System and method for providing borrow coverage services to short sell securities

• US 8,738,514 B2
• Filed: 02/18/2011
• Issued: 05/27/2014
• Est. Priority Date: 02/18/2010
• Status: Active Grant

• Current Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Original Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Inventors: Chan, Tommy, Sclafani, Jennifer, Dobrick, Jeremy M., Yadlapalli, Rajiv T., Bax, Matthew, Fezza, Dean X.
• Primary Examiner(s): Shrestha, Bijendra K
• Application Number:
  US13/030,914
• Publication Number:
  US 20110202452A1
• Time in Patent Office: 1,194 Days
• Field of Search: 705/38, 705/35, 705/37
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof

Abstract

The present invention is directed to providing borrow coverage services to clients by a conduit lender, while the conduit lender maintains a flat position. The source of supply for the loans is a liquidity pool from existing agent lenders that have enrolled the conduit lender as a borrower.

Claims

1. A computer implemented method, the method comprising the steps of:

receiving, at a programmed computer, a loan request and corresponding collateral from a borrower;

receiving, at the programmed computer, an allocation of securities from a plurality of lenders and storing the allocation of securities in a pool of securities;

identifying, at the programmed computer, a number of shares of a security allocated from each of the plurality of lenders available to service the loan request;

determining, at the programmed computer, a total number of shares needed from the allocation of securities in the pool of securities to satisfy the loan request;

selecting, at the programmed computer, two or more lenders from the plurality of lenders to service the loan request, wherein the number of shares received from each of the two more lenders collectively equal the total number of shares needed to satisfy the loan request;

distributing, using the programmed computer, the collateral received from the borrower proportionally to the two or more lenders selected based on the number of shares allocated from each lender, wherein a separate escrow account is associated with each lender for receiving the proportional distribution of collateral owed to each lender; and

providing, using the programmed computer, the borrower with the securities from the two or more lenders selected to service the loan request.

2. The method of claim 1, wherein the collateral is securities or cash.

3. The method of claim 1, wherein the steps are performed by a conduit lender system.

4. The method of claim 3, wherein the conduit lender system is associated with a banking entity.

5. A computer system, comprising:

a computer-readable memory; and

a processor communicatively coupled to the computer-readable memory, the processor programmed to;

receive a loan request and corresponding collateral from a borrower;

receive an allocation of securities from a plurality of lenders and storing the allocation of securities in a pool of securities;

identify a number of shares of a security allocated from each of the plurality of lenders available to service the loan request;

determine a total number of shares needed from the allocation of securities in the pool of securities to satisfy the loan request;

select two or more lenders from the plurality of lenders to service the loan request, wherein the number of shares received from each of the two or more lenders collectively equal the total number of shares needed to satisfy the loan request;

distribute the collateral received from the borrower proportionally to the two or more lenders selected based on the number of shares allocated from each lender, wherein a separate escrow account is associated with each lender for receiving the proportional distribution of collateral owed to each lender; and

provide the borrower with the securities from the two or more lenders selected to service the loan request.

6. A non-transitory computer-readable storage medium carrying one or more sequences of instructions for implementing a method, wherein execution of the one or more sequences of instructions by one or more computers causes the one or more computers to perform the steps of:

receiving a loan request and corresponding collateral from a borrower;

receiving an allocation of securities from a plurality of lenders and storing the allocation of securities in a pool of securities;

identifying a number of shares of a security allocated from each of the plurality of lenders available to service the loan request;

determining a total number of shares needed from the allocation of securities in the pool of securities to satisfy the loan request;

selecting two or more lenders from the plurality of lenders to service the loan request, wherein the number of shares received from each of the two or more lenders collectively equal the total number of shares needed to satisfy the loan request;

distributing the collateral received from the borrower proportionally to the two or more lenders selected based on the number of shares allocated from each lender, wherein a separate escrow account is associated with each lender for receiving the proportional distribution of collateral owed to each lender; and

providing the borrower with the securities from the two or more lenders selected to service the loan request.