Method and system for computer-implemented trading of secondary market debt securities

• US 7,526,443 B2
• Filed: 02/13/2004
• Issued: 04/28/2009
• Est. Priority Date: 12/22/2000
• Status: Expired due to Term

• Current Assignee: MarketAxess Holdings Inc.
• Original Assignee: MarketAxess Holdings Inc.
• Inventors: Moseley, Rachel, Agarwal, Brijesh, Schiffman, Richard J.
• Primary Examiner(s): Poinvil; Frantzy
• Application Number:
  US10/779,082
• Publication Number:
  US 20040172356A1
• Time in Patent Office: 1,901 Days
• Field of Search: 705 10- 44
• US Class Current: 705/35
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• 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
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

A computer-implemented method and system for trading of debt securities (bonds), where multiple dealers participate and compete on a single platform (100). Dealers and investors have respective interfaces (250, 230) for communicating. In one aspect, dealers announce new debt security issues (400), the investors communicate an indication of interest (IOI) (500) in purchasing the new debt security issues, and the issues are allocated to the investors. In another aspect, issues from multiple dealers are made available to investors on a secondary trading market in a searchable format (1000). In response to price inquiries sent by the investors (1200), the dealers provide offers (1300) which are briefly held and released to the investor concurrently to allow the investor to consider all offers together. In another aspect, the dealers post bid and offer terms for actively traded issues (1700) that are updated in real-time to avoid the need for the inquiry procedure.

Claims

1. A system for negotiating the price of a traded security, comprising:

a computer providing a trading interface and a message from a dealer with bid and/or offer terms for the security; and

a data center enabled to communicate the security, and bid and/or offer terms therefor, to investors in a market,

wherein the data center is enabled to receive a firm offer or an indication of interest for the security from a particular investor in the market,

wherein the firm offer signals an intention to trade immediately by the particular investor;

wherein the data center is enabled to communicate a message to the particular investor indicating whether the dealer accepts or rejects the firm offer, and enforcing limits on negotiation in response to the submitted inquiry,

wherein the data center is enabled to receive a plurality of the available inventory from the plurality of dealers for display to and access by the plurality of investors;

wherein the data center is enabled to display to the plurality of investors an available inventory of security issues on a standardized and sortable manner that are being offered or bid on by the plurality of dealers in a secondary resale market;

wherein the data center is enabled to allow a plurality of dealers to provide a bid in response to the indication of interest,

wherein the data center is enabled to store a bid from each of the plurality of dealers to the investor at substantially the same time, and

wherein the data center is enabled to allow the investor to accept, reject, or provide a counter-offer to at least one bid.

2. A method for negotiating the price for a traded security using a trading interface, comprising:

receiving a message from at least one dealer with at least one bid and offer terms for a security;

communicating the security, and the at least one bid and offer terms thereof, to investors in a market;

receiving from a particular investor firm offer or an indication of interest, for the security;

enabling the at least one dealer to communicate a message to the particular investor indicating whether the dealer accepts or rejects the firm offer, and enabling negotiation in response to the submitted price;

enforcing limits on said negotiation;

receiving from the particular investor an intention to trade immediately by submitting the firm offer;

receiving a plurality of the available inventory from the plurality of dealers for display to and access by the plurality of investors;

displaying to the plurality of investors an available inventory of security issues on a standardized and sortable manner that are being at least one of offered and bid on by the plurality of dealers in a secondary resale market;

enabling the plurality of dealers to provide a bid in response to the indication of interest;

storing the bid from each of the plurality of dealers for a period of time;

providing the stored bid from each of the plurality of dealers to the plurality of investors at substantially the same time; and

enabling the plurality of investors to at least one accept, reject, or provide a counter-offer to at the least one bid.

3. The method of claim 2, further comprising:

enabling the investor to select at least one dealer to which to submit an offer.

4. The method of claim 2, further comprising:

enabling the investor to indicate to at least one dealer an additional status of the offer.

5. The method of claim 4, wherein the additional status is an in competition status.

6. The method of claim 4, wherein the additional status is a time within which a response to the offer must be submitted.

7. The method of claim 2, wherein the limits are a time within which a response to the offer must be submitted.

8. The method of claim 2, farther comprising the step of:

sorting the different inventories according to a plurality of fields including size, rating, issuer, ticker, coupon, maturity, spread, benchmark, dealer, and update time when details of an different inventories are updated by at least one of the plurality of the dealers and investors.

9. The method of claim 8, wherein said displaying step further comprising the steps of:

displaying simultaneously to the plurality of investors the available inventory of security issues on a standardized and sortable manner that are being offered and bid on by the plurality of dealers in a secondary resale market including issue identifier, coupon rate, details of each of the plurality of dealer bids and offers, the inside market, and the freshness of the indicated price, providing the plurality of investors information to determine in real-time which of the multiple dealers provides the best terms for a particular issue of interest.

10. The method of claim 9, further comprising the steps of:

receiving from the plurality of investors a request comprising a bid, or requesting an offer;

receiving from the plurality of investors inquiry details, inquiry size, SD, inquiry type where cash indicates a cash sale, and cross indicates an exchange of securities, and a benchmark;

receiving from the plurality of inventors at least one specific dealer to send the inquiry allowing the inventor to target the at least one specific dealer to negotiate the price for the traded security; and

receiving from the plurality of inventors a firm price signaling that the investor intends to trade immediately or an indication only, which is subject to subsequent agreement on the price of the issue.

11. The method of claim 10, further comprising the steps of:

transmitting to the plurality of dealers information to inform each of the plurality of dealers of competition between the plurality of dealers;

receiving a selection from the plurality of investors of the plurality of dealers;

displaying to the plurality of dealers selected by the plurality of investors details relating to the investor, including the investor identity and the investor inquiry;

displaying to the plurality of inventors responses to the inventor inquiry received from the plurality of dealers;

receiving from at least one of the plurality of dealers at least one of an acceptance of and offer, and acceptance of a bid and responses to the investor'"'"'s inquiry, and accept an offer or bid, and a counteroffer responsive to the spreads determined for the traded security.

12. The method of claim 11, further comprising the steps of:

receiving from at least one of the plurality of investors at least one of an acceptance of and offer, acceptance of a bid, and a counteroffer responsive to the spreads determined for the traded security;

when a counteroffer is received from at least one of the plurality of investors, receiving from at least one of the plurality of dealers a further offer or bid in response; and

repeating the negotiation between the plurality of dealers and the plurality of investors until at least one of the bid, offer and counteroffer is accepted.

13. The method of claim 12, further comprising the steps of:

displaying to the plurality of inventors the bids, offers and counter offers simultaneously for consideration by the plurality of investors; and

receiving an acceptance from at least one of the plurality of investors;

initiating spot negotiations between the at least one of the plurality of inventors and at least one of the plurality of dealers wherein the investor confirms the spot versus a benchmark;

receiving at least one of an acceptance and a re-spot of the benchmark from the at least one of the plurality of inventors via a counteroffer to complete the trade.

14. The method of claim 13, further comprising the steps of:

identifying from the available inventory of the available issues, most actively traded issues based on at least one of size of the traded security when it was originally issued,

designating the identified most actively traded issues in separate categories, including financials, industrials, utilities, international organizations.

15. The method of claim 14, wherein said identifying step further comprised the steps of:

identifying from the available inventory of the available issues, most actively traded issues based on at least one of size of the traded security when it was originally issued, and as a percentage of the number of issues; and

displaying the active issues responsive to relative activity, thereby providing an inventory of actively traded issues which are expected to have high liquidity.

16. A method for negotiating the price for a traded security using a trading interface, comprising:

communicating a security, and bid and/or offer terms thereof, to investors in a market via the trading interface from at least one dealer;

enabling an investor to provide an indication of interest in purchasing the security to at least one dealer;

enabling a plurality of dealers to provide a bid in response to the indication of interest;

storing a bid from each of the plurality of dealers for a period of time;

providing the stored bid from each of the plurality of dealers to the investor at substantially the same time;

enabling the investor to accept, reject or provide a counter-offer to at least one bid; and

enforcing limits on the negotiation;

displaying simultaneously to the plurality of investors an available inventory of security issues on a standardized and sortable manner that are being offered and bid on by the plurality of dealers in a secondary resale market; and

selecting, by the plurality of investors, different inventories from the available inventory, using a plurality of filters for displaying of the different inventories comprising offers, bids, and actively-traded securities, enabling investors to be buyers and sellers of the different inventories for the secondary resale market.

17. The method of claim 16, wherein the indication of interest further comprises a firm offer or a subject to negotiation indication.

18. The method of claim 16, further comprising:

enabling the investor to select at least one dealer to which to submit an indication of interest.

19. The method of claim 16, further comprising:

enabling the investor to indicate to at least one dealer an additional status of the offer.

20. The method of claim 19, wherein the additional status is an in competition status.

21. The method of claim 19, wherein the additional status is a time within which a response to the offer must be submitted.

22. The method of claim 16, wherein the limits are a time within which a response to the offer must be submitted.

23. The method of claim 18, further comprising the steps of:

receiving a plurality of the available inventory from the plurality of dealers for display to and access by the plurality of investors; and

displaying to the plurality of investors an available inventory of security issues on a standardized and sortable manner that are being offered or bid on by the plurality of dealers in a secondary resale market.

24. The method of claim 23, further comprising the steps of:

selecting, by the plurality of investors, different inventories from the available inventory, comprising investment-grade US securities and Eurobond securities; and

trading by the plurality of investors of the different inventories from the available inventory.

25. The method of claim 23, further comprising the step of:

sorting the different inventories according to a plurality of fields including size, rating, issuer, ticker, coupon, maturity, spread, benchmark, dealer, and update time when details of an different inventories are updated by at least one of the plurality of the dealers and investors.

26. The method of claim 25, wherein said displaying step further comprising the steps of:

displaying simultaneously to the plurality of investors the available inventory of security issues on a standardized and sortable manner that are being offered and bid on by the plurality of dealers in a secondary resale market including issue identifier, coupon rate, details of each of the plurality of dealer bids and offers, the inside market, and the freshness of the indicated price, providing the plurality of investors information to determine in real-time which of the multiple dealers provides the best terms for a particular issue of interest.

27. The method of claim 26, further comprising the steps of:

receiving from the plurality of investors a request comprising a bid, or requesting an offer;

receiving from the plurality of investors inquiry details, inquiry size, SD, inquiry type where cash indicates a cash sale, and cross indicates an exchange of securities, and a benchmark;

receiving from the plurality of inventors at least one specific dealer to send the inquiry allowing the inventor to target the at least one specific dealer to negotiate the price for the traded security; and

receiving from the plurality of inventors a firm price signaling that the investor intends to trade immediately or an indication only, which is subject to subsequent agreement on the price of the issue.

28. The method of claim 27, further comprising the steps of:

transmitting to the plurality of dealers information to inform each of the plurality of dealers of competition between the plurality of dealers;

receiving a selection from the plurality of investors of the plurality of dealers;

displaying to the plurality of dealers selected by the plurality of investors details relating to the investor, including the investor identity and the investor inquiry;

displaying to the plurality of inventors responses to the inventor inquiry received from the plurality of dealers;

receiving from at least one of the plurality of dealers at least one of an acceptance of and offer, and acceptance of a bid and responses to the investor'"'"'s inquiry, and accept an offer or bid, and a counteroffer responsive to the spreads determined for the traded security.

29. The method of claim 28, further comprising the steps of:

receiving from at least one of the plurality of investors at least one of an acceptance of and offer, acceptance of a bid, and a counteroffer responsive to the spreads determined for the traded security;

when a counteroffer is received from at least one of the plurality of investors, receiving from at least one of the plurality of dealers a further offer or bid in response; and

repeating the negotiation between the plurality of dealers and the plurality of investors until at least one of the bid, offer and counteroffer is accepted.

30. The method of claim 29, further comprising the steps of:

displaying to the plurality of inventors the bids, offers and counter offers simultaneously for consideration by the plurality of investors; and

receiving an acceptance from at least one of the plurality of investors;

initiating spot negotiations between the at least one of the plurality of inventors and at least one of the plurality of dealers wherein the investor confirms the spot versus a benchmark;

receiving at least one of an acceptance and a re-spot of the benchmark from the at least one of the plurality of inventors via a counteroffer to complete the trade.

31. The method of claim 30, further comprising the steps of:

identifying from the available inventory of the available issues, most actively traded issues based on at least one of size of the traded security when it was originally issued,

designating the identified most actively traded issues in separate categories, including financials, industrials, utilities, international organizations.

32. The method of claim 31, wherein said identifying step further comprised the steps of:

identifying from the available inventory of the available issues, most actively traded issues based on at least one of size of the traded security when it was originally issued, and as a percentage of the number of issues; and

displaying the active issues responsive to relative activity, thereby providing an inventory of actively traded issues which are expected to have high liquidity.