Computer borrow and loan securities auction system

• US 7,349,881 B1
• Filed: 11/02/2000
• Issued: 03/25/2008
• Est. Priority Date: 11/03/1999
• Status: Active Grant

• Current Assignee: David Lockwood
• Original Assignee: David Lockwood
• Inventors: Lockwood, David
• Primary Examiner(s): Dass; Harish T.
• Application Number:
  US09/890,815
• Time in Patent Office: 2,700 Days
• Field of Search: 705 35- 38, 705/26, 705/53, 395/235, 235/380
• US Class Current: 705/37
• 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 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• 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

Abstract

An auction system is disclosed which allows users to participate using their own, or the exchanges, or a brokers, computers, suitably connected to the auction system. This connection may use the internet or a private leased line or an alternative network. The invention involves a method and system for providing auction mechanisms, including a wide variety of types of auctions as described below, and a central counterparty for assuming credit risk between borrowers and lenders, if the borrowers and lenders chose not to transact with each other. This method and auction system provides a means for borrowers and lenders of securities to meet more efficiently, to trade at a better price, to trade in larger size, to trade more rapidly, and, in some cases eliminate the role of the broker as an intermediary between borrower and lender. This mechanism facilitates not only a borrowing and subsequent short sale of securities but also the financing of securities.

Claims

1. A method for facilitating the mutual exchange of securities and cash, comprising:

receiving a plurality of first indications of offers to lend a security from respective lenders, each of the offers to lend a security indicating a corresponding quantity of the security and a corresponding fee;

receiving a plurality of second indications of offers to borrow the security from respective borrowers, each of the offers to borrow the security indicating a corresponding quantity of the security and a corresponding fee;

matching one of the offers from one of the lenders with one of the offers from one of the borrowers based on the corresponding quantity and the fee; and

sending a notification of a transaction between the one lenders and the one borrower based on the matched offer.

2. The method of claim 1, further comprising recording the transaction in a database electronically accessible to a plurality of borrowers and lenders over at least one computer network and least one computer.

3. A computer system comprising a memory and one or more processors, configured to perform the steps of:

receiving a plurality of first indications of offers to lend a security from respective lenders, each of the offers to lend a security indicating a corresponding quantity of the security and a corresponding fee;

receiving a plurality of second indications of offers to borrow the security from respective borrowers, each of the offers to borrow the security indicating a corresponding quantity of the security and a corresponding fee;

matching one of the offers from one of the lenders with one of the offers from one of the borrowers based on the corresponding quantity and the fee; and

sending a notification of a transaction between the one lenders and the one borrower based on the matched offer.

4. The computer system of claim 3, wherein said computer system is strictly connected to separate listing financial incentives for real-time confirmation of acceptable financial transactions of the borrowing and lending of securities.

5. The computer system of claim 3, further comprising:

at least one Web computer server for serving as host for computer browsers and providing said browsers with the capability to participate in various auctions of a single product at a specified time the specified number of the product available for sale, and

a Web server cooperating the set the database computer separate from some of servers, said computer based computer being in communication with at least one said Web computer server to allow retrieval product information which includes;

a) securities description,

b) a quantity of the security to be auctioned

c) a duration of the auction, and

d) a minimum amount and rate.

6. The computer system of claim 3, wherein the computer system is further configured for implementing one or more auction mechanisms, including an English auction, a Dutch auction, a first price sealed bid uniform second price double auction, a simultaneous bidding hazard system, a handshake whisper time interval auction, a silent auction, a callable bid rotation auction, and a Swiss auction.

7. A method for facilitating the mutual exchange of securities, comprising:

receiving a plurality of first indications of offers to lend a security from respective lenders, each of the offers to lend a security indicating a corresponding quantity of the security and a corresponding fee for lending the security;

receiving a plurality of second indications of offers to borrow the security from respective borrowers, each of the offers to borrow the security indicating a corresponding quantity of the security and a corresponding fee for borrowing the security;

matching one of the offers from one of the lenders with one of the offers from one of the borrowers based on the corresponding quantity and the fee, wherein the fee for lending and the fee for borrowing are equivalent; and

sending a notification of a transaction between the one lenders and the one borrower based on the matched offer.