp and charge confirmation; and

the first and second notification messages having at least one field selected from the group consisting of settlement country, clearing agent, depository, address, account, safekeeping and wire instructions.

14. The system according to claim 4, wherein the server further comprises:

means for determining whether the order message comprises a buy order or a sell order; and

means for varying the type of first and second notification messages, respectively, sent to the first and second clearing agents, respectively, depending upon whether the order message comprises the buy order or the sell order.

15. The system according to claim 14, wherein the determining means further includes:

means for constructing and sending a first type message to the first clearing agent if the order message comprises the buy order;

means for constructing and sending a second type message to the second broker and the second clearing agent if the order message comprises the buy order;

means for constructing and sending a second type message to the first clearing agent if the order message comprises the sell order;

means for constructing and sending a first type message to the second broker and the second clearing agent if the order message comprises the sell order;

wherein the first type message is the first or second notification message comprising a settlement instruction selected from the group consisting of a receive against payment message and a receive free message; and

wherein the second type message is the first or second notification message comprising a settlement instruction selected from the group consisting of a deliver against payment message and a deliver free message.

16. A method for trading and settling securities in a securities transaction, comprising:

receiving an order message at a host computer, wherein the order message comprises a buy order or a sell order;

transmitting the order message from the host computer to an executing broker;

transmitting a confirmation message from the executing broker to the host computer, wherein the confirmation message verifies the execution of the order message;

automatically constructing within the host computer a notification message for settling the transaction by utilizing data elements from the order message, from the confirmation message and from a standing delivery instructions database accessible by the host computer, wherein the standing delivery instructions database includes a plurality of standing delivery instructions; and

transmitting the notification message to a first clearing agent for settlement of the transaction.

17. The method of claim 16, further comprising sending the order message from a broker computer associated with an originating broker.

18. The method of claim 16, further comprising receiving the order message from the host computer at a broker computer associated with the executing broker.

19. The method of claim 16, wherein transmitting the confirmation message further comprises transmitting the confirmation message from a broker computer associated with the executing broker.

20. The method of claim 16, wherein utilizing data elements from the standing delivery instruction database comprises selecting at least one standing delivery instruction from the plurality of standing delivery instructions, wherein the at least one standing delivery instruction corresponds to the order message.

21. A method as recited in claim 16, wherein automatically constructing the notification message further comprises:

determining whether the order message comprises the buy order or the sell order; and

varying a type of the notification message depending on whether the order message is the buy order or the sell order.

22. A method as recited in claim 21, further comprising:

constructing a first type of the notification message if the order message comprises the buy order, wherein the first type comprises a settlement instruction selected from the group consisting of a receive against payment message and a receive free message; and

constructing a second type of the notification message if the order message comprises the sell order, wherein the second type comprises a settlement instruction selected from the group consisting of a deliver against payment message and a deliver free message.

23. The method of claim 16, wherein the host computer receives the message via a communication network.

24. The method of claim 23, wherein the communication network is selected from the group consisting of a public network and a secure financial network.

25. The method of claim 23, wherein the communication network is a SWIFT network.

26. The method of claim 16, wherein transmitting the order message to the executing broker occurs via a communication network.

27. The method of claim 26, wherein the communication network is selected from the group consisting of a public network and a secure financial network.

28. The method of claim 26, wherein the communication network is a SWIFT network.

29. The method of claim 16, wherein transmitting the confirmation message from the executing broker to the host computer occurs via a communication network.

30. The method of claim 29, wherein the communication network is selected from the group consisting of a public network and a secure financial network.

31. The method of claim 29, wherein the communication network a SWIFT network.

32. The method of claim 16, further comprising appending one standing delivery instruction from the plurality of standing delivery instructions to the order message prior to transmitting the order message to the executing broker, wherein the standing delivery instruction corresponds to the order message.

33. The method of claim 32, wherein appending the standing delivery instruction is performed by the host computer.

34. The method of claim 32, wherein receiving an order message further comprises receiving an order message and a temporary standing delivery instruction associated with the order message, wherein the temporary standing delivery instruction overrides the standing delivery instruction from the standing delivery instruction database.

35. The method of claim 34, wherein the temporary standing delivery instruction is appended to the order message by an originating broker.

36. A method for trading and settling securities in a securities transaction, comprising:

receiving a trade message at an executing broker, wherein the trade message comprises a buy order or a sell order to trade securities;

transmitting a confirmation message from an executing broker to a host computer, wherein the confirmation message verifies the execution of the trade message;

transmitting the confirmation message from the host computer to an originating broker;

automatically constructing via the host computer an originating broker order utilizing data elements of the confirmation message; and

transmitting the originating broker order to the originating broker to complete the originating broker'"'"'s record of the securities transaction.

37. A method for trading securities as recited in claim 36, wherein the receiving of the trade message at the executing broker is via a communication method selected from the group consisting of telephoning, faxing and e-mailing.

38. A method for trading securities as recited in claim 36, further comprising:

automatically constructing a notification message for settlement utilizing data elements from the originating broker order and the confirmation message; and

transmitting the notification message to a first clearing agent for performing settlement of the securities transaction.