U.S. patent application number 10/617295 was filed with the patent office on 2004-06-03 for real time network exchange with seller specified exchange parameters and interactive seller participation.
Invention is credited to Odom, James Michael, Yelich, Scott D..
Application Number | 20040107158 10/617295 |
Document ID | / |
Family ID | 25398567 |
Filed Date | 2004-06-03 |
United States Patent
Application |
20040107158 |
Kind Code |
A1 |
Odom, James Michael ; et
al. |
June 3, 2004 |
Real time network exchange with seller specified exchange
parameters and interactive seller participation
Abstract
A system and method for networked exchange are disclosed. A
system for networked exchange comprises an internal proxy; an
exchange processor in communication with the internal proxy; a
database in communication with the internal proxy; an external
proxy in communication with the internal proxy; and, a
communications network connected to the external proxy. A method
for networked exchange comprises 8 steps. Those steps are (1)
specifying a mode of operations for an exchange; (2) identifying a
financial instrument for the exchange; (3) listing information
about the financial instrument; (4) accessing of the listing by a
potential purchaser; (5) accessing the network-based exchange by
the potential purchaser; (6) processing information generated by
the potential purchaser, the information comprising a negotiation;
(7) concluding the negotiation; and, (8) clearing the concluded
negotiation.
Inventors: |
Odom, James Michael; (Santa
Fe, NM) ; Yelich, Scott D.; (Santa Fe, NM) |
Correspondence
Address: |
LAVA GROUP LAW BY SMITH & FROHWEIN, LLC
P.O. BOX 88148
ATLANTA
GA
30356
US
|
Family ID: |
25398567 |
Appl. No.: |
10/617295 |
Filed: |
July 10, 2003 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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10617295 |
Jul 10, 2003 |
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09532684 |
Mar 21, 2000 |
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09532684 |
Mar 21, 2000 |
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08891633 |
Jul 11, 1997 |
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6058379 |
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Current U.S.
Class: |
705/37 |
Current CPC
Class: |
G06Q 40/00 20130101;
G06Q 30/02 20130101; G06Q 30/08 20130101; G06Q 30/0601 20130101;
G06Q 20/10 20130101; G06Q 40/04 20130101 |
Class at
Publication: |
705/037 |
International
Class: |
G06F 017/60 |
Claims
We claim:
42. A method for operating a networked exchange in which a
financial instrument is traded from a seller to a purchaser by an
exchange processor comprising: said seller identifying said
financial instrument for said exchange; specifying a mode of
operations for an exchange; said purchaser accessing said networked
exchange; said exchange processor processing information generated
by said purchaser, said processing information comprising a
negotiation between said seller and said purchaser; concluding said
negotiation between said seller and said purchaser; and said
exchange processor clearing said concluded negotiation.
43. The method of claim 42 wherein said step of specifying a mode
of operations comprises: specifying a start time for said exchange;
specifying an end time for said exchange; categorizing said
financial instrument for said exchange; specifying an access status
for said exchange; and, specifying a negotiations status for said
exchange.
44. The method of claim 42, wherein said specifying a mode of
operations for an exchange is done by said seller.
45. The method of claim 42 wherein said step of said seller
identifying said financial instrument to be traded comprises: said
seller classifying said financial instrument; said seller entering
a price for said financial instrument; and, said seller entering a
goal for said exchange.
46. The method of claim 42, further comprising: said processor
listing information about said financial instrument; and, said
purchaser accessing said listing.
47. The method of claim 46 wherein said step of said exchange
operator listing information about said financial instrument
comprises posting said listing information.
48. The method of claim 46, wherein said listing information
comprises: a description of said financial instrument; and, a bid
start price for said financial instrument.
49. The method of claim 48, wherein said listing information is
posted on a world wide web page.
50. The method of claim 48, wherein said listing information is
sent to at least one subscriber.
51. The method of claim 50, wherein said listing information is
sent by E-mail.
52. The method of claim 46, wherein said step of said purchaser
accessing of said listing comprises searching for information about
said financial instrument.
53. The method of claim 42, wherein said step of said purchaser
accessing said networked exchange comprises: using a graphical
interface to view said exchange; chatting about said good or
service to be exchanged; and, bidding on said good or service to be
exchanged.
54. The method of claim 53, wherein said graphical interface is a
scroller.
55. The method of claim 53, wherein said graphical interface is a
dual scroller.
56. The method of claim 53, wherein said graphical interface is a
three-dimensional scroller.
57. The method of claim 53, wherein said chatting is between said
purchaser and said seller.
58. The method of claim 53, wherein said chatting is between said
purchaser and at least one other purchaser.
59. The method of claim 42, wherein said step of said exchange
processor processing information generated by said purchaser
comprises: filtering said information generated by said purchaser;
and, routing said information generated by said purchaser.
60. The method of claim 42, wherein said step of concluding said
negotiation between said seller and said purchaser comprises
matching an offer by said purchaser to a goal price.
61. The method of claim 42, wherein said step of said exchange
processor clearing said concluded negotiation comprises: obtaining
an exclusive right to modify a lock on a first data record;
obtaining an exclusive right to modify a lock on a second data
record; exchanging data in said first data record and said second
data record; releasing said exclusive right to modify lock on a
first data record; and, releasing said exclusive right to modify
lock on a second data record.
62. The method of claim 61, wherein said step of said exchange
processor clearing said concluded negotiation further comprises:
modifying a third data in a third data record; said third data
representing a commission.
63. Computer-readable media having computer-readable code embodied
therein for networked exchange of a financial instrument between a
seller and a purchaser, said computer readable code comprising:
means for identifying said financial instrument for said exchange:
means for specifying a mode of operations for an exchange; means
for accessing said networked exchange by said purchaser; means for
processing information generated by said purchaser, said means for
processing information comprising a negotiation; means for
concluding said negotiation; and means for clearing said concluded
negotiation.
64. The computer-readable media of claim 63, wherein said means for
specifying a mode of operations comprises: means for specifying a
start time for said exchange; means for specifying an end time for
said exchange; means for categorizing a financial instrument for
said exchange; means for specifying an access status for said
exchange; and, means for specifying a negotiations status for said
exchange.
65. The computer-readable media of claim 63, wherein said means for
identifying said financial instrument to be traded comprises: means
for classifying said financial instrument; means for entering a
price for said financial instrument; and, means for entering a goal
for said exchange.
66. The computer-readable media of claim 63, wherein said means for
processing information generated by said purchaser comprises: means
for filtering said information generated by said purchaser; and,
means for routing said information generated by said purchaser.
67. The computer-readable media of claim 63, wherein said means for
clearing said concluded negotiation comprises: means for obtaining
an exclusive right to modify a lock on a first data record; means
for obtaining an exclusive right to modify a lock on a second data
record; means for swapping data in said first data record and said
second data record; means for releasing said exclusive right to
modify lock on a first data record; and, means for releasing said
exclusive right to modify lock on a second data record.
68. The computer-readable media of claim 63, wherein said means for
clearing said concluded negotiation further comprises means for
modifying data in a third data record; said data representing a
commission.
69. The method of claim 42, wherein said financial instrument
comprises a stock.
70. The method of claim 42, wherein said financial instrument
comprises an option.
71. The method of claim 42, wherein said financial instrument
comprises a future.
72. The method of claim 42, wherein said financial instrument
comprises a security.
73. The method of claim 42, wherein said financial instrument
comprises a currency.
74. The method of claim 42 further comprising using software agents
to automatically search for financial instruments to bid on.
75. The method of claim 42 further comprising using software agents
to monitor bid status to automatically bid on financial instruments
without purchaser intervention.
76. The method of claim 42 further comprising using software agents
to monitor closing items to automatically bid on financial
instruments without purchaser intervention.
77. The computer-readable media of claim 63, wherein said financial
instrument comprises a stock.
78. The computer-readable media of claim 63, wherein said financial
instrument comprises an option.
79. The computer-readable media of claim 63, wherein said financial
instrument comprises a future.
80. The computer-readable media of claim 63, wherein said financial
instrument comprises a security.
81. The computer-readable media of claim 63, wherein said financial
instrument comprises a currency.
82. The computer-readable media of claim 63, wherein said
computer-readable code further comprises means for automatically
searching for financial instruments to bid on.
83. The computer-readable media of claim 63, wherein said
computer-readable code further comprises means for monitoring bid
status to automatically bid on financial instruments without
purchaser intervention.
84. The computer-readable media of claim 63, wherein said
computer-readable code further comprises means for monitoring
closing items to automatically bid on financial instruments without
purchaser intervention.
Description
CROSS REFERENCE TO RELATED APPLICATIONS
[0001] This application is a continuation of U.S. application Ser.
No. 08/891,633 filed Jul. 11, 1997, now U.S. Pat. No.
6,058,379.
BACKGROUND OF THE INVENTION
[0002] This invention relates generally to the electronic exchange
of goods and services via an electronic network and, more
particularly, to a system and method for networked exchange.
[0003] All trade is based upon new needs brought on as a result of
new technology--the advent of long term human habitats over the old
style of hunting and gathering brought about the need for trading
for items which were not or could not be autonomously made. The
need to establish a new type of trading process, beyond the barter
system, brought about an establishment of a medium of exchange
(e.g., money). This has evolved over the ages into modem day
commerce with monetary exchanges, stock markets, supermarkets, gas
stations, flea markets, swap meets, etc. However, many of the
globally employed systems may not be as efficient, or as fair as
possible, since they rely on third party interaction or are based
around a set market style or process. The utopian vision of a
marketplace would be where the utility of the marketplace allowed
for an individual to achieve the most efficient and advantageous
level of transaction negotiation, fairest market value, protected
and guaranteed clearing for a commodity or service.
[0004] Ancient people invented money by placing fixed values on
certain items such as shells, beads, stones, and even salt, with
ingots being the most common form of money. Ingots were clumps of
precious metal in no particular shape or size with their worth
depending on their mineral content and weight. Their value was high
because these metals were hard to find and difficult to mine.
Ingots were not a panacea, though, and posed some problems for
merchants even after being weighed. The greatest of these was
determining true value because the content and purity of ingots
varied. A partial solution for this dilemma was solved by stamping
them with seals. Each seal displayed a description of the metal
content, as well as a declaration of its weight. Even with the use
of seals, unscrupulous traders would shave some of the metal off
the ingot from the opposite side from the seal, thus depreciating
the value. Despite these incipient problems associated with
development, the world monetary system has evolved from ingots and
ancient coinage to wire transfers, debit and credit cards and from
primitive barter to currency exchanges, stock markets and
intertwined global markets.
[0005] The Internet and world wide web (WWW) provide the first true
continuous world wide communications structure open to the
individual. This allows for new ways to address global commerce.
There are several different methods in which commerce may be
implemented as there are a vast variety of commodities and services
that are in need of being traded. The concept of using the Internet
as a marketplace or auction forum is not particularly unique or
difficult of an endeavor. The current technology of using E-mail
and a telephone for notification employed by existing firms in
closed environments has a rather low entry threshold of complexity.
This method can be duplicated quite easily and has limited or no
room for evolution. However, digital technology lends itself quite
readily to real-time high-volume transactions made by multiple
participants using shared information. Businesses are moving to
digital technologies and this leads to a need to invent new
technology and processes to fill the utility.
[0006] Commerce systems over the Internet are known in the art.
Most of these systems operate on a post and match process; that is,
the systems work by having a prospective buyer bid on an item, and
if the bid matches the seller's specified selling price, the item
is sold to the buyer. The bid and notification may not be processed
in real time. Additionally, the seller does not have the ability to
intervene once the exchange process has been initiated--once the
offer for sale or exchange is made, the seller is isolated from the
transaction until it is complete.
[0007] Previous networked commerce systems do not allow a user to
bid automatically on an item. Thus, in order to stay apprised of
what is being offered for sale, a person or a representative would
have to remain on the network constantly. Additionally, most
systems require participants to be registered members of a system
where sellers may be restricted only to merchants, and most rely on
credit card transactions. It is difficult for a prospective buyer
to search for the exact item that he is looking for without a
considerable input of time. Finally, in systems that involve the
sale of stocks, operations are still routed through a brokerage
firm, and the system itself is essentially an order placing
service.
SUMMARY OF INVENTION
[0008] It is an object of the invention to provide an improved
electronic network-based exchange system that overcomes these and
other deficiencies of prior systems.
[0009] It is a further object of the invention to provide such an
exchange that operates and clears on a real-time basis.
[0010] It is a further object of the invention to provide such an
exchange that provides flexibility, for example, to enable a seller
to determine the style and parameters of a particular exchange such
as whether the exchange is "open" or "closed."
[0011] It is a further object of this invention to provide a
real-time electronic network-based exchange that is interactive,
for example, to enable a seller to intervene at any time during the
exchange process.
[0012] It is a further object of the invention to provide such an
exchange that provides filtering (e.g., filtering of bid
information) to ensure compliance with predetermined criteria, to
avoid unnecessary use of system resources and for other
purposes.
[0013] It is a further object of the invention to provide such an
exchange that enables classification and categorization of items to
be exchanged to enable various search techniques and facilitate
location of items of interest.
[0014] It is a further object of the invention to provide such an
exchange that provides flexibility of a push or pull system.
[0015] It is a further object of the invention to provide such an
exchange that provides a proxy with processing to provide security
and conserve system resources.
[0016] It is a further object of the invention to provide such an
exchange that provides an improved graphical presentation of
exchange information, such as current and/or past bid
information.
[0017] It is a further object of the invention to provide such an
exchange that provides advanced client-side functionalities and
capabilities, including artificial intelligence and agents style
behaviors.
[0018] In order to accomplish these and other objects of the
invention, an electronic network- based exchange system is provided
that comprises a server system for hosting transaction operations,
and client terminals connected to the server via a communications
network. Various client/server architectures may be used. The
exchange host is operated by an exchange operator. Sellers and
buyers access the exchange to list items and bid on listed items
via client terminals. The server side of the system preferably
comprises at least one database, an internal proxy, an external
proxy, an exchange processor and a listing. The client side can be
any suitable client terminal. Separate client software for sellers
and buyers may be provided, or both may be provided together.
[0019] According to one embodiment of the invention, the system
enables the capability to operate an exchange that is based on at
least an eight-step capability. In step one, the mode of operation
of the exchange is specified. In this step, parameters such as the
start/stop time for the exchange, the exchange's open or closed
status, public or private access to negotiations, seller
information, bid requirements, etc. may be specified. This may be
done by the seller and/or auction host. Next, the proposed exchange
item can be further identified. This information may include
entering information about the item to be sold, which may include
its classification, pricing information, etc. Next, the proposed
item is added to an electronic listing. This may include posting
the information on a world wide web page. Next, on the client side,
a potential purchaser accesses the listing information. For
example, the potential purchaser may view listed items. If desired,
the potential purchaser accesses the exchange. This includes the
opportunity to "chat" (e.g., to electronically obtain additional
information about a listed item or auction terms) and bid on a
listed item. Next, if a bid is made, the client passes the bid
information to the server side to be processed. This processing may
include a first level of filtering to determine if the bid meets
predefined criteria or rates. If it does not, it is rejected. If it
does, it is passed on for further processing. For example, it may
be compared to previous bids to determine if it is the current best
bid. Additional bids can be similarly processed. Upon the
occurrence of some event, the opportunity for bidding on an item is
concluded. This may be done on an automatic basis, or it may be
done manually through transaction control. For example, transaction
control may be exercised by the seller (e.g., when an acceptable
bid is received). Upon conclusion of the bidding, a clearing
process is performed. Various clearing mechanisms may be used.
[0020] This system precludes traditional exchange market systems in
that it provides a vehicle in which the individual is empowered to
circumvent third parties to ensure that exchanges are as fair as
possible as well as provide a mechanism to facilitate the migration
of trading to the form and process it will take in the future.
[0021] A technical advantage of the present invention is that a
system and method for networked exchange is provided. Another
technical advantage is that the invention provides real-time
exchange to occur over a network. Another technical advantage is
that the seller can set the parameters of the exchange. Another
technical advantage is that the exchange is interactive, allowing
the seller to intervene at any time during the exchange
process.
BRIEF DESCRIPTION OF DRAWINGS
[0022] FIG. 1 is an overall system block diagram according to one
embodiment of the invention.
[0023] FIG. 2 depicts the exchange process according to a preferred
embodiment of the invention.
[0024] FIG. 3 is a flowchart of the internal clearing process.
[0025] FIG. 4 is a flowchart of the external clearing process.
[0026] FIG. 5 illustrates the bidding process according to one
embodiment of the invention.
[0027] FIG. 6 is a system component layout diagram according to one
embodiment of the invention.
[0028] FIG. 7 is a system component layout diagram according to one
embodiment of the invention.
[0029] FIG. 8 illustrates an overview of the electronic auction
phases.
DETAILED DESCRIPTION
[0030] FIG. 1 is a block diagram of an electronic network-based
exchange system according to one embodiment of the present
invention. Preferably, the general architecture used is a
client/server architecture. Client/server architectures, per se,
are generally known. As shown in FIG. 1, the server side comprises
an exchange provider 100, which may further comprise at least one
database 130, exchange processor 120, internal proxy 140, listing
160, and external proxy 150. Exchange provider 100 is connected to
one or more clients 170 via network 110.
[0031] If desired, exchange provider 100 may include at least two
portions. In a preferred embodiment, exchange provider 100 consists
of two portions. The first portion comprises an internal portion
101, which may include database 130, exchange provider 120, and
internal proxy 140. The second portion comprises external portion
103, which may include the listing 160 and external proxy 150.
Internal portion 101 may be separated by security means 102 from
external portion 103. Security means 102 may be a firewall or
similar security providing device to prevent unauthorized access to
certain portions of the server side component.
[0032] Database 130 is a primary data storage mechanism and
communicates with internal proxy 140. It is responsible for storing
data and other information relating to system operation. Such
information may include, system parameters, item records, account
information, exchange accounting information and other information.
Database 130 may be any conventional database, including multiple
databases or distributed databases.
[0033] Exchange processor 120 is a controller that performs the
function of managing the exchange or auction. Any suitable
controller may be used. Exchange processor 120 communicates
directly with internal proxy 140. It receives bids, processes the
bids and reports out to the internal proxy.
[0034] Internal proxy 140, which itself may be a server, may be
used to sanitize, authenticate, filter and route communications
(e.g., chat) and assist in the clearing process. Proxies, per se,
are generally known. However, particular functions are performed by
internal proxy 140. For example, internal proxy 140 communicates
directly with database 130 and exchange processor 120, and may link
the internal portion 101 to external proxy 150 or other components
of the informal portion 103. More than one internal proxy 140 may
be provided. Preferably, clients cannot directly access the
internal proxy. Proxy 140 may be on a firewall.
[0035] Listing 160, which may be a database, web server or other
suitable mechanism provides information about items listed for
exchange. Listing 160 is client accessible via external proxy 150
and network 110. One or more than one listing 160 may be provided
per exchange.
[0036] External proxy 150 is responsible for security, filtering,
and routing. External proxy 150 communicates with internal proxy
140, listing 160, and network 110. One or more than one external
proxy 150 may be provided per exchange. External proxy 150 prevents
direct client access to the internal portion 101. It may be used to
prevent unwanted or undesired information from entering the
exchange.
[0037] Network 110 may be any medium (wired or wireless) that
allows for communications between components of the invention
(e.g., clients and servers) and need not be homogeneous throughout
the communications paths of the invention.
[0038] A preferred embodiment of the invention operates according
to FIG. 2 It is assumed that the host has been configured. In step
200, the mode of operation of the exchange is specified. For
example, it is specified how the exchange will work and what rules
it will work under. Information that may be entered during this
phase may include, inter alia, the start and stop time for the
exchange, the categorization of the commodity (e.g., as either a
good or a service), the aspects of the exchange that will be "open"
and those that will be "closed," whether there will be public or
private access to negotiations, and whether or not seller
intervention will be allowed. Other rules and terms may be
specified. This information is stored in the server and used to
control a given exchange.
[0039] In step 205, commodity information is entered by the seller.
The term commodity or item can include goods or services. This
information may include identification of a new commodity or
modification of an existing listing by an authorized person. Such
information may include system required administrative information
such as exchange rules (parameters for that item) seller
identification, identification of the item, a major and/or minor
classification, pricing information, and other terms. Other options
available to a seller client include the ability to search/list
items, modify/remove items, intervene in an exchange (e.g.,
terminate bidding or an item listed by the seller), electronic
chat, and reviewing the history/status of bids. If the client
selects viewing an item by identifier (e.g., an alpha-numeric), the
client may be prompted for the identifier that a particular item is
assigned. The client may have retained this number from a previous
session, or may have received the number via accessing the listing
service. If the client enters a valid identifier, the buyer may be
shown the item, information about the item, or both.
[0040] In step 210, the listing information is made accessible to
the public. This may include posting information on a world wide
web page that the public can access. Additionally, an automatic
identification may be used to send E-mail to potential purchasers.
Other means of making the information accessible may also be used.
The listing itself may include historical data (a list of
commodities traded or listed in the past and associated transaction
information), current listings and their status, and future
listings (e.g., commodities scheduled to be offered, but for which
bidding is not yet permitted). The listing may be searched by
fields, keywords or other search techniques.
[0041] In step 215, a potential purchaser or exchange partner
accesses the exchange via a client terminal. The purchaser client
presents a number of options. For example, the purchaser may
search, obtain additional information, perform electronic chat
(real-time or store/forward) bid and review (history/status). For
example, the search function may enable the purchaser to search
through the listing for items of interest. The purchaser may be
provided with several fields of information that can be used to
facilitate the search. These search fields may include
classification (e.g., automobile, tool, furniture, etc.), price,
terms or other fields or key words. The system may return either an
exact match, the closest match, or an entire classification for the
client to browse through.
[0042] The client may have the capability of browsing through the
database using standard navigational tools. These options allow the
client to quickly advance and review through the database. Items
may be displayed in various views and in various orders.
[0043] Once a desired items is identified, the buyer may obtain
additional information about the listed item. For example, the
client may be provided with a chat option. Chat enables electronic
communication via the network and may provide the client with a
real-time communication link with other buyers, the seller or the
exchange host. Further, if the rules of the exchange provide, the
chat may be either public (i.e., everyone viewing that particular
item will be able to see the chat such as in a chat room) or it may
be private (i.e., no one except the involved parties can see the
chat). This option may be one of the exchange parameters.
[0044] Additional options may be provided to assist the client in
managing the information. The client may be able to retrieve more
information about a particular item that is being viewed. This may
be useful when information for an item takes more than one screen
to present. It may also allow the client to send an E-mail
containing all of the information about the particular item being
viewed to an E-mail address.
[0045] The potential purchaser may make a bid on an item that is
currently being viewed and the information is processed in step
220. Once bid is selected, the client may be provided with the
current highest bid for the item, and a window entering the
required information for making a bid. In order to be accepted, the
bid must meet certain criteria. For example, the bid must be higher
than the current highest bid. The system may have rules in place
that allow only predetermined increments (e.g., $0.50, $1, $10,
etc.) depending on the particular estimated cost of the item. Same
as all, rules can be enforced on the client side and others can be
enforced at the external proxy or internal proxy. This enforcement
may also include the initial filtering of information. For example,
if a bid placed is not higher than the current highest bid, the
client may not transmit the bid. Alternatively, the non-qualifying
bid may be dropped at the external proxy. Thus, unnecessary
communications to the server are avoided.
[0046] In another embodiment of the invention, bids are not
transmitted to the host if they are irrelevant. Irrelevant bids may
be bids that are less than the current "best" bid. In order to
determine if the bid is relevant or not, the system determines what
the seller's goal is (price, location, etc.) and then determines if
the bid is more desirable to the seller than the current "best"
bid. If it is, it replaces the "best" bid and the seller may be
notified of the new highest bid. If it is not, the bid is
disregarded. Notification may include a bid identifier, an amount
and other information.
[0047] New "best" bids may be broadcast to all participants in the
exchange. If a potential purchaser owns the "best" bid, he may also
be notified of this status.
[0048] In step 225, the negotiations between the seller and all
bidding parties are concluded. Negotiations may be concluded by
expiration of the predefined exchange time, through seller
intervention, through a match being achieved or other events.
[0049] In step 230, clearing process is performed. This may be tied
to a clearing bank.
[0050] Clearing may be done in several fashions. One implementation
of clearing is based on a simple process for modifying at least two
items. The steps required in the actual process of modifying these
items will be described in detail later. Internal clearing occurs
when there is very little or no chance for the clearing process to
fail, such as when the system directly controls all commodities in
question. When there is internal clearing, the integrity of every
trade on the system is protected at all times; that is, the system
provides insurance or a guarantee of the trade completion. It is
not possible for a participant to default after a trade is
arranged. Since internal clearing is processed in real-time, the
clients involved may proceed to the next negotiation immediately.
External clearing occurs when at least one commodity to be cleared
requires dealing with external systems or where there is a
possibility of failure during the clearing process.
[0051] Database 130 may have the ability to control the process of
internal clearing. The present invention's implementation of
clearing is based on a simple process for modifying at least two
items. Referring to FIG. 3, the database can ensure the integrity
of a trade by using the following process. First, in step 300, the
system obtains the exclusive right to modify lock on data record #1
and on data record #2. This ensures that no process other than the
internal clearing process can access the two data records. Next, in
step 305, the system modifies the relevant data in each record.
This may entail exchanging the information between the two locked
records. In step 310, the system releases the exclusive right to
modify lock on data record #1 and data record #2. The chronological
order of the processes within a step is not significant, but each
process of a step must be complete before moving to the next step
and the steps must be completed in proper order.
[0052] If internal clearing is not available, or if it is not
desired, external clearing may be used. Referring to FIG. 4, an
overview of the external clearing process is given. First, in step
400, the system obtains an exclusive right to modify lock on data
record #1 and data record #2. In step 405, the system waits for one
or more real-world events to occur. Real-world events may include a
physical exchange of objects, a credit card validation, etc. Once
this real-world event occurs, in step 410, the system modifies
relevant data in each record. In step 415, the system releases the
exclusive right to modify the lock on data record #1 and data
record #2. At the completion of these steps, the external clearing
process is complete.
[0053] In both situations, a third data record may be modified.
This may be done in order to account for the system's commission.
The commission may be measured in several ways: it may be a
percentage of the selling price, paid by the buyer or seller, or
both; it may be a fixed amount paid by the buyer or seller, or
both, or may be any other suitable means for providing
compensation. Based on the type of commission, data record #3,
which may represent the system, is modified to include the amount
of commission gained from this trade.
[0054] In addition to being internal or external, the clearing may
also be direct or indirect. Direct clearing would be used when the
items are directly transferred between the buyer's and the seller's
accounts. Indirect clearing would be used when items are
transferred to a third party or placed in escrow.
[0055] Referring to FIG. 5, an illustration of the bidding process
according to one embodiment of the invention is given. First, in
step 500, the client bids on the item. In step 505, the system
checks to see if the bidder is an authorized bidder. This may be
based on the exchange rules set earlier by the seller. If the
bidder is not an authorized bidder, an error message 590 is
returned to the client. If the bidder is authorized, the process
continues.
[0056] In step 510, the bid is checked to determine if it meets the
rules, e.g., if it is greater than the current highest bid plus a
predetermined increment. There may be other rules for determining
whether the bid is valid. In one embodiment, the increment may be
solely based on the bid on the item. For example, for items with
bids of less that $100, bids may only be made in $1 increments; for
items over $100, bids may only be made in $5 increments. In another
embodiment, the bid increment may be determined based on the
seller's estimated value of the item. In yet another embodiment,
the increment may be set by the seller regardless of the bid or
value of the item. If the bid is not greater than the highest bid
plus a predetermined increment, an error message is returned to the
client.
[0057] In step 515, the bid is transmitted to the seller or
exchange. This may be done by electronic mail, by electronic
messaging, or any suitable method.
[0058] In step 520, the system determines if a concluding event has
occurred. This may be an expiration of time, by an exact match, by
seller intervention, or any other suitable event. Once this occurs,
the successful bidder is notified (step 525).
[0059] In another embodiment, the seller may have the option of not
selling the item. This would allow the seller to retain control of
his item should the best bid be unacceptable.
[0060] Once the bidder has been notified, the clearing process is
initiated in step 530.
[0061] The standard client 170 of the invention may employ various
graphical user interface, or GUI, components, artificial
intelligence and agent-like behaviors for various functions. For
example, a modified scroller is provided. In this modified
scroller, displayed items move from one location to another, and
depending on predetermined settings, the time may then either move
off the display or be retained and remain visibly present in the
display. If the item is not retained, then the scrolling area of
the scroller is adjusted to be smaller by the size of the retained
item. If enough items are retained so that the remaining display
space is be insufficient for proper scroller display, then the
retained items may scroll in order to accommodate the new item as
necessary. Both the active and retained scrollers are able to be
manually manipulated such that items that have been previously
removed from the display may be brought back for a type of history
review mechanism.
[0062] In a preferred embodiment, two scrollers may be linked or
associated with each other via some binding and may use this
binding or association to help display information in a new and
unique way. There are at least three presentations of this
scroller. The first presentation, is where the scrolling is in a
similar direction, and another is where the scrolling is opposite
direction. A center-out scroller, where the scrolling moves from
the center to the outsides, may also be provided.
[0063] Any of these scrollers may have retained items as well. Dual
scrollers may be extended to three or more scrollers linked by some
association. These scrollers may also be in any orientation
including an orthogonal perspective such as would be in a three
dimensional environment.
[0064] Security is provided for this system at different levels.
Any suitable means for providing security to the system may be used
such as an encrypted stream-based network communication.
[0065] Referring again to FIG. 1, internal proxy component 140 also
has the critical duty of handling communications with systems
external to the invention, and may employ additional security,
protocols, and filters. The proxy's filters are based on any field
in the protocol, but primarily will be based on the bid, ask, and
item classification fields. It may be desirable to not have direct
communication between client 170 and exchange 120. All
communication destined for exchange 120 is routed through proxies
140 and 150 to insure authorized and authenticated
communication.
[0066] The external proxy 150 has the ability to connect to
external systems and retrieve information based upon an external
protocol in order to extract information that another component
requires. For instance, the external proxy 150 handles incoming
connections from client 170 using the invention's protocol, and it
also has the ability to handle incoming connections from other
outside sources such as E-mail, CGI scripts, telephone, fax or
secondary clients with secondary protocols.
[0067] An example of this is using a web page on the World Wide Web
to display information about a lot for exchange. The external proxy
150 can then extract appropriate information from the remote web
page and pass this to listing service 140 which in turn will pass
information to database 130 and exchange 120 as needed. The
information that is required to be extracted is information that is
sufficient to allow for an exchange to take place. This information
is then embedded using the invention's standard protocol so that it
can be extracted. Therefore, it would be possible to use the Hyper
Text Markup Language (HTML) comment tokens to wrap the invention's
required information.
[0068] Referring to FIG. 6, internal proxy 140 and exchange
processor 120 are provided with additional processing. Box A
represents the additional processing that applies to internal proxy
140. These processes may include a clearing processor, such as a
clearing bank, electronic data interchange (EDI). Box B represents
the additional processing that applies to exchange processor 120.
These processes may include a partial matching processor, barter
matching processor or a pooling processor. One or more of the
internal or external proxy can be used for, among other things,
verification of authenticity of bids, validity of bids (based on
rules), filtering of bids for price, status/time, item
identification and required information. Preferably, the internal
proxy handles more advanced functions, including authorization,
identification and final verifications. A single proxy may be used
if desired. Two proxies permit load balancing. Processing may
include routing of data and/or filtering, among other things.
[0069] Referring to FIG. 7, an example of how systems may
interconnect is shown. In this embodiment, a plurality of exchange
providers may be connected via network 110. Exchange provider 100
may actually host the exchange, and a plurality of exchange
providers 100 may interact via network 110. Further, a plurality of
clients 170 may be able to access exchange provider 100 and
participate in the exchange.
[0070] A preferred embodiment of this invention is an electronic
auction. Referring to FIG. 8, an overview of the electronic auction
phases is given. The electronic auction is designed to emulate and
surpass a real-world auctions' functions and capabilities. First,
in step 805, the preview phase represents the start of an auction.
A lot, or an item, preferably will have been entered by this time
and when the auction is started, and it is immediately placed in
the preview phase.
[0071] In step 810, the activity phase includes a calling for bids.
If a lot is in this phase after a predetermined event and no bids
are entered, the next phase is the settlement phase. If there is a
bid, the auction moves to step 815, the first interval phase. This
phase is provided to give a gap between the activity phase and the
auction phase. It provides time to prepare for the auction phase by
placing a resting bid. No active bidding is allowed during this
phase. As in step 805, if there is no bid on the lot, the next
phase is the settlement phase.
[0072] In step 820, the auction phase represents the termination of
the ability of multiple bidders to bid in an individual auction.
When there are multiple concurrent auctions, the starting and
stopping times may be staggered based on factors such as, but not
limited to, activity, bid volume, price, or category. The schedule
is posted when finalized, which may occur during the first interval
phase. Any outstanding resting bids are processed during this
phase.
[0073] The second interval phase 825 is a gap between the auction
phase and the interface phase. A new resting, or maximum, bid may
be entered during this phase for use as a fail-safe during the
interface phase 830. There is no active competitive bidding during
this phase.
[0074] The interface phase 830 is the phase where the high bidder
from the auction phase may have the ability to further bid in a
second auction. If a resting, or maximum, bid was entered during
interval 825 or during second the interface phase 830, it is used
as a fail-safe during this phase in case of interface failure.
[0075] The settlement phase 835 is the phase where the results of
each auction are finalized.
[0076] A simple auction has only auction phase 820 settlement phase
835. Other steps are included in order to promote fairness and
active bidding. Step 825 and 830 may be used only when there is a
need to tie a computer bidder to a second auction such as one
hosted by a human auctioneer or direct buyer to seller
negotiation.
[0077] The following are example embodiments:
[0078] An alternate embodiment of this invention is a paperless,
brokerless real-time concurrent point and click trading of
Securities and Exchange Commission (SEC) listed stocks where
individuals acting as an individual, broker, or broker/dealer may
buy or sell registered shares of stock without using a brokerage
firm as an intermediary. Brokerless refers to the fact that
participants are trading directly with other participants without
brokerage firm or other third party assistance. Real-time means
both the ability to offer shares of stock for sale or to purchase
shares, and the results of bids on these offers is processed nearly
instantaneously and thereby known almost immediately by all
exchange participants. The system will consist of real-time price
negotiation between buyer and seller with a price matching
mechanism when an offer to buy or sell is first entered. Trading is
concurrent and interactive for both buyer and seller. Both buyer
and seller will use the bidding mechanism to raise or lower bids
and offers. The participants may choose any listed item offering
and place a bid if they wish to buy, or change aspects of their
offering if they have offered to sell. This will allow electronic
price negotiation between buyers and sellers, simulating the
trading floors of the real-world exchanges. When an offer to buy or
sell stock is first entered, a check is made by the system to see
if there is a matching offer on the opposite side of the trade.
This match will be for the same stock at the same price in tradable
quantities. A similar check is made if an existing bid or offer on
any shares of stock changes. If the system locates a match, a trade
is consummated. The exchange system will include an extensive
database for customer and trade information. The system will
maintain and provide a record of all trades concerning the time of
day, the parties involved, the price and number of shares traded,
and any other information that is required such as required by a
government regulatory agency such as the Securities and Exchange
Commission (SEC). A bid history will be available for any stock
traded that will include the most recent offer and bid price, the
price and volume of the last trade, and the previous day (or week)
history. The system will provide real-time trade information on a
per-trade basis.
[0079] Another embodiment is the trading of "entertainment" stocks,
options and futures. These stocks and options will be issued by the
governing body of the trading floor on participants or entrants in
real-world events. In no way will a stock or option indicate an
ownership in the entity that serves as the symbol or name (i.e.,
sport stock in the Buffalo Bills). The stock or option value is
merely an indication of perceived value derived by the trading
floor members and market forces in this particular forum.
[0080] Only members of this trading floor will be allowed to trade.
Registration is required to become a member of the trade floor, and
members are assigned an account number which are kept in the
trading forum's database. To commence trading, members must have
sufficient funds in their account to pay for the stock purchase.
The system will preclude any member from trading more stock or
money than is in their account.
[0081] The "entertainment" refers to the excitement created or
enthusiasm generated by the media over the anticipated outcome of a
real-world event. This event must have multiple entrants but only
one clearly-defined winner after a period of time. Small events may
occur during this time duration that may help define the eventual
winner. These small events will stimulate the trading of the
entrant's stock. Depending on the trader's perceived value of how
an entrant is fairing in relation to other entrants, during the
trade period, will determine the value of any entrant's stock. An
example of these events may include individual team games leading
to a championship, political primaries leading to an election, or
critic's review of Oscar-bound movies.
[0082] Stocks and options are issued in an initial offering of
finite amount at a par value by the governing body. This initial
offering of par value stock will be sold to trading floor members
at the beginning of the time duration for the real-world event.
Options to purchase specific amounts of stock from the governing
body during the time period may also be issued. The proceeds of
these sales will go into a dividend depository that will be paid to
the stock shareholders of the winning entrant, entrants, or
combinations set by the specific rules for a particular event. This
dividend will be paid at the end of the time period.
[0083] As each entrant's issue becomes more subscribed, that
particular stock will be assigned a symbol and moved to the trading
floor to be traded on by the trade floor members. Trading on a
particular symbol is done by either the owner of the stock offering
to sell, or the governing entity may issue more stock on this open
market. Trading will simulate real-world stock exchanges in that
both sides of a trade (buyer and seller) may raise, lower, or
cancel offers to trade in real-time. The trading floor clearing
mechanisms will clear all trades and debit and credit the stock and
money into the principal's accounts. Members may be limited to the
amount of stock or the amount of money in their individual
accounts.
[0084] When the winner of the real-world event is determined, the
dividend is distributed according to the rules for this particular
event. If the real-world event is reoccurring, the stock holders
may be issued stock options that allow them to purchase the same
amount of stock at the next issue at par value.
[0085] Another embodiment of this invention is a brokerless
commodity exchange. The commodities traded may range from current
contracts traded over commodity exchanges, such as the Chicago
Board of Trade, to new contracts such as water rights, pollution
credits, electric power, and petroleum derivatives, or commodities
such as commodities such as information (i.e., "data") such as
breaking new stories or knowledge such as from knowledge modeling
and information brokers or others such as bananas, rubber, or
computer chips. These commodity forums could be CFTC regulated, or
independent.
[0086] The membership, trading, and clearing mechanisms for a
commodity exchange are similar to the stock exchange embodiment.
The differences would be in the nature of the commodities
themselves as opposed to stocks. There may be commodities that
require a physical settlement with no commodity exchange for money,
or a cash settlement where no commodity changes hands.
[0087] Another embodiment is a barter exchange. This barter
exchange may be based on a client-server system that provides
real-time networked forum for barter. The clearing of the barter
between members of the exchange would be arranged completely by the
participants for the trade.
[0088] All sides of the barter must be members of the exchange.
Membership requires that the applicant use the barter exchange
system to submit the application form that contains specific
identification, background, and financial information. Once the
applicant is granted an exchange membership, an account number is
assigned. A member must have funds or a line of credit established
by a credit card available for debiting.
[0089] Members may negotiate in real-time for items. Either side of
a trade may offer to increase, decrease, add items, remove items,
or do any variation of trade that one is able to do in the real
world. This will be accomplished by a listing function and a system
priority chat. Anonymity will be preserved in forum until a barter
is consummated. Upon the system verifying and transferring the
commission to the exchange, which is charged for use of the forum,
the identification of the principals are revealed to each other.
The principles may then arrange the details of the exchange.
[0090] Another embodiment is an exchange for all types of domestic
and foreign currencies and their derivatives. This could include
arbitrage or direct swaps. Again, this exchange's membership,
trading, and clearing mechanisms may operate in the same manner as
the exchange system. However, differences may exist in the specific
commodities that are traded and minor adjustments may be made to
account for their particular attributes.
[0091] Another embodiment is an on-line gambling forum. A digital
calcutta is a method of wagering on sporting events that are of
public knowledge and generate interest. Calcutta wagering is based
on an auction-style forum where all entrants of an event are
auctioned to the highest bidder. This auction may be for an
individual event, such as an automobile race, for a round, such as
a golf tournament, or for a team championship. The proceeds of the
auction are placed into a pool to be divided among the high bidders
on the top four finishers in the event or round. There could be
many calcuttas based on a single sporting event based on bid size,
including minimum bid, maximum bid, and unlimited bid, or pool
size, including maximum pool, minimum pool, and unlimited pool, or
may be based on any combination of bids size and pool size. The
calcutta could also be based on the split of high bidders on the
high finishers. The pool could be split among high bidders on
several places down from the first-place winner.
[0092] The digital calcutta would serve as a mechanism for wagering
on highly publicized sporting events over a computer and network.
Examples may include the Indy 500, the Tour de France, Wimbeldon,
World Cup, Master's, Olympic events, college basketball (NCAA
playoffs). News media originates the enthusiasm necessary for these
events to be well-published throughout large portions of the world.
This, in turn, creates interest in wagering that could have a low
entry level with a large payoff in the foreseeable future. The
electronic auction forum for wagering on these events could
generate its own excitement.
[0093] Another application for computerized wagering based on the
outcome of real-world events is the use of a virtual interactive
trading floor. This would allow the participants to become
odds-makers and place wagers on any event they choose without going
through an intermediary. The trading floor would provide a
real-time forum for participants to negotiate odds, point spreads,
winners, or any other form of wagering. The only criterion is that
there must be a definitive outcome and that the method to determine
this outcome is agreed upon by both parties.
[0094] A participant must register to become a member of the
trading floor and be assigned an account. Before the participant
would be allowed to place or offer a wager, the total amount of
funds or credit necessary to cover this wager must be in his
account. Once a wager is made, the total amount involved may be
placed in the trading floor's depository. If the participant used a
line of credit issued by a credit card, approval would be verified
and the funds immediately transferred. The wager would be "locked"
until the funds were transferred; this means that the participants
could not reject the wager while the funds were being transferred.
This transfer would take no longer than a few seconds.
[0095] If, for any reason, funds were unavailable, the bet would be
canceled. Once the event's outcome is determined, the wager would
be settled and the winner's account would be credited via the
trading floor's clearing mechanism. A small commission would be
paid to the trading floor for every cleared wager.
[0096] If desired, artificial intelligence capability can be added
to the buyer client to enhance its capabilities. For example, the
buyer may use software agents to automatically search for items to
bid on, may monitor bid status and/or closing items to
automatically bid on items, without buyer intervention (subject to
preset parameters by the buyer). Other functions can be added such
as agent behaviors, single or multiple clients working together to
address the market, and allow for the use of different sources of
data such as on-line news tickers, information brokers and
knowledge modeling databases. If desired, host-to host
communication can be permitted. Multiple item lots may also be
permitted.
[0097] In a preferred embodiment, a virtual online bank (VOB) may
be provided. The VOB may be used to provide convenience to the
traders and credibility to the exchange. Margin services may be
provided by the VOB to a client based on a predetermined criteria.
This predetermined criteria may include the results of a credit
check, past trading experience, etc. A client may be provided the
option of visiting the VOB at any time during the access to the
exchange.
[0098] Although the present invention has been described in detail,
it should be understood that various changes, substitutions, and
alterations can be made without departing from the intended scope
as defined by the appended claims.
* * * * *