System and method for issuing, circulating and trading financial instruments with smart features

• US 9,177,313 B1
• Filed: 10/18/2007
• Issued: 11/03/2015
• Est. Priority Date: 10/18/2007
• 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: Silverman, Robert Michael
• Primary Examiner(s): Qayyum, Zeshan
• Application Number:
  US11/874,416
• Time in Patent Office: 2,938 Days
• Field of Search: 705/65
• US Class Current: 1/1
• CPC Class Codes: G06Q 20/223 based on the use of peer-to-peer networks
• CPC Class Codes: G06Q 20/36 using electronic wallets or electronic money safes
• CPC Class Codes: G06Q 20/367 involving electronic purses or money safes
• CPC Class Codes: G06Q 20/382 insuring higher security of transaction
• CPC Class Codes: G06Q 20/389 Keeping log of transactions for guaranteeing non-repudiation of a transaction
• 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

A system and method for issuing, circulating and trading financial instruments with smart features is disclosed. In one particular exemplary embodiment, a financial instrument having smart features may comprise a document portion and a token device attached to or embedded in the document portion. The token device may comprise a storage device and a communication interface, wherein the token device is configured to provide a unique address for the financial instrument, the unique address including a device identifier that matches at least in part the document portion and a network address that changes based on a network location of the financial instrument and to communicate securely with an external entity at least to report an identity or a status of the financial instrument.

Claims

1. A computer-implemented method for issuing, circulating and trading financial instruments having smart features, the method comprising:

issuing, by a computer processor, a financial instrument comprising monetary value and physically attached to a token device, and wherein the token device comprises;

a unique address including (a) a device identifier that indicates ownership, value, and transferability of the financial instrument and (b) a network address for tracking said token device that changes based on a current network location of the token device, at least a portion of said device identifier changes based on at least a portion of financial parameters of the financial instrument,

a non-transitory computer memory to record the financial parameters, and

one or more communication capabilities;

changing, by the computer processor, the network address based on the current network location of the token device;

changing, by the computer processor, at least a portion of the device identifier based on at least a portion of financial parameters of the financial instrument;

transferring, by the computer processor, the financial instrument based on the transferability of the financial instrument; and

tracking, by the computer processor, the ownership, value, and transferability of the financial instrument based on the device identifier and the network address of the associated token device by communicating with the token device at least once subsequent the issuing of the financial instrument.

2. The method according to claim 1, further comprising:

causing, by the computer processor, the token device to authenticate to a server via a communication network and to report a current status of the financial instrument.

3. The method according to claim 2, wherein the reporting of the current status by the token device is triggered by a transaction involving the financial instrument.

4. The method according to claim 1, further comprising:

causing, by the computer processor, the token device to record at least one financial parameter of the financial instrument that has changed as a result of a transaction involving the financial instrument.

5. The method according to claim 1, wherein the financial instrument is a financial derivative referencing a second financial instrument, and the method further comprising causing the token device to:

detect, by the computer processor, a change in the second financial instrument; and

update, by the computer processor, at least one financial parameter of the financial instrument based on the detected change in the second financial instrument and a derivative relationship between the financial instrument and the second financial instrument.

6. The method according to claim 1, further comprising:

issuing, by the computer processor, a second financial instrument comprising monetary value and physically attached to a second token device; and

causing, by the computer processor, the first and second token devices to engage in peer-to-peer communications with one another, whereby the first and second token devices exchange information relevant to a transaction involving the first and second financial instruments.

7. The method according to claim 1, further comprising recording, by the computer processor, the financial parameters in an encrypted form.

8. The method according to claim 1, wherein the financial parameters comprise one or more parameters selected from a group consisting of:

a composition of the financial instrument;

a type or category of the financial instrument;

an asset class of the financial instrument;

a unique identifier that distinguishes the financial instrument from its peers;

a fixed value of the financial instrument;

a fluctuating value of the financial instrument and one or more rules for determining the fluctuating value;

a time or time period associated with a transaction related to the financial instrument;

an identification of a party in a transaction related to the financial instrument;

an identification of an issuer of the financial instrument;

an identification of a governmental authority to which to report a transaction related to the financial instrument;

an identification of an account, if the financial instrument is associated with the account;

a current status of the financial instrument;

an intent of a holder of the financial instrument to conduct one or more transactions; and

a reference to another financial instrument, if the financial instrument is a financial derivative associated with said another financial instrument.

9. The method according to claim 1, further comprising encoding, by the computer processor, at least a portion of the financial parameters in the device identifier.

10. The method according to claim 1, further comprising configuring, by the computer processor, the token device to maintain or obtain a current time and date.

11. The method according to claim 1, further comprising providing, by the computer processor, the token device with a tamper-proof mechanism to prevent unauthorized alteration of the unique address.

12. The method according to claim 1, wherein the financial instrument includes a document portion wherein the transferability of the financial instrument is based upon co-presence and validity of the document portion and the token device.

13. A computer-implemented method for issuing, circulating and trading financial instruments having smart features, the method comprising:

issuing, by a computer processor, a financial instrument comprising monetary value and physically attached to a token device, and wherein the token device comprises;

a unique address including a device identifier that indicates ownership, value, and transferability of the financial instrument and a network address for tracking said token device that changes based on a current network location of the token device, at least a portion of said device identifier changes based on at least a portion of financial parameters of the financial instrument,

non-transitory computer memory to record the financial parameters, and

one or more communication capabilities;

changing, by the computer processor, the network address based on the current network location of the token device;

changing, by the computer processor, at least a portion of the device identifier based on at least a portion of financial parameters of the financial instrument;

transferring, by the computer processor, the financial instrument based on the transferability of the financial instrument; and

tracking, by the computer processor, the ownership, value, and transferability of the financial instrument based on the device identifier and the network address of the associated token device by communicating with the token device at least once subsequent the issuing of the financial instrument.