U.S. patent application number 12/470343 was filed with the patent office on 2009-12-17 for system and method for electronic trading and delivery of a commoditized product.
This patent application is currently assigned to BULLION DIRECT, INC.. Invention is credited to Vivek KATYAL, Charles Hadley MCALLISTER.
Application Number | 20090313161 12/470343 |
Document ID | / |
Family ID | 41009255 |
Filed Date | 2009-12-17 |
United States Patent
Application |
20090313161 |
Kind Code |
A1 |
MCALLISTER; Charles Hadley ;
et al. |
December 17, 2009 |
SYSTEM AND METHOD FOR ELECTRONIC TRADING AND DELIVERY OF A
COMMODITIZED PRODUCT
Abstract
The present invention provides a system and method for trading
of a commoditized product through a distributed network of
computers, and for delivering the commoditized products after the
trade. The system includes an order matching routine, a payment
routine, a product qualification routine, and a distribution
routine. The invention provides for secure electronic trading of a
commoditized product through a hub centric platform that provides
for a real order exchange in a real time environment, allows
individual buyers and sellers to remain anonymous to each other,
eliminates size or volume as a means of discrimination for
transaction, and maximizes distribution efficiency.
Inventors: |
MCALLISTER; Charles Hadley;
(Wimberley, TX) ; KATYAL; Vivek; (Austin,
TX) |
Correspondence
Address: |
DECHERT LLP
P.O. BOX 390460
MOUNTAIN VIEW
CA
94039-0460
US
|
Assignee: |
BULLION DIRECT, INC.
Austin
TX
|
Family ID: |
41009255 |
Appl. No.: |
12/470343 |
Filed: |
May 21, 2009 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
09860134 |
May 17, 2001 |
7584135 |
|
|
12470343 |
|
|
|
|
60204650 |
May 17, 2000 |
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Current U.S.
Class: |
705/37 |
Current CPC
Class: |
G06Q 40/00 20130101;
G06Q 40/025 20130101; G06Q 40/04 20130101 |
Class at
Publication: |
705/37 |
International
Class: |
G06Q 40/00 20060101
G06Q040/00 |
Claims
1. A method for providing secure electronic trading of a
commoditized product between at least one seller and at least one
buyer, and for providing distribution of the commoditized product
from at least one seller to at least one buyer, wherein a hub
centric platform administers a seller account, a buyer account, a
data management system, a system account, a seller portfolio
account, a buyer portfolio account, a qualification routine, a
payment routine, and a distribution routine comprising: receiving a
sell order from at least one seller to sell a commoditized product;
receiving a buy order from at least one buyer to buy a commoditized
product; matching the sell order with at least one buy order from
the at least one buyer; matching the buy order with at least one
sell order from the at least one seller; determining the
qualification of the at least one buyer or the at least one seller;
receiving the commoditized product from the at least one seller;
qualifying the commoditized product received from the at least one
seller; drawing a seller payment from the system account; and
distributing a seller payment to the at least one seller
account.
2. The method of claim 1 wherein the at least one buyer comprises
at least two buyers, and the at least one seller comprises one
seller.
3. The method of claim 1 wherein the at least one seller comprises
at least two sellers and the at least one buyer comprises one
buyer.
4. The method of claim 1 wherein the buyer designates a
distribution routine by selecting from shipping the commoditized
product to another location, accumulating the commoditized product
in a designated account, or taking delivery of the commoditized
product.
5. The method of claim 1 where distribution comprises shipping the
commoditized product by overnight delivery means, standard delivery
means, ground delivery means, or air delivery means.
6. The method of claim 1 further comprising the at least one seller
selects a prior pay option for shipping commoditized product to the
platform.
7. The method of claim 6 wherein the prior pay option comprises;
the hub centric platform sending a negotiable payment document to
the seller, wherein the negotiable payment document is subject to a
bank hold of funds until the commoditized product shipped from the
seller is received and qualified by the hub centric platform; the
seller depositing the negotiable payment document into a designated
account; the seller shipping the commoditized product to the hub
centric platform; the product is qualified by the hub centric
platform, the hub centric platform notifies the bank to release the
hold on the negotiable payment document; and payment funds are
released to the seller designated account.
8. The method of claim 7 wherein the seller designated account is a
portfolio account on the hub centric platform, a credit union
account, a brokerage account, a bank account, or any combination
thereof.
9. The method of claim 1 wherein the qualification routine
comprises authentication of commoditized product, inspection of
commoditized product, verification of commoditized product,
authentication of buyer or seller information, inspection of buyer
or seller information, performing credit checks on buyer or seller,
verification of market price of the commoditized product, or any
combination thereof.
10. The method of claim 1 wherein the qualification routine is
performed automatically or manually.
11. The method of Claim 7, further comprising: the hub centric
platform receiving the shipping package with the commoditized
product from the seller; the hub centric platform determining
whether the commoditized product matches the sell order; and in
response to determining that the commoditized product matches the
sell order, notifying the bank to remove the temporary hold on the
negotiable payment document to the seller.
12. The method of Claim 7, further comprising: in response to
determining that the commoditized product does not match the sell
order, maintaining the temporary hold on the payment to the seller;
and notifying the seller that the commoditized product does not
match the sell order.
13. The method of Claim 1, wherein the commoditized product
comprises any product or service having a size, weight, color or
quality specification.
14. The method of Claim 1, wherein the commoditized product is
precious metal, agricultural products, building products, business
services, or any combination thereof.
15. A hub centric platform for trading a commoditized product
comprising means for matching orders for at least one seller and at
least one buyer wherein at least one seller and at least one buyer
are not limited by size or volume of order, the at least one seller
and at least one buyer remain anonymous to one another; multiple
buy orders can fulfill one sell order and multiple sell orders can
fulfill one buy order, one shipment results from fulfillment of any
buy order and one payment results from any sell order; means for
qualifying commoditized product, buyer information, seller
information, market pricing information, or any combination
thereof; means for providing real time order and pricing
information; means for accumulation and managing buyer and seller
transactions; means for distributing commoditized product, and
means for issuing payments, and means for accepting commoditized
products sold.
16. The hub centric platform of claim 15 further comprising: a
proprietary software program to perform all functions; a
telecommunications system operated by the software program; a
network of computers for accessing the software program; and a
system of checks and balances to monitor the software, the
telecommunications system, and the network of computers.
Description
CROSS REFERENCE TO RELATED APPLICATION
[0001] This application is a continuation of U.S. application Ser.
No. 09/860,134, filed May 17, 2001, which claims the benefit of
U.S. Provisional Application No. 60/204,650, filed May 17,
2000.
TECHNICAL FIELD
[0002] This invention relates generally to the field of electronic
trading and, more particularly, to providing secure electronic
trading of a commoditized product through a hub centric platform
that provides for a real order exchange in a real time environment,
allows individual buyers and sellers to remain anonymous to each
other, eliminates size or volume as a means of discrimination for
transaction, qualifies products, and maximizes distribution
efficiency.
BACKGROUND OF THE INVENTION
[0003] Establishing a buyer seller relationship is an essential
step in commerce. The seller can attract buyers through
advertising, direct solicitation, or through the sales activities
of brokers and buyers. Currently, sellers can solicit buyers
through traditional methods such as media advertising, and face to
face selling, or they can utilize the relatively new technology of
e-commerce by advertising on the Internet. Once interested buyers
are attracted, transactions can proceed to closure in many
ways.
[0004] Establishing a buyer seller relationship in traditional ways
may result in a contract which then requires execution. The seller
must provide the product, and the buyer must pay for the product.
If the buyer and seller are in two different locations, a number of
other issues are raised. For example, the credibility of each
party, the authenticity and qualification of the product, the terms
under which the buyer must take possession, the way in which the
product will be shipped, who will pay for shipping and handling,
and the mode of payment, all become major issues with which both
parties must deal. Often buyers and sellers utilize a funding agent
and establish a letter of credit for transfer of funds on products
that must be shipped. This is costly and usually only available to
sellers and buyers of substantial size, and for orders of
significant volume. Carloads of grain may be sold in this manner,
however, it would not be cost effective to use such a system for
one gold coin.
[0005] Currently, buyers and sellers may use the Internet for
establishing relationships. Current means for trading on the
internet include order matching, catalogue sales, and auctions.
Order matching is used most effectively for financial products,
such as, for instance, stocks, bonds, and futures. These current
systems may generate information or conduct a trade, however, the
fulfillment of the transaction is purely electronic and doesn't
involve the physical transfer of the item being traded. The price
is tied to a limited access market, such as the New York Stock
Exchange, or Chicago Board of Trade. These markets are market
focused, not product focused. Price is determined based on the
trades in the market.
[0006] In traditional order matching systems, end customers
typically do not have access to true market pricing. The channels
to view, place, and execute orders are tightly controlled by large
players (i.e. institutions). Traditional commodities markets, such
as the New York Mercantile Exchange (NYMEX), allow only limited
access and are open only during certain times of the day. Actual
commoditized products are not typically traded. Instead, large
paper contracts for future delivery of bulk commodities are the
focus of these markets. For example, a typical platinum contract is
for future delivery of 50 ounces of platinum at a total value of
approximately $30,000 each. These contracts are not feasible for
purchase and delivery by small investors due to their high value,
lack of fractional distribution, as well as the fact that the
contracts themselves are impossible to hold over an extended period
of time as they are set to expire. In fact, the primary purpose of
the traditional commodities exchange is to facilitate hedges for
large players in a particular industry in which physical delivery
is not normally made.
[0007] In other related market services, pricing for product is
derived from the most actively traded contract month. In the
traditional market, this has become the standard because the
largest players of an industry, who control the distribution
channel, use paper contracts for hedging purposes when conducting
there large trades. Therefore, pricing for the actual products is
not true or real as pricing is not in a real time environment and
doesn't directly represent the true voice of the consumer or end
user of product. For example, a large supplier of American Gold
Eagles 1 ounce coins might sell only 100 ounce lots at a price that
is based on the most actively traded month for a futures contract
on the New York Commodities Exchange (COMEX). The broker that is
reselling from the 100 ounce lots might sell 20 ounces at a time to
retail jewelry or coin stores and will price product in the same
manner. The broker will likely include an additional premium or
commission for transaction costs and profit margin. The retail
jewelry or coin store might resell one at a time to individual
investors in the same manner. The total transaction cost ultimately
paid by the end customer can be substantial considering that each
market participant in the distribution chain also allows for a
market risk factor in case the contract price of gold (100 ounces)
has dropped. The price of the product might change due to price of
the paper futures contract changing even though the actual supply
and demand of the product has not changed. This practice doesn't
allow for true market pricing of each individual commoditized
product as dictated by real buyers and sellers.
[0008] Due to controlled (or lack of) access to markets, current
trading platforms give advantage to large volume buyers and small
buyers must pay a premium price due to brokerage fees and minimum
trade sizes. Additionally, large volume orders are matched with
similar volumes, and it is not advantageous for large sellers to
have an order filled by many small buyers, because they must
transact many contracts and pay for many shipments. Brokers may
combine incoming trades from small buyers or sellers and conduct
one transaction to fulfill his obligation, however, the broker does
not represent both parties to a transaction. In fact, it is common
practice for brokers to actually buy at one price, sell to their
customer at a higher price, and collect a commission from their
customer, all at the same time. This practice is commonly referred
to as "making or playing the spread". In such a case, the end buyer
or seller obviously has no true voice in the marketplace.
[0009] Catalogues provide buyers with many choices of products to
purchase with a set asking price. The asking price includes
margins. As the price of the product fluctuates, the asking price
must be updated by the seller, sometimes on a frequent basis. On
some sophisticated catalogues, pricing might be tied to a certain
suppliers price schedule or even to a futures exchange. For
example, one online catalogue for precious metals products is
linked to the NYMEX and to COMEX futures contract exchange for
pricing. Once an order is placed on the catalogue, the order still
has to be fulfilled with the actual product sold, which is
unavailable on the exchange. This form of pricing is not accurate
and does not ensure efficient or accurate pricing and is not
automatically fulfilled. Current catalogue systems are not
integrated with an order matching system and therefore do not
benefit from real time pricing with immediate order fulfillment.
The fulfillment and shipping requires a series of steps to
completion.
[0010] Auctions are another means of trading on the internet.
Sellers list products and buyers bid on the price they want to pay
for the product. Auctions are time defined because the product is
offered for a set amount of time and is matched to the highest
offer at the expiration of the auction. In addition, the underlying
value of the product might be fluctuating during that time-frame. A
bid placed on the initial offer date may not be a fair price one
week later for some goods, such as precious metals, coins, and
gemstones. In addition, auctions do not provide for combining
orders. Even though there may be several buyers, only one gets the
item because buyers are pit against each other. Pricing is
determined by the bidding, not the real time value of the item. In
an auction format, the buyers and sellers must deal directly with
each other, are often known, and share the risk of the transaction.
Furthermore, it is difficult and time consuming to buy from or sell
to a large number of parties at the same time.
[0011] For commoditized products, the current systems available for
commerce do not provide for distribution efficiency, do not allow
small players to participate equally, and do not provide a real
time pricing system based on real time supply and demand
principals. Thus there is a need in the art for a system and method
for providing secure trading, qualification, and delivery of a
commoditized product. There is a further need for providing
individual buyers and sellers with an anonymous, non-discriminatory
means to exchange product without the burden of authenticating
transaction elements and details including buyer/seller
qualifications, product qualification, payment, and order
fulfillment. There is a further need for a continuous market that
is accessible and open 24 hours daily, seven days a week and 365
days a year. There is also a need for automatic price determination
and automatic price matching that is not limited by market makers
or by uneven buyer to seller units. And further there is a need for
efficient distribution of commoditized products. Also, there is a
need for buyers to be able to purchase from more than one seller at
a time and receive delivery, if they so choose, at one time with
one shipment, and the ability to pay one source. There is also a
need for a seller to be able to efficiently sell to more than one
buyer at a time, and be able to ship one package to one source, if
they so choose, and receive a payment from one source. There is
also a need for a secure payment method by which seller can receive
payment prior to delivering product.
SUMMARY OF THE INVENTION
[0012] The foregoing needs of the market are met by a method and
system for the secure electronic trading of a commoditized product.
In one aspect, the system and method provides for order matching
that is not auction based, and provides real time pricing via real
orders on a hub centric platform that is product focused rather
than market focused. All trades are guaranteed on the buy and sell,
products are authenticated, and all players participate equally
regardless of size. The price is automatically adjusted for the
market, and the system is available 24 hours daily 365 days a year.
The market of the invention is a continuous market that has the
ability to move in real time on a seconds notice based on real
orders, not limited to a market-maker's bid and ask. The system
provides access to real orders that the customer can execute
against and no one really controls the channel to execution of the
order. This is a real order exchange in a real time environment. A
small player has just as much opportunity to get the next
competitive price as a large order that might be priced behind
them.
[0013] Trading efficiency is apparent because an individual buyer
that wants to conduct ten different trades or buy ten different
units of a product, has the ability to match orders against ten
different parties of a platform to have the advantage of dealing
with only one transaction, the transaction with the hub. The orders
will be matched with the 10 most competitive offers, without
shopping in several different locations. A seller who would not
normally entertain a transaction with a small player is now selling
to several small buyers in one transaction. The hub centric model
levels the playing field and opens up channels of trade previously
not profitable. The seller does not have to ship the product to 10
different buyers, or open ten different accounts.
[0014] Buyers do not have to search for and qualify each potential
seller. Buyers now have the capability of accumulating any number
of orders that match with any number of sellers without the burden
of establishing an equal number of relationships. Now, only one
relationship would need to be established and maintained with the
hub. Distribution efficiency is attained by shipping several
different orders through one shipment. For example, a builder
purchases 3 windows, 25 nuts, 25 bolts and 15 4 by 8 sheets of
plywood, and 4 pallets of roofing shingles resulting from orders
matched to 20 different sellers. All can be shipped in one
shipment. The same is true for a buyer purchasing 25 gold coins at
$270.00 per ounce, where there were 2 different sellers, one
selling 20 coins and one selling 5 coins. In both cases of the
builder and the coin purchaser, one transaction was implemented and
one shipment is sent at a dramatic decrease of transaction costs to
all parties involved.
[0015] Sellers do not have to advertise to establish new
relationships and they have the ability to view all these orders in
the market and decide if they want to place a matching order or
place another order in the market. It is possible to know the depth
of the market for each product and neither the buyer or seller need
to assume the risk of credibility of the other party in the
transaction because it is assumed by the hub. In addition, sellers
remain anonymous to other members. For example, a seller now has
the ability to place one order for 1000 1/10 ounce American Gold
Eagle coins valued at $30 each. The order might match with 1000
different buyers in 1000 different locations. The seller would be
able to send one shipment to the hub at a cost of approximately
$25.00 and receive one payment from the hub for $30,000 less a
small clearing fee. Obviously, this ability to efficiently access
the market would dramatically decrease their transaction cost.
[0016] The hub centric system provides for a process to qualify
buyers and sellers using uniform standards. Once a new customer has
opened an account, a process for qualifying and then authorizing
the customer is initiated. This process includes, but is not
limited to verify financial standing and market position. A trading
power is defined based on this and other relevant information. The
customer is then free to transact business with the hub within the
parameters set on their account.
[0017] The hub also provides a process for the qualification of
product, including but not limited to authentication and
verification. Once incoming product is received at the hub, the
product is verified to meet the specifications of the matching
order. The product can also be inspected or authenticated to
determine ernnerner using best practices for the particular
industry. This process ensures that the 1000 matching buyers for
the product receive verified and authenticate product with out the
burden and expense to have product verified or authenticated for
themselves. For example, when a seller ships in 1000 1/10 ounce
American Gold Eagle coins, the hub qualifies the product which
includes, but is not limited to, counting, weighing, inspecting and
authenticating the gold coins. The authentication process includes,
but is not limited to, examining color, measuring size,
displacement, and weight. Advanced technology might be used to
determine metal content.
[0018] The hub provides a way for payments to be distributed
securely to customers by using a system involving, but not limited
to, clearing accounts, banking processes, and for some payment
types, a special account structure with predefined restrictions.
One such payment type provides a secure way to pay seller prior to
product delivery. When a seller has executed orders on the hub
trading system, they can opt for payment prior to shipping product
to the hub. Upon request, a prior pay payment is sent from a
special account that has restrictions based on the prior pay
contract. The customer may deposit payment into their bank account
prior to sending product. Once product is received and qualified,
the restrictions on payment are automatically released through an
automatic process involving software but can also be done by a
manual process. This form of payment gives the seller a binding
payment instrument and therein provides an extraordinary level of
security for the seller before releasing product from their
possession. As an auxiliary service, the hub also provides the
packaging material for the shipment along with a prepaid shipping
label. Insurance is also provided on return package.
[0019] In other aspects, further services can be offered from
sub-hubs that link to the hub centric model. For instance, when
catalogue sales are tied to the hub centric model or one of the sub
hubs, the price is constantly updated from the link to the market
for that specific product and the margin is built in or defined by
the catalog operator. Therefore, it isn't necessary to manually
update the catalogue inventory at specific intervals because it is
done every time the market price changes. Furthermore, a catalog
order can now be immediately fulfilled by initiating an immediate
market order for the exact product sold. This system would allow
for continuous real time pricing and fulfillment of catalog orders
24 hours daily, 7 days a week, 365 day a year.
BRIEF DESCRIPTION OF THE DRAWINGS
[0020] FIG. 1 is a functional block diagram illustrating the system
architecture of an exemplary aspect of the present invention.
[0021] FIG. 2 is a flowchart illustrating an exemplary aspect of an
account opening routine.
[0022] FIG. 3 is a flowchart illustrating a second method
implemented by an exemplary aspect of the present invention.
[0023] FIG. 4 is a flowchart illustrating a third method of an
exemplary aspect of the present invention.
[0024] FIG. 5 is a functional block diagram illustrating a revenue
model implemented by an exemplary aspect of the present
invention.
[0025] FIG. 6 is a flow chart illustrating the authorization of new
accounts.
[0026] FIG. 7 is a functional block diagram illustrating an
exemplary aspect of a buy order.
[0027] FIG. 8 is a functional block diagram illustrating an
exemplary aspect of a sell order
[0028] FIG. 9 is a functional block diagram illustrating an
accounts payable routine.
[0029] FIG. 10 is a functional block diagram illustrating the prior
pay routine.
[0030] FIG. 11 is a functional block diagram illustrating an
exemplary aspect of shipping selection.
[0031] FIG. 12 is a functional block diagram illustrating an
exemplary aspect of distribution.
[0032] FIG. 13 is a functional block diagram illustrating an
exemplary aspect of distribution.
[0033] FIG. 14 is a functional block diagram illustrating an
exemplary aspect of distribution.
[0034] FIG. 15 is a flow chart demonstrating the prior pay bank
routine.
[0035] FIG. 16 is a flow chart demonstrating draw options.
[0036] FIG. 17 is a flow chart demonstrating pending trades.
[0037] FIG. 18 is a flow chart demonstrating a receivables
routine.
[0038] FIG. 19 is a flow chart demonstrating the qualification of
product.
[0039] FIG. 20 is a flow chart demonstrating an accounts receivable
routine.
[0040] FIG. 21 is a continuation of the functional block diagram in
FIG. 7
DETAILED DESCRIPTION OF THE INVENTION
[0041] The present invention comprises a hub centric platform which
has the capability to accept orders, match orders, organize and
manage portfolios; qualify buyers, sellers, and products;
distribute products and payments; and accept products and payments.
All activities are conducted through the hub, which eliminates the
need for individual buyers and sellers to interact. Orders are
matched without discrimination based upon the size or volume of the
order.
[0042] For purposes of the invention, the following definitions
apply.
[0043] A "customer" can be either a buyer or a seller. The term
"member" is interchangeable with any of these terms.
[0044] A "seller" can be anyone wishing to sell a commoditized
product. This includes individuals, buyers, distributors,
manufacturers, farmers, cooperative sales organizations, warehouses
and the like.
[0045] A "buyer" can be anyone wishing to purchase a commoditized
product, including individuals, buyers, distributors,
manufacturers, farmers, cooperative sales organizations, warehouses
and the like.
[0046] A "commoditized product" includes any product or service
that has standardized specifications, such as size, weight, color,
and quality.
[0047] A "commodity" is any commoditized product.
[0048] "Nucleo" refers to the entire hub centric system.
[0049] The hub centric platform can be a software system, or a
manual system. The various functions can be linked by computer
systems, telecommunication systems, or any means to quickly and
efficiently carry out the assigned task. Advantageously, the
platform can be a computer network linked and operated by software
designed for specific functions.
[0050] The commoditized products traded through the hub centric
system include any product that has standardized specifications
including but not limited to, size, weight, color and quality.
Commoditized products can include farm products, building products,
precious metals, even non-specialized services such as shipping,
and the like.
[0051] A qualification program can be carried out manually, or
utilizing any state of the art automatic technology. Qualification
programs include inspection and authentication of product,
certification of credit worthiness of participants in the system,
including but not limited to buyers, sellers, and
manufacturers.
[0052] Buyers and sellers, or customers of the system include but
are not limited to individual consumers, manufacturers, resource
management entities, financial institutions, brokerages, mining
facilities, cooperative sales organizations, and industry
organizations.
[0053] For purposes of explanation, the trading of a precious
metal, such as gold bullion is used. FIG. 1 illustrates a
functional block diagram illustrating the system architecture of an
exemplary aspect of the trading system comprising a hub centric
platform. The system comprises buyer sites 102 and seller sites 104
which can be any electronic source including but not limited to a
home computer, a broker access means, a direct line from a
manufacturer, individual or institution, or any means of
telecommunication.
[0054] A server 106 which may be associated with the buyer site 102
or the seller site 104 connects to a distributed network of
computers 108, such as the Internet. The distributed computer
network 108 connects to the order matching routine 116 of the hub
centric platform through an Internet website interface 118 or
similar type interface between the server 106 and the Internet
108.
[0055] The hub centric platform, or Nucleo system 100 links an
individual investor to a data base management system of the
platform, where orders are accumulated, managed, and qualified. An
order matching routine 116 running on the Internet server 106
matches a seller order with corresponding matching buy orders.
Several buy orders may be necessary to match one sell order and
this is performed automatically by the matching routine. Quality,
quantity, and other commoditized product characteristics will also
be matched by the order matching routine 116. The Internet website
interface 118 permits a user to obtain information from and to
communicate with the order matching routine 116. The order matching
routine 116 can provide a user with up-to-date account information,
real time market information, and a variety of market command
options. The market trade specifications are continually provided
to the order matching routine 116, enabling a buyer or seller to
continually check the current price for the product.
[0056] The database management system maintains portfolios for
buyers 124 and sellers 120. The database management system debits
and credits the portfolios for each trade. Portfolios can be
customer accounts which the buyer or seller maintains with the hub
centric platform or any secured financial facility including but
not limited to banks, credit unions, brokerage accounts or industry
specified facility.
[0057] New customers access the system as explained in FIG. 2. The
buyer or seller logs onto a new account page and enters requested
information. A user identification and password are established.
The Buyer or seller must log in for the first time. New customers
are limited on first time trades until their credit information has
been established.
[0058] Established customers log into the site and can obtain
information as shown in FIG. 3. Information on current trading
power, and outstanding products and payments due are provided. In
order to place orders, the customer must accept contractual terms
before proceeding. Customers can view pending trades, review
portfolios, post new orders, or draw from the current account. If
the customer elects to place a new order (FIG. 4), the system
determines if the customer is new or approved. FIG. 5 demonstrates
the trade process where the seller or buyer places a trade. The
order specifications are advanced to the order matching platform
and confirmation of the trade is sent to the customer. FIG. 6
demonstrates the process for qualifying the customer account. FIG.
7 demonstrates an exemplary aspect of the authentication of
payments and the determination of account balances for customer
orders.
[0059] Once the customer placing the order (buyer or seller) is
qualified, the data base management system searches portfolios for
the commoditized product being sold or purchased (FIG. 8). If the
product is on hand (in the seller's portfolio), product is
automatically delivered to the hub to settle outstanding trade. If
not on hand, customer is given delivery instructions. Payment is
issued to the seller through a payment routine such as one
exemplified in FIG. 9.
[0060] If the product to be sold is not on hand, the seller can
utilize several systems to send the product to the hub centric
platform (FIG. 10). Any method of shipping can be utilized to ship
the product to the platform, and payment can be issued once the
product is received and authenticated. The product is then sent to
the buyer. If the seller elects the prior pay method of shipping
the product (FIG. 15), the hub centric platform system sends a
payment to the seller. The payment acts as a contract that operates
as a reverse hold on the funds in the payment. If the seller meets
the conditions of the contract, for instance the product is
received by the platform, and is authenticated, then the hold is
removed and the funds are dispersed. This payment contract can be
deposited in a financial institution as soon as it is received by
the seller. Optionally, the shipping containers and prepaid
shipping labels can be sent with the payment (FIG. 11).
[0061] The hub centric system also incorporates distribution
routines. Product can be received and distributed through the
platform, so that several orders can be combined from several
sellers to provide only one shipment for the buyer. Conversely,
several buy orders can be distributed from one sell order without
requiring the seller to ship to several locations. All shipping of
commoditized product goes through the platform (hub?). Package
handling can be manual, or automated using various scales and
mechanical devices known in the art. Shipping can be provided by
shipping companies including but not limited to FedEx, UPS,
Airborne, and the like. (FIG. 12-14)
[0062] Whenever a customer elects to withdraw assets from their
portfolio, there are several choices that can be made. If the
customer wishes to be paid cash, a check or wire can be sent by
means known in the art. If the customer chooses to take delivery of
the commoditized products in the portfolio, a shipping method must
be selected (FIG. 16). The data management system debits the
commoditized products from the portfolio.
[0063] Once an order has been placed, and there is not a match to
facilitate an execution, the order then resides in the market until
it either matches, expires (if applicable), or is cancelled (FIG.
17)
[0064] When the customer sells product that is not in their
portfolio, they are required to send product to the hub where
product is then received (FIG. 18), qualified (FIG. 19), including
but not limited to weighing, inspecting, verifying displacement,
and any other means available to the industry.
[0065] Once incoming product is received and qualified, product is
then posted to customer's account (FIG. 20). Payment can now be
made to a customer for corresponding trade value without lien.
[0066] Although an illustrative example of the present invention
and various aspects thereof have been described in detail herein
with reference to the accompanying drawings, it is to be understood
that the invention is not limited to this precise example and that
various changes and further modifications may be effected therein
by one skilled in the art without departing from the scope or
spirit of the inventions as defined in the appended claims.
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