System and methods for processing open-end mutual fund purchase and redemption orders at centralized securities exchanges and other securities trading and processing platforms

• US 8,615,461 B2
• Filed: 11/06/2009
• Issued: 12/24/2013
• Est. Priority Date: 11/19/1999
• Status: Active Grant

• Current Assignee: James Macpherson
• Original Assignee: James Macpherson
• Inventors: MacPherson, James
• Primary Examiner(s): Kazimi, Hani M
• Assistant Examiner(s): Graham, Clement B
• Application Number:
  US12/590,415
• Publication Number:
  US 20100057608A1
• Time in Patent Office: 1,509 Days
• Field of Search: 705 35- 39, 705/38.R
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A system for processing traditional open-end mutual fund purchase and redemption orders at a server at designated Exchange(s) for receiving order messages from at least one of a plurality of Brokers and Member Firms, the server having at least one processor and memory for storing routines operable to process individual or aggregated order messages, preferably based on a prioritized set of business rules, and/or match the purchase and redemption orders, reformat the orders, and transmit the reformatted orders to at least one of a plurality of Fund/Securities Clearing Agents, Funds/Transfer Agents and Depositaries for confirmation, and clearing and settlement of issuance and redemption orders for mutual fund shares, as well as payment of mutual fund dividends.

Claims

1. A computer implemented method for processing traditional open-end mutual fund order messages including purchase and redemption orders of shares of an open-end mutual fund, the open-end mutual fund being continuously listed or hosted by a securities Exchange for processing the purchase and redemption orders, and the open-end mutual fund having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares, the method comprising the steps of:

receiving, at one or more first servers associated with the securities Exchange, order messages associated with purchase and/or redemption orders for shares of the open-end mutual fund, the mutual fund being continuously listed or hosted at the Exchange, the order messages being sent from one or more Member Firms of the securities Exchange, and the securities Exchange being a financial market that includes listed securities with a finite number of shares and lists the open-end mutual fund having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares;

processing at the one or more first servers, per Member Firm, the received purchase and redemption order messages for the open-end mutual fund shares as individual orders or as an aggregation of multiple orders, wherein said processing includes storing the received order messages in a first format, applying predetermined business rules to underlying orders associated with the order messages, and formatting the order messages to a second format; and

transmitting the processed orders from the one or more first servers to at least one of a plurality of second servers at Fund/Securities Clearing Agents for confirmation, clearing and settlement including issuance and redemption of the open-end mutual fund shares by the open-end mutual fund, wherein the total number of currently issued shares of the open-end mutual fund is variable as a function of the periodic adjustments for the newly purchased shares and redeemed shares upon clearance and settlement of the processed orders.

2. The computer implemented method of claim 1, wherein the step of transmitting further comprises the step of forwarding the processed orders from the at least one second server to at least one third server of at least one individual Funds and Transfer Agents for processing and confirmation.

3. The computer implemented method of claim 1, wherein the step of transmitting comprises sending said processed orders periodically from the at least one first server as single, batch and/or multi-batch messages.

4. The computer implemented method of claim 1, wherein the step of transmitting comprises sending said processed orders throughout the business day from the at least one first server as single, batch and/or multi-batch order messages.

5. The computer implemented method of claim 1, wherein the step of processing the underlying orders includes applying a set of business rules to the orders.

6. The computer method of claim 5, wherein the applying a set of business rules comprises processing orders per fund per Member Firm based when new purchase or redemption orders of a predetermined amount are received, and processing orders when a predetermined number of orders are received.

7. The computer implemented method of claim 5, wherein the applying a set of business rules further comprises processing orders per fund per Member Firm based on when gross purchase and redemption orders of a predetermined amount are received, and processing orders when gross purchase and redemption orders of a predetermined number of shares are received.

8. The computer implemented method of claim 5, wherein the applying a set of business rules further comprises processing orders per fund per Member Firm based on a predetermined time interval, processing orders when gross orders to purchase or redeem a predetermined amount of shares are received, and processing orders at periodic time intervals and/or at end of day.

9. The computer implemented method of claim 5, further comprising the step of prioritizing the set of business rules.

10. The computer implemented method of claim 1 further comprising reformatting the individual or aggregated orders from a first format to a second format at the one or more first servers prior to transmitting the orders to the at least one of a plurality of second servers at Fund/Securities Clearing Agents.

16. The computer implemented system of claim 1, wherein the individual or aggregated orders are sent from the at least one second server throughout the business day as single, batch and/or multi-batch order messages.

11. A computer implemented system for processing traditional open-end mutual fund order messages at a designated securities Exchange, including purchase and redemption orders of shares of an open-end mutual fund, the open-end mutual fund being continuously listed or hosted at the Exchange for processing, the open-end mutual fund having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares, the system comprising:

at least one first server communicably coupled to and associated with the Exchange, the at least one first server being configured to;

receive, from Member Finns of the securities Exchange, order messages associated with purchase and/or redemption orders for open-end mutual fund shares which are continuously listed or hosted at the Exchange, the securities Exchange being a financial market that includes listed securities with a finite number of shares and lists the open-end mutual fund having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares;

process at the at least one first server, per Member Firm, the received purchase and/or redemption order messages for the open-end mutual fund shares as individual orders or as an aggregation of multiple orders, wherein said process includes storing the received order messages in a first format, applying predetermined business rules to underlying orders associated with the order messages, and formatting the order messages to a second format; and

transmit the processed orders from the at least one first server to at least one of a plurality of second servers at Fund/Securities Clearing Agents for confirmation, clearing and settlement including issuance and redemption of the open-end mutual fund shares by the open-end mutual fund, wherein the total number of currently issued shares of the open-end mutual fund is variable as a function of the periodic adjustments for the newly purchased shares and redeemed shares upon clearance and settlement of the processed orders.

15. The computer implemented system of claim 11, wherein the at least one first server is further operable to reformat the orders to a fund order entry format prior to the transmission of the orders to the at least one of a plurality of second servers at the Fund/Securities Clearing Agents.

17. The computer implemented system of claim 11, wherein the individual or aggregated orders are sent periodically from the at least one first server as single, batch and/or multi-batch order messages.

18. The computer implemented system of claim 11, wherein the individual or aggregated orders are sent at the end of the business day from the at least one first server as single, batch and/or multi-batch order messages.

19. The computer implemented system of claim 11, wherein the applying predetermined business rules includes applying one or more business rules to the underlying orders.

20. The computer implemented system of claim 19, wherein the set of business rules comprises processing orders per fund per Member Firm based on when new purchase or redemption orders of a predetermined amount are received, and processing orders when a predetermined number of orders are received.

21. The computer implemented system of claim 19, wherein the set of business rules comprises processing orders per fund per Member Firm based on when gross purchase and redemption orders of a predetermined amount are received, and processing orders when gross purchase and redemption orders of a predetermined number of shares are received.

22. The computer implemented system of claim 19, wherein the set of business rules comprises processing orders per fund per Member Firm based on a predetermined time interval, processing orders when gross orders to purchase or redeem a predetermined amount of shares are received, and processing orders at periodic time intervals and/or at end of day.

23. The computer implemented system of claim 19, wherein the set of business rules determine hierarchy and timing for processing the orders.

12. A computer implemented method for continuously processing traditional open-end mutual fund order messages associated with purchase and redemption orders of a plurality of open-end mutual funds listed at a securities Exchange, each said open-end mutual fund having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares;

the method comprising the steps of;

receiving purchase and redemption orders at a first server of the securities Exchange from a second server of at least one Member Firm of the securities Exchange, the securities Exchange being a financial market that includes listed securities with a finite number of shares and lists or hosts the open-end mutual fund having a total number of currently issued shares which is variable as a function of periodic adjustments for newly purchased shares and redeemed shares;

aggregating, which includes matching orders for each open-end mutual fund per Member Firm at the first server of the Exchange, each said open-end mutual fund being continuously listed or hosted on the Exchange;

transmitting orders to servers of at least one of a plurality of Fund/Securities Clearing Agents, Funds/Transfer Agents and Depositaries for clearing and settlement;

receiving executed orders from at least one of a plurality of Fund/Securities Clearing Agents, Funds/Transfer Agents and Depositaries for clearing and settlement;

disaggregating the executed orders at the first server of the Exchange; and

transmitting the disaggregated and other executed orders from the first server of the Exchange to the second server of the at least one Member Firm for confirmation, wherein the total number of currently issued shares of the open-end mutual fund is variable as a function of the periodic adjustments for the newly purchased shares and redeemed shares upon clearance and settlement of the processed orders.

13. The computer implemented method of claim 12, wherein the step of transmitting the aggregated orders from the first server comprises forwarding the orders continuously in real-time to servers of the at least one of a plurality of Fund/Securities Clearing Agents, Funds/Transfer Agents and Depositaries.

14. The computer implemented method of claim 12, further comprising the step of tabulating the aggregated and executed orders.