System and method for providing efficiency and stability to securities financing marketplace

• US 7,937,310 B1
• Filed: 04/14/2006
• Issued: 05/03/2011
• Est. Priority Date: 04/14/2005
• Status: Expired due to Fees

• Current Assignee: Edmon W. Blount
• Original Assignee: Edmon W. Blount
• Inventors: Blount, Edmon W.
• Primary Examiner(s): Colbert; Ella
• Assistant Examiner(s): Tran; Hai
• Application Number:
  US11/404,385
• Time in Patent Office: 1,845 Days
• Field of Search: 705 35- 45, 700/90, 713150-194
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/40 Authorisation, e.g. identification of payer or payee, verification of customer or shop credentials; Review and approval of payers, e.g. check credit lines or negative lists
• 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

Abstract

The present invention provides a system and method for providing matching buyers and sellers of securities. The system and method of the present system provides auction services over a network. A list of designated counterparties is maintained by each of a plurality of lenders. Another list of designated counterparties is maintained by each of a plurality of borrowers. Another list of preferred characteristics (preferences) that a potential borrower would have is maintained by each of a plurality of lenders. Another list of preferred characteristics (preferences) that a potential lender would have is maintained by each of a plurality of borrowers. These lists can be updated daily or as frequently as desired. When securities are to loaned, a matching process accesses the appropriate list of designated counterparties to create a list of one or more suggested counterparty. The matching process also accesses the appropriate list of preferred characteristics. Based on the list of preferred characteristics, a search is made of a database of securities lending information to find matches to the preferred characteristics. Based on the matches, the list of one or more suggested counterparties is updated. The suggested list of counterparties is then sent to an intermediary who completes the loan of securities using the matching information.

Claims

1. A preferred financing system for matching one of a plurality of institutional lenders of investment securities and one of a plurality of entities that borrow investment securities, comprising:

a processor and a memory that generate and store;

a first set of lists of designated recipients and preferred types of recipients of securities made available for lending, the first set of lists including a qualified subset of the plurality of institutional lenders;

a second set of lists of designated lenders and preferred types of lenders of securities made available for lending, the second set of lists including a qualified subset of the plurality of entities that borrow investment securities;

a third set of lists, the third set of lists including a list for each of the plurality of lenders, each list in the third set of lists indicating one or more preferred characteristics of a potential borrower for one of the plurality of lenders;

a fourth set of lists, the fourth set of lists including a list for each of the plurality of traders and investment companies, each list indicating one or more preferred characteristics of a potential lender for one of the plurality of investment companies, the preferred characteristics of a potential lender including a degree to which any prior defaults on a commitment to lend or to consummate a preferred type of securities lending transaction by a lender is important;

the processor accessing the first through fourth set of lists in the memory to generate one or more suggested matches between one the plurality of lenders and one of the plurality of investment houses in accordance with information in the first list, in the second list, in the third list and in the fourth list; and

a communication circuit that communicates the one or more suggested matches to an intermediary.

2. The system as claimed in claim 1, further comprising means for receiving information concerning a securities lending transaction when the securities lending transaction is based on the one or more suggested matches and is consummated.

3. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is a pre-qualification rating of the degree to which the type of relationship(s) a lender has to a borrower is important.

4. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is a pre-qualification rating of the degree to which the type of relationship(s) a borrower has to a lender is important.

5. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is a pre-qualification rating of the degree to which any prior defaults on a commitment to lend or to consummate a preferred type of securities lending transaction by a borrower is important.

6. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is the degree to which a crowd of pre-qualified lenders has made available the particular security names and sizes needed by a crowd of borrowers.

7. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is the degree to which a crowd of pre-qualified borrowers has stated a need for the particular security names and sizes made available by crowd of lenders.

8. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is the degree to which the qualification rating of investment, collateral management and settlement styles for each pre-qualified available lender is important.

9. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is the degree to which the qualification rating of trading, collateral management and settlement styles of each pre-qualified needy borrower is important.

10. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is the degree to which a qualified, available lender is price sensitive and risk tolerant.

11. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is the degree to which a qualified, needy borrower is price sensitive and risk tolerant.

12. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is the degree to which a qualified, available lender'"'"'s settlement requirements are important.

13. The system as claimed in claim 1, wherein one of the one or more characteristics in each list in the third set of lists is the degree to which a qualified, needy borrower'"'"'s settlement requirements are important.

14. A method of using a computer to provide preferred financing decisions with respect to a security for a plurality of potential lenders of the security and for a plurality of potential borrowers of the security, comprising:

the computer generating a list of the plurality of potential borrowers of the security;

the computer generating a list of the plurality of potential lenders of the security;

the computer generating a list of preferred characteristics of each of the potential borrowers of the security for each one of the plurality of lenders of the security,

the computer generating a list of preferred characteristics of each of the potential lenders of the security for each one of the plurality of borrowers, the preferred characteristics of a potential lender of the security including a degree to which any prior defaults on a commitment to lend or to continue a preferred type of securities lending transaction by a lender of the security is important;

the computer accessing each of the lists to generate a plurality of matches between one or more of the plurality of borrowers of the security and one or more of the plurality of lenders of the security; and

the computer communicating the plurality of matches to an intermediary.

15. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential lender is a pre-qualification rating of the degree to which the type of relationship(s) a lender has to a borrower is important.

16. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential borrower is a pre-qualification rating of the degree to which the type of relationship(s) a borrower has to a lender is important.

17. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential borrower is a pre-qualification rating of the degree to which any prior defaults on a commitment to lend or to consummate a preferred type of securities lending transaction by a borrower is important.

18. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential lender is a degree to which a crowd of pre-qualified lenders has made available the particular security names and sizes needed by a crowd of borrowers.

19. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential borrower is a degree to which a crowd of pre-qualified borrowers has stated a need for the particular security names and sizes made available by crowd of lenders.

20. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential lender is a degree to which the qualification rating of investment, collateral management and settlement styles for each pre-qualified available lender is important.

21. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential borrower is a degree to which the qualification rating of trading, collateral management and settlement styles of each pre-qualified needy borrower is important.

22. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential lender is a degree to which a qualified, available lender is price sensitive and risk tolerant.

23. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential borrower is a degree to which a qualified, needy borrower is price sensitive and risk tolerant.

24. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential borrower is a degree to which a qualified, available lender'"'"'s settlement requirements are important.

25. The method as claimed in claim 14, wherein one of the preferred characteristics of the potential lender is a degree to which a qualified, needy borrower'"'"'s settlement requirements are important.