Method and system for optimal pricing and allocation with canceling/modifying of indications of interest for a set of equity instruments to be offered

• US 7,698,211 B2
• Filed: 01/12/2007
• Issued: 04/13/2010
• Est. Priority Date: 03/05/2004
• Status: Active Grant

• Current Assignee: Barry Forman
• Original Assignee: URSO Limited
• Inventors: Avery, N. Caleb
• Primary Examiner(s): Poinvil; Frantzy
• Assistant Examiner(s): GRAHAM, CLEMENT B
• Application Number:
  US11/652,764
• Publication Number:
  US 20070118464A1
• Time in Patent Office: 1,187 Days
• Field of Search: 705/34, 705 35- 38
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/00 Commerce
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0601 Electronic shopping [e-shopping]
• 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 40/03 Credit; Loans; Processing thereof
• 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

Abstract

A method and system for the determination of optimal pricing and allocation of securities in an open, competitive environment. The method and system may also be used in developing pre-markets of other items that are difficult to price and allocate in a competitive manner, such as the underwriting/securitization of contracts for property; future revenue/earning streams from an asset and/or group of assets; underwritten insurance portfolios, intellectual property and other goods and services. The system of price optimization and allocation is accomplished by interactive feedback of information using a display and including competitive participation of individual members of the public (and/or their agents) or institutional buyers over a data network e.g., the Internet, uncovering the nature and identification of demand in a self-organizing fashion. Demand emerges through participants'"'"' interaction with the system and with each other, via a graphically-supported, interactive reservation process. Also, there is provided an interactive reservation process whereby additional units may be allocated.

Claims

1. A computer-implemented method for generating an order book of reservations for potential equity instrument purchasers in a set of equity instruments to be offered by an issuer, comprising the steps of:

(a) storing, on one or more computer readable media that are operatively coupled to one or more processors, a database comprising information relating to a plurality of units of an equity offering of one or more types at one or more prices that are available for reservation, wherein each of the units of the equity offering is intended to be offered as an equity instrument for later sale to the potential equity instrument purchasers;

(b) transmitting, from the one or more processors which are operatively connected to a communication device, a first set of one or more signals to at least a first plurality of the potential equity instrument purchasers that identify the status of the plurality of units of the equity offering, wherein the status comprises an identification of units of the equity offering at each type and each price that are available;

(c) receiving, at the one or more processors, a second set of one or more signals that indicate a request by a first potential equity instrument purchaser to reserve a first group of one or more of the units of the equity instrument offering;

(d) determining, at the one or more processors, using the second set of one or more signals, a first reservation comprising units within the first group that are available for reservation;

(e) updating the database on the one or more computer readable media to reflect the first reservation;

(f) transmitting, from the one or more processors, a third set of one or more signals to at least a second plurality of potential equity instrument purchasers that identify at least the following;

(i) units within the plurality of units of the equity instrument offering that are available for request for reservation, and

(ii) the first reservation as being reserved;

(g) receiving, at the one or more processors, a fourth set of one or more signals that indicate a request by a second potential equity instrument purchaser to reserve a second group of one or more units of the equity instrument offering;

(h) determining, at the one or more processors, using the fourth set of one or more signals, a second reservation comprising units within the second group that are available for reservation;

(i) updating the database on the one or more computer readable media to reflect the second reservation;

(j) transmitting, from the one or more processors, a fifth set of one or more signals to at least a third plurality of potential equity instrument purchasers that identify at least the following;

(i) units within the plurality of units of the equity instrument offering that are available for request for reservation,

(ii) the first reservation as being reserved, and

(iii) the second reservation as being reserved;

(k) receiving, at the one or more processors, a sixth set one or more signals that indicate a request by a third potential equity instrument purchaser to reserve a third group of one or more units of the equity instrument offering;

(l) determining, at the one or more processors, using the sixth set of one or more signals, a third reservation comprising units within the third group that are available for reservation;

(m) modifying at least one of the first reservation and the second reservation to remove at least some of the units in the modified reservation;

(n) updating the database on the one or more computer readable media to reflect the third reservation and the modification of at least one of the first reservation and the second reservation;

(o) transmitting, from the one or more processors, a seventh set of one or more signals to at least a fourth plurality of potential equity instrument purchasers that identify at least the following;

(i) units within the plurality of units of the equity instrument offering that are available for request for reservation,

(ii) the status of the first reservation,

(iii) the status of the second reservation, and

(iv) the third reservation as being reserved;

(p) terminating, upon the occurrence of a condition, the transmission of signals that identify the plurality of equity units that are intended to be offered for later sale; and

(q) generating the order book that comprises reservations that are stored on the database.

2. The method of claim 1, wherein in step (m) the modified first reservation includes at least one unit as being reserved.

3. The method of claim 1, wherein in step (m) the first reservation is modified and the modified first reservation includes no units as being reserved.

4. The method of claim 1, wherein in step (m) the first reservation is modified and the method further comprises the step of transmitting, from the one or more processors, an eighth set one or more signals that indicate to the first potential equity instrument purchaser information relating to the modified first reservation.

5. The method of claim 1, wherein in step (m) the second reservation is modified and the modified second reservation comprises at least one unit as being reserved.

6. The method of claim 1, wherein in step (m) the second reservation is modified and the modified second reservation comprises no units as being reserved.

7. The method of claim 1, wherein in the step (m) the second reservation is modified and the method further comprises the step of transmitting, from the one or more processors, an eighth set of one or more signals that indicate to the second potential equity instrument purchaser information relating to the modified second reservation.

8. The method of claim 1, wherein the number of the plurality of units of the equity offering of one or more types at one or more prices that are available for reservation are increased.

9. The method of claim 1, further comprising the step of transmitting an eighth set of one or more signals to at least a fifth plurality of potential equity instrument purchasers that identify new units available for reservation that have been added to the plurality of units of the equity instrument offering.

10. The method of claim 1, wherein prior to the first reservation, there is a plurality of reservations.

11. The method of claim 1, wherein between any two of the reservations, there is a plurality of other reservations.

12. The method of claim 1, wherein between the third reservation and the occurrence of the condition, there is a plurality of reservations.

13. The method of claim 1, wherein the one or more types comprise options on equity instruments.

14. The method of claim 1, wherein the one or more types comprise warrants on equity instruments.

15. The method of claim 1, wherein the one or more types comprise a restricted set of equity instruments.

16. The method of claim 15, wherein the one or more types of restricted set of equity instruments comprise overallotments of equity instruments.

17. The method of claim 1, wherein the equity instruments, when offered for later sale, comprise secondary offering equity instruments.

18. The method of claim 17, wherein the equity instruments, when offered for later sale, comprise shelf-offering equity instruments.

19. The method of claim 1, wherein the equity instruments, when offered for later sale, comprise international equity instruments.

20. The method of claim 1, wherein the equity instruments, when offered for later sale, comprise convertible equity instruments.

21. The method of claim 1, wherein the first set of one or more signals, the third set of one or more signals, and the fifth set of one or more signals further comprise display information to direct a graphical user interface of a computer system receiving the signals to graphically display the status of the plurality of units of the equity instrument offering.

22. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a historical representation of the quantity of units in reservations made as a function of time.

23. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display for each reservation price along a first axis and quantity along a second axis.

24. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display along a third axis an additional aspect of each reservation.

25. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a plurality of axes, and the information displayed in at least one axis changes.

26. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation of a normalization comprising at least two of the reservations.

27. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation of previous offerings of similar units.

28. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation of reservations exceeding a predetermined size.

29. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation of the type of entity associated with each reservation.

30. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation that is one or more of the following:

static;

iterative; and

a simulation.

31. The method of claim 21, wherein the display information sent to the graphical user interface of the first potential equity instrument purchaser is generated based on information relating to the first potential equity instrument purchaser.

32. The method of claim 21, wherein the display information sent to the graphical user interface of the second potential equity instrument purchaser is generated based on information relating to the second potential equity instrument purchaser.

33. The method of claim 21, wherein the display information sent to the graphical user interface of the third potential equity instrument purchaser is generated based on information relating to the third potential equity instrument purchaser.

34. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display additional information with at least one of the modified reservations.

35. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a calculator.

36. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation of there being accepted reservations that exceed the number of available units.

37. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation of a spread in the prices associated with each reservation.

38. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation of changes in prices of the reservations over time.

39. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display an identification of the potential purchaser of at least one of the first, second, third, and modified reservations.

40. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a representation of a projected set of reservations.

41. The method of claim 21, wherein the representation includes a representation of the outcomes of game theory-based scenarios.

42. The method of claim 1, wherein the method is carried out as a simulation.

43. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display multiple displays for units having different characteristics.

44. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display split screens for units having different characteristics.

45. The method of claim 21, wherein the display information further comprises information to direct the graphical user interface to display a tabbed screen for units having different characteristics.

46. The method of claim 1, further comprising the step of transmitting an eighth set of one or more signals, at any point in time, that direct a graphical user interface of a computer system receiving the eighth signal to display information stored in the database.

47. The method of claim 46, wherein the computer system to which the eighth set of one or more signals is transmitted to is one or more computers of one or more of the following:

the issuer, and one or more agents of the issuer.

48. The method of claim 1, further comprising the step of setting the price for each unit in the order book at the price of its corresponding reservation.

49. The method of claim 1, wherein the units of the equity instrument offering are set at a single price.

50. The method of claim 49, wherein the single price for at least some of the units is different than the price of at least one of the reservations.

51. The method of claim 1, further comprising the step of pricing units at different prices to different potential equity instrument purchasers.

52. The method of claim 1, further comprising the step of setting a price of the units as a function of aspects of all the reservations in the order book.

53. The method of claim 52, wherein the function is based on an average of the prices of the reservations in the order book.

54. The method of claim 52, wherein the function is based on adjusting the average of the prices to set terms of the equity instrument prices.

55. The method of claim 54, wherein the average is a weighted average.

56. The method of claim 1, further comprising the step of rewarding potential equity instrument purchasers whose requests for reservation are early in time.

57. The method of claim 56, wherein the reward comprises a favorable price.

58. The method of claim 56, wherein the reward comprises an additional allocation of the units.

59. The method of claim 56, wherein the reward comprises post-sale price support.

60. The method of claim 1, further comprising the step of not accepting a request for reservation that fails to meet a predetermined condition.

61. The method of claim 1, wherein a commission on the later sale of the units is a function of the value of the units of the order book.