Single-period auctions network decentralized trading system and method

• US 7,970,689 B2
• Filed: 01/28/2005
• Issued: 06/28/2011
• Est. Priority Date: 11/17/2000
• Status: Expired due to Fees

• Current Assignee: Setec Astronomy Limited
• Original Assignee: Scale Semiconductor FLG LLC (Intellectual Ventures LLC)
• Inventors: Glodjo, Arman
• Primary Examiner(s): Khattar; Rajesh
• Application Number:
  US11/045,235
• Publication Number:
  US 20050131801A1
• Time in Patent Office: 2,342 Days
• Field of Search: 705/37, 705 35- 45
• 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 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A method and system serve for network dealing for conducting single-period auctions where there is one seller and at least one buyer, but typically multiple buyers. The method and system allow for posting of at least one or multiple items offered for sale on a network by a computer at the seller interconnected to other computers on the network. Bids are submitted by buyers for the items offered for sale with the seller requiring predetermined information about the buyer submitting bids before determining a selling price. The seller applies a selected set of criteria to strike out bids the seller does not wish to consider and applies a seller determined criteria to determine the price at which the seller is willing to sell the item(s).

Claims

1. A method for conducting a single-period auction, comprising:

during a single auction period, receiving, via a computer network, bids submitted by a plurality of offerees to purchase at least one item offered for trade, including an aggregated bid from a first offeree to purchase a desired quantity of the at least one item, wherein the aggregated bid includes;

a first bid to purchase a first quantity of the at least one item, wherein the first bid originates from a first entity to which the first offeree has directly extended credit, and wherein the first entity has directly received an offer for trade of the at least one item from the first offeree; and

a second bid to purchase a second quantity of the at least one item, wherein the second bid originates from a second entity to which the first offeree has not directly extended credit, wherein the second entity has not directly received an offer for trade of the at least one item from the first offeree, wherein the second entity has directly received an offer for trade of the at least one item from an intermediate entity that has directly extended credit to the second entity, and wherein the intermediate entity is not the first offeree; and

after the single auction period concludes, a computer system;

determining a closing price at which an offeror of the at least one item is willing to trade the at least one item, wherein the determining the closing price is based at least in part on the received bids; and

matching two or more bids of the received bids at the determined closing price;

wherein the desired quantity comprises the first quantity and the second quantity.

2. The method of claim 1, wherein said at least one item comprises a plurality of items, wherein said offeror is a seller, and wherein the determining the closing price is based at least in part on one or more of bid quantities associated with the received bids and bid prices associated with the received bids.

3. The method of claim 2, further comprising receiving, via the computer network, instructions from credit-extending agents permitting bids by authorized entities to be made in their name.

4. The method of claim 1, wherein said single-period auction is conducted as a Dutch auction, and wherein the at least one item offered for trade is a plurality of shares.

5. The method of claim 1, wherein the first offeree and the intermediate entity are financial institutions, and wherein the at least one item offered for trade includes a financial instrument.

6. The method of claim 3, wherein any defaults in payment by entities bidding within limits authorized by credit-extending agents are compensated by the credit-extending agents on whose authorization the bids were made, the method further comprising striking some, but not all, of the received bids based at least in part on received information about the offerees.

7. The method of claim 6, wherein the credit-extending agents are contractually obligated to buy the amount of items that their authorized entities bid and any items they bid for in their own name, and wherein said credit-extending agents and said seller have the ability to agree to release any contractual obligations between each other.

42. The method of claim 1, wherein the aggregated bid includes two or more bids originating from entities that have not directly received an offer to trade the item from the first offeree.

43. The method of claim 1, further comprising:

receiving information about the offerees submitting bids; and

after the single auction period concludes, striking some, but not all, of the received bids based at least in part upon the received information about the offerees.

48. The method of claim 1, wherein the at least one item offered for trade includes shares.

8. A system for conducting a single-period auction, the system comprising:

a first computer system configured to provide, to a plurality of offerees, information relating to an item offered for trade by an offeror, wherein the first computer system includes a processor and a memory storing program instructions executable to cause the computer system to;

during a single auction period, receive, via a computer network coupled to the first computer system, bids from ones of the plurality of offerees to buy or sell the item, wherein the plurality of offerees includes a first financial institution, wherein received bids include an aggregated bid from the first financial institution, wherein the aggregated bid includes a plurality of bids, each of which is a bid to buy or sell the item and is from an entity that has been directly extended credit by the first financial institution or by another financial institution, and wherein the plurality of bids of the aggregate bid includes;

a first bid originating from a first entity that has directly received an offer to buy or sell the item from the first financial institution; and

a second bid originating from a second entity that has not directly received an offer to buy or sell the item from the first financial institution, wherein the second entity has directly received an offer to buy or sell the item from a second financial institution that has directly extended credit to the second entity, wherein the second financial institution is different from the first financial institution; and

after the single auction period concludes;

apply an offeror-selected set of criteria to determine a closing price at which the offeror is willing to sell the item, wherein the applying the offeror-selected set of criteria to determine the closing price is based at least in part on the received bids; and

match two or more of the received bids at the determined closing price.

9. The system of claim 8, wherein:

said item comprises a plurality of items;

said offeror is a seller; and

said offerees are buyers that are connected through buyer computers and through the computer network to the first computer system.

10. The system of claim 9, wherein said program instructions are executable by the processor to receive instructions from said credit-extending agents permitting authorized entities to bid in their name.

11. The system of claim 10, wherein said first computer system is configured to conduct said single-period auction as a Dutch auction.

12. The system of claim 9, wherein said item is a plurality of shares, and wherein the applying the offeror-selected set of criteria to determine the closing price is based at least in part on bid prices associated with the received bids.

13. The system of claim 10, wherein any defaults in payment by entities bidding as authorized by credit-extending agents are compensated by the credit-extending agent on whose authorization the bid was made, and wherein the applying the offeror-selected set of criteria to determine the closing price is based at least in part on bid quantities associated with the received bids.

14. The system of claim 10, wherein the credit-extending agents are contractually obligated to buy the amount of items that their authorized entities bid and any items it bids for in its own name, and wherein said credit-extending agents and said offeror have the ability to agree to release any contractual obligations between one another.

44. The system of claim 8, wherein the aggregated bid includes two or more bids originating from entities that have not directly received an offer to trade the item from the first offeree.

45. The system of claim 8, wherein the program instructions are executable to cause the computer system to:

receive information about the offerees submitting bids; and

after the single auction period concludes, apply a set of criteria to determine whether to strike some, but not all, of the received bids, wherein the set of criteria is based at least in part on the information received about the offerees.

15. A method, comprising:

conveying an offer to sell one or more items to a plurality of offerees via a computer network in a single-period auction, wherein the offer to sell is from or on behalf of an offeror;

during a first time period, receiving two or more bids on the offer to sell from two or more of the plurality of offerees via the computer network, wherein each of the received bids is within one or more stored limits specified by at least one of the following;

the offeror and an obligor for the bidding offeree, wherein the one or more limits for a bidding offeree are indicative of that offeree'"'"'s ability to bid with respect to the offer, and wherein the received bids include a first bid from a first of the plurality of offerees, wherein the first bid is an aggregation of collected bids from a first group of entities to whom the first offeree or an intermediate entity has directly extended credit, wherein each collected bid in the first bid is an offer to buy a specified quantity of the one or more items, and wherein the first group of entities includes a first entity that directly receives the offer from the first offeree and a second entity that directly receives the offer from a first intermediate entity that has directly extended credit to the second entity, wherein the second entity has not directly received an offer from the first offeree, wherein the first offeree has not directly extended credit to the second entity, and wherein the first intermediate entity is not the first offeree; and

at the end of the first time period, a computer system matching two or more of the received bids at a computed closing price at which the offeror is willing to sell the one or more items.

16. The method of claim 15, wherein the one or more items are shares.

17. The method of claim 15, wherein for each received bid, either the bidding offeree or its obligor is contractually obligated to honor the bid.

18. The method of claim 15, wherein the one or more stored limits corresponding to the first offeree are indicative of a maximum amount that the first offeree may bid with respect to the offer.

19. The method of claim 18, wherein the maximum amount is set by the offeror.

20. The method of claim 18, wherein the maximum amount is set by an obligor for the first offeree that is different from the offeror.

21. The method of claim 15, wherein the one or more items include two or more of a first item, and wherein the one or more stored limits include one or more limits corresponding to the first offeree that are indicative of the maximum quantity of the first item on which the first offeree may bid.

22. The method of claim 21, wherein the maximum quantity is specified by the offeror.

23. The method of claim 15, wherein the stored set of limits includes one or more limits applicable to a particular one of the first group of entities that is indicative of an amount that the particular entity may bid with respect to the offer, wherein at least one of the one or more limits corresponding to the particular entity is specified by an obligor for the particular entity.

24. The method of claim 23, wherein the obligor for the particular entity is the first offeree.

25. The method of claim 15, further comprising:

receiving information indicative of the identities of the entities from whom each of the received two or more bids originated.

26. The method of claim 15, further comprising:

prior to computing the closing price, striking at least one, but not all, of the received two or more bids from consideration for said matching.

27. The method of claim 15, further comprising:

prior to computing the closing price, striking at least one, but not all, of the received two or more bids from consideration for said matching, wherein said striking is based at least in part on the received information indicative of the identities of the entities from whom each of the bids originated.

28. The method of claim 15, wherein the plurality of offerees includes credit-extending and non-credit-extending entities.

29. The method of claim 15, wherein the plurality of offerees include a first credit-extending entity that is not a financial institution.

30. The method of claim 15, wherein the received two or more bids include a second bid that is received from a first credit-extending entity, wherein the second bid originates from a first non-credit-extending entity, and wherein the first credit-extending entity has extended credit to the first non-credit-extending entity.

31. The method of claim 30, wherein the first credit-extending entity is obligated to honor the second bid in the event that the second bid is matched at the computed closing price and the first non-credit-extending entity defaults on the second bid.

32. The method of claim 15, wherein the first set of criteria is applied to sell all of the offered items to a predetermined number of offerees.

33. The method of claim 15, wherein the first set of criteria is applied to conduct a Dutch auction.

34. The method of claim 15, wherein the first set of criteria is applied to sell a predetermined number of items.

35. The method of claim 15, wherein the first offeree and the intermediate entity are financial institutions, and wherein the one or more items includes a financial instrument.

46. The method of claim 15, wherein the first bid includes two or more bids originating from entities that have not directly received an offer to trade the item from the first offeree.

36. A system, comprising:

one or more computer systems storing program instructions in memory, wherein the program instructions are executable by the one or more computer systems to cause the one or more computer systems to;

convey, to two or more offerees via computer network, an offer to trade at least one item, wherein the offer to trade is with an offeror as part of a single-period auction;

maintain a set of limits indicative of the ability of each of the two or more offerees to bid;

change at least one of the maintained set of limits for a first of the two or more offerees in response to information received from an obligor of the first offeree with respect to the offer;

during the single-period auction, receive two or more bids to trade the at least one item from two or more of the offerees, wherein each bid by an offeree is not permitted to exceed the set of maintained limits for that offeree, and wherein the two or more received bids include an aggregated bid received from a second offeree, wherein the aggregated bid includes a plurality of bids to trade the at least one item, wherein the plurality of bids of the aggregated bid includes bids received by the second offeree from a first entity to whom the second offeree has extended credit and from a second entity to whom the second offeree has not directly extended credit, wherein the second entity has not directly received an offer to trade the at least one item from the second offeree, wherein the second entity has directly received an offer to trade the at least one item from an intermediate entity that has directly extended credit to the second entity, and wherein the second entity is not the second offeree; and

at the end of the single period auction, match two or more of the received bids at a computed closing price at which the offeror is willing to trade the at least one item.

37. The system of claim 36, wherein the maintained set of limits for the second offeree specify an aggregate amount that the second offeree is permitted to bid.

38. The system of claim 37, wherein the two or more received bids include at least one bid originating from a first customer of the second offeree.

39. The system of claim 38, wherein the second offeree is an obligor for the first customer.

40. The system of claim 36, wherein the program instructions are executable by the one or more computer systems to:

post an available quantity of the at least one item to the two or more offerees.

47. The system of claim 36, wherein the plurality of bids includes two or more bids originating from entities that have not directly received an offer to trade the item from the second offeree.

41. An apparatus, comprising:

first means for receiving bids submitted by two or more offerees for an item offered for trade as part of a single-period auction, including an aggregated bid from a first offeree that includes a plurality of bids originating from entities that have been directly extended credit from the first offeree or the other entities, wherein each of the plurality of bids of the aggregated bid is a bid to buy or sell the at least one item, and wherein entities from which the plurality of bids originate include at least one entity that has not directly received an offer to trade the item from the first offeree, wherein the at least one entity has directly received an offer to trade the item from an intermediate entity that has directly extended credit to the at least one entity, and wherein the intermediate entity is not the first offeree; and

second means for;

determining, based at least in part on the received bids, a closing price at which the offeror is willing to trade the item; and

matching two or more of the received bids at the determined closing price.