System for implementing a security issuer rights management process over a distributed communications network deployed in a financial marketplace

• US 8,589,261 B2
• Filed: 06/10/2012
• Issued: 11/19/2013
• Est. Priority Date: 06/11/2009
• Status: Active Grant

• Current Assignee: Interest Capturing Systems LLC
• Original Assignee: Interest Capturing Systems LLC
• Inventors: Hardison, Joseph H. III
• Primary Examiner(s): ADE, OGER GARCIA
• Application Number:
  US13/492,886
• Publication Number:
  US 20120254069A1
• Time in Patent Office: 527 Days
• Field of Search: 705/30
• US Class Current: 705/30
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/12 Accounting

Abstract

A computer-network implemented system recognizes that (i) the security issuer retains (i.e. withholds) the right to lend a debt or equity security prior to security issuance, and (ii) the system allows security borrowers to request from the security issuers, through the system, the right to borrow the non-borrowable security from the security issuer, according to borrowing/lending rates and time periods set by the security issuer with the system, so that (iii) security borrowers can then acquire the right to lend the non-borrowable security from the security issuer, and thereafter, (iv) security borrowers can sell the non-borrowable security short in the financial marketplace and profit from a short sale, without adversely effecting the security issuer.

Claims

1. A system for implementing a security issuer rights management process (SIRMP) over a distributed communications network, and deployed in a financial marketplace involving one or more equity security issuers, one or more equity security purchasers, and one or more equity security borrowers, said system comprising:

a data center, including one or more relational database servers (RDBMS), application servers, and web servers, interfaced with the infrastructure of said distributed communications network;

a first networked group of computer systems for use by said one or more said equity security issuers, and being interfaced with the infrastructure of said distributed communications network, and including client machines and server machines, for supporting packet-based communications between said data center and said first networked group of computer systems;

a second networked group of computer systems for use by said one or more equity security borrowers, and being interfaced with the infrastructure of said distributed communications network, and including client machines and server machines, for supporting packet-based communications between said data center and said second networked group of computer systems;

wherein said data center supports the implementation of a network-level financial accounting system that recognizes and accounts for a set of equity rights possessed by said security issuer of equity securities prior to equity security issuance, and ensures that said set of equity rights is associated with non-borrowable equity securities that exclude the equity right to lend and which are offered for sale in said financial marketplace;

wherein said equity security issuer of an equity security to be issued in said financial marketplace (i) withholds from, and prior to, an equity security issuance, the equity right to lend so as to create said non-borrowable equity security, which precludes lending of said non-borrowable equity security by said purchasers of said non-borrowable equity security and, which, can be borrowed only from said equity security issuer at lending rates set by said equity security issuer, thereby precluding the lending of said non-borrowable equity security by said equity security purchasers in said financial marketplace;

wherein said equity security issuer uses said first networked group of computer systems to communicate with said data center via packet-based communications, to set borrowing rates and periods for said non-borrowable equity security held by said equity security purchasers;

wherein said equity security borrower uses said second networked group of computer systems to communicate with said data center via packet communications, and (i) requests from said equity security issuer, the equity right to lend for said non-borrowable equity security pursuant to said borrowing rates and periods set by said equity security issuer, (ii) accepts said borrowing rates and periods set by said equity security issuer, and (iii) receives said equity right to lend associated with said non-borrowable equity security, from said equity security issuer, via said data center, so that said equity security borrower can borrow said non-borrowable equity security from said equity security issuer for the purpose of selling said non-borrowable equity security short in said financial marketplace; and

wherein said data center automatically accounts for the allocation of said borrowed equity right to lend associated with said non-borrowable equity security, and payment of said borrowing rates agreed to between said equity security issuer and said equity security borrower.

2. The system of claim 1, wherein each said first and second group of networked computer systems comprises relational database servers (RDBMSs), application servers, and web servers, and client machines supporting graphical user interfaces (GUIs).

3. The system of claim 1, wherein said distributed communications network comprises the Internet supporting TCP/IP.

4. The system of claim 1, wherein said equity security issuers comprise one or more equity-issuing companies.

5. The system of claim 1, wherein issuers of equity securities are afforded the opportunity to withhold and/or transfer the equity right to lend which they possess prior to security structuring and issuance or, after security restructuring/conversion, so as to optimize profit from, and to manage, the lending/borrowing and, thus, short-selling of their equity securities.

6. The system of claim 1, wherein issuers of equity securities are afforded the opportunity to collect security borrowing revenue from short-term or high-frequency traders, who currently avoid paying for a security borrow by closing a position within the required T+3 location and settlement period and thus avoid the actual location and borrow of a security, by requiring all security borrowing to be sourced through the equity security issuers that have withheld the equity right to lend which facilitates immediate location and borrowing of said equity securities.

7. The system of claim 1, which further comprises a third networked group of computer systems for use by government regulatory agencies, and being interfaced with the infrastructure of said distributed communications network, and including client machines and server machines, for supporting communications between said data center and said third networked group of computer systems;

and wherein said government regulatory agencies use said third networked group of computer systems to communicate with said data center via packet-based communications, for the purpose of overseeing said equity security issuers and said equity security borrowers in said financial marketplace.

8. The system of claim 1, wherein equity security issuers are able to withhold, prior to structuring and issuance or, after structuring and issuance via restructuring/conversion, the individual right to lend equity securities, so as to preclude borrowing and, thus, short-selling of said equity securities.

9. The system of claim 1, wherein said equity security issuers are able to restructure existing, outstanding equity securities through a controlling equity interest, or through a proxy shareholder vote to gain a controlling equity interest, to withhold the individual right to lend equity securities so as to preclude borrowing and, thus, short-selling of their equity securities.

10. The system of claim 1, whereby a long-only equity security is created by an equity security issuer by permanently withholding the equity right to lend prior to the issuance of an equity security.

11. A system for implementing a security issuer rights management process (SIRMP) over a distributed computer network having an infrastructure, and deployed in a financial marketplace involving one or more debt security issuers, one or more debt security purchasers, and one or more debt security borrowers, said system comprising:

a data center, including one or more relational database servers (RDBMS), application servers, and web servers, interfaced with the infrastructure of said distributed communications network;

a first networked group of computer systems for use by said one or more said debt security issuers, and being interfaced with the infrastructure of said distributed communications network, and including client machines and server machines, for supporting packet-based communications between said data center and said first networked group of computer systems; and

a second networked group of computer systems for use by said one or more debt security borrowers, and being interfaced with the infrastructure of said distributed communications network, and including client and server machines, for supporting packet-based communications between said data center and said second networked group of computer systems;

wherein said data center supports the implementation of a network-level financial accounting system that recognizes and accounts for a set of debt rights possessed by said debt security issuer of debt securities prior to debt security issuance, and ensures that said set of debt rights is associated with non-borrowable debt securities that exclude the debt right to lend and which are offered for sale in said financial marketplace;

wherein said debt security issuer of a debt security to be issued in said financial marketplace (i) withholds from, and prior to, a debt security issuance, the debt right to lend so as to create said non-borrowable debt security, which precludes lending of said non-borrowable debt security by said purchasers of said non-borrowable debt security and, which, can be borrowed only from said debt security issuer at lending rates set by said debt security issuer, thereby precluding the lending of said non-borrowable debt security by said debt security purchasers in said financial marketplace;

wherein said debt security issuer uses said first networked group of computer systems to communicate with said data center via packet-based communications, to set borrowing rates and periods for said non-borrowable debt security held by said debt security purchasers;

wherein said debt security borrower uses said second networked group of computer systems to communicate with said data center via packet-based communications, and (i) requests from said debt security issuer, the debt right to lend for said non-borrowable debt security pursuant to said borrowing rates and periods set by said debt security issuer, (ii) accepts said borrowing rates and periods set by said debt security issuer, and (iii) receives said debt right to lend associated with said non-borrowable debt security, from said debt security issuer, via said data center, so that said debt security borrower can borrow said non-borrowable debt security from said debt security issuer for the purpose of selling said non-borrowable debt security short in said financial marketplace; and

wherein said data center automatically accounts for the allocation of said borrowed debt right to lend associated with said non-borrowable debt security, and payment of said borrowing rates agreed to between said debt security issuer and said debt security borrower.

12. The system of claim 11, wherein each said first and second group of networked computer systems comprises relational database servers (RDBMSs), application servers, and web and other communication servers, and client machines supporting graphical user interfaces (GUI) interfaces.

13. The system of claim 11, wherein said distributed communications network comprises the Internet supporting TCP/IP.

14. The system of claim 11, wherein said debt security issuers comprise one or more debt-issuing companies, debt-issuing governments or government agencies, or other debt-issuing entities.

15. The system of claim 11, wherein issuers of debt securities are afforded the opportunity to withhold and/or transfer the debt right to lend which they possess prior to security structuring and issuance or, after security restructuring/conversion, so as to optimize profit from, and to manage, the lending/borrowing and, thus, short-selling of their debt securities.

16. The system of claim 11, wherein issuers of debt securities are afforded the opportunity to collect security borrowing revenue from short-term or high-frequency traders, who currently avoid paying for a security borrow by closing a position within the required T+3 location and settlement period and thus avoid the actual location and borrow of a security, by requiring all security borrowing to be sourced through the debt security issuers that have withheld the debt right to lend which facilitates immediate location and borrowing of said debt securities.

17. The system of claim 11, which further comprises a third networked group of computer systems for use by said government regulatory agencies, and being interfaced with the infrastructure of said distributed communications network, and including client machines and server machines, for supporting communications between said data center and said third networked group of computer systems;

and wherein said government regulatory agencies use said third networked group of computer systems to communicate with said data center via packet-based communications, for the purpose of overseeing said equity security issuers and said equity security borrowers in said financial marketplace.

18. The system of claim 11, wherein debt security issuers are able to withhold, prior to structuring and issuance, or after structuring and issuance via restructuring/conversion, the individual right to lend debt securities so as to preclude borrowing and, thus, short-selling of said debt securities.

19. The system of claim 11, wherein debt security issuers are able to restructure existing, outstanding debt securities through a controlling debt interest, or through a proxy debt holder vote to gain a controlling debt interest, to withhold the individual right to lend debt securities so as to preclude borrowing and, thus, short-selling of their debt securities.

20. The system of claim 11, whereby all debt security lending revenue is distributed across a debt security issuer'"'"'s entire debt holder base in the form of a new/increased coupon payment, a debt repurchase program, or through early payment of outstanding corporate debt.

21. A system for implementing a security issuer rights management process (SIRMP) over a distributed communications network, and deployed in a financial marketplace involving one or more security issuers, one or more security purchasers, and one or more security borrowers, said system comprising:

a data center, including one or more relational database servers (RDBMS), application servers, and web servers, interfaced with the infrastructure of said distributed communications network;

a first networked group of computer systems for use by said one or more said security issuers, and being interfaced with the infrastructure of said distributed communications network, and including client machines and server machines, for supporting communications between said data center and said first networked group of computer systems;

a second networked group of computer systems for use by said one or more security borrowers, and being interfaced with the infrastructure of said distributed communications network, and including client machines and server machines, for supporting communications between said data center and said second networked group of computer systems;

wherein said data center supports the implementation of a network-level financial accounting system that recognizes and accounts for a set of rights possessed by said security issuer of securities prior to security issuance, and ensures that said set of rights is associated with non-borrowable securities that exclude the right to lend and which are offered for sale in said financial marketplace;

wherein said security issuer of a security to be issued in said financial marketplace (i) withholds from, and prior to, a security issuance, the right to lend so as to create said non-borrowable security, which precludes lending of said non-borrowable security by said purchasers of said non-borrowable security and, which, can be borrowed only from said security issuer at lending rates set by said security issuer, thereby precluding the lending of said non-borrowable security by said security purchasers in said financial marketplace;

wherein said security issuer uses said first networked group of computer systems to communicate with said data center, to set borrowing rates and periods for said non-borrowable security held by said security purchasers;

wherein said security issuer uses said second networked group of computer systems to communicate with said data center, and (i) establishes a security lending right lease or purchase rate schedule for the right to lease or purchase the right to lend said non-borrowable security pursuant to regulatory approval from overseeing government regulatory agencies and (ii) enables said security borrower to lease or buy the right to lend associated with said non-borrowable security at a price established by said security issuer, and make payment to said security issuer for the leased or purchased right to lend associated with said non-borrowable security; and

wherein said data center automatically accounts for (i) the allocation of said leased or purchased security right to lend associated with said non-borrowable security, and (ii) the payment associated with said leased or purchased security right to lend associated with said non-borrowable security and agreed to between said security issuer and said security borrower.

22. The system of claim 21, wherein each said first and second group of networked computer systems comprises relational database servers (RDBMSs), application servers, and web servers, and client machines supporting graphical user interfaces (GUIs).

23. The system of claim 21, wherein said distributed communications network comprises the Internet supporting TCP/IP.

24. The system of claim 21, wherein said security issuers comprise one or more of equity-security issuing entities or debt-issuing entities.

25. The system of claim 21, wherein issuers of securities are afforded the opportunity to withhold and/or transfer the right to lend which they possess prior to security structuring and issuance or, after security restructuring/conversion, so as to optimize profit from, and to manage, the lending/borrowing and, thus, short-selling of their securities.

26. The system of claim 21, wherein issuers of securities are afforded the opportunity to collect security borrowing revenue from short-term or high-frequency traders, who currently avoid paying for a security borrow by closing a position within the required T+3 location and settlement period and thus avoid the actual location and borrow of a security, by requiring all security borrowing to be sourced through the security issuers that have withheld the right to lend which facilitates immediate location and borrowing of said securities.

27. The system of claim 21, which further comprises a third networked group of computer systems for use by government regulatory agencies, and being interfaced with the infrastructure of said distributed communications network, and including client machines and server machines, for supporting communications between said data center and said third networked group of computer systems;

and wherein said government regulatory agencies use said third networked group of computer systems to communicate with said data center via communications, for the purpose of overseeing said security issuers and said security borrowers in said financial marketplace.

28. The system of claim 21, wherein security issuers are able to withhold, prior to structuring and issuance or, after structuring and issuance via restructuring/conversion, the individual right to lend securities, so as to preclude borrowing and, thus, short-selling of said securities.

29. The system of claim 21, wherein said security issuers are able to restructure existing, outstanding securities through a controlling interest, or through a proxy shareholder vote to gain a controlling interest, to withhold the individual right to lend securities so as to preclude borrowing and, thus, short-selling of their securities.

30. The system of claim 21, whereby a long-only security is created by a security issuer by permanently withholding the right to lend prior to the issuance of a security.