U.S. patent application number 17/327394 was filed with the patent office on 2021-09-02 for system and method for manufacturing and trading securities and commodities.
This patent application is currently assigned to Clarovia Holdings, LLC. The applicant listed for this patent is Clarovia Holdings, LLC. Invention is credited to Dan Alan Preston, Joseph D. Preston, William R. Rieger, Brett C. Simpson.
Application Number | 20210272205 17/327394 |
Document ID | / |
Family ID | 1000005599075 |
Filed Date | 2021-09-02 |
United States Patent
Application |
20210272205 |
Kind Code |
A1 |
Preston; Joseph D. ; et
al. |
September 2, 2021 |
SYSTEM AND METHOD FOR MANUFACTURING AND TRADING SECURITIES AND
COMMODITIES
Abstract
Systems and methods are disclosed for a distributed trading
system. The preferred invention offer solutions to problems that
arise with High-Frequency Trading and the future of stock market
regulation. The use of a distributed object brokered interface to
facilitate transactions not only makes the trading faster but also
more secure.
Inventors: |
Preston; Joseph D.;
(Bainbridge Island, WA) ; Rieger; William R.;
(Atlanta, GA) ; Preston; Dan Alan; (Bainbridge
Island, WA) ; Simpson; Brett C.; (Richland,
WA) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
Clarovia Holdings, LLC |
Bainbridge Island |
WA |
US |
|
|
Assignee: |
Clarovia Holdings, LLC
Bainbridge Island
WA
|
Family ID: |
1000005599075 |
Appl. No.: |
17/327394 |
Filed: |
May 21, 2021 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
15669870 |
Aug 4, 2017 |
11017469 |
|
|
17327394 |
|
|
|
|
62371098 |
Aug 4, 2016 |
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Current U.S.
Class: |
1/1 |
Current CPC
Class: |
H04L 2209/38 20130101;
H04L 2209/76 20130101; H04L 63/10 20130101; H04L 63/08 20130101;
G06F 9/465 20130101; G06Q 40/04 20130101; H04L 9/3239 20130101 |
International
Class: |
G06Q 40/04 20060101
G06Q040/04; H04L 29/06 20060101 H04L029/06; G06F 9/46 20060101
G06F009/46; H04L 9/32 20060101 H04L009/32 |
Claims
1. A system to protect financial information, comprising: a
distributed network; a processor to: use an ORB proxy to bind a
communication down to the distributed network, and transfer
information between a first independent user and a second
independent user, wherein the transferred information is at least
one of protected and privileged, and wherein the transferred
information is restricted for use within the distributed
network.
2. A method to protect financial information, comprising: identify
at least one independent user; use a distributed network; use a
processor to: use an ORB proxy to bind a communication down to the
distributed network, and transfer information between a first
independent user and a second independent user, wherein the
transferred information is at least one of protected and
privileged, and wherein the transferred information is restricted
for use within the distributed network.
Description
COPYRIGHT NOTICE
[0001] Contained herein is material that is subject to copyright
protection. The copyright owner has no objection to the facsimile
reproduction by anyone of the patent document or the patent
disclosure, as it appears in the United States Patent and Trademark
Office patent file or records, but otherwise reserves all rights to
the copyright whatsoever. The following notice applies to the
software, screenshots and data as described below and in the
drawings hereto and All Rights Reserved.
RELATED FILINGS
[0002] This application is a divisional application of U.S. patent
application Ser. No. 15/669,870, entitled System and Method for
Manufacturing and Trading Securities and Commodities, filed Aug. 4,
2017, which takes priority to U.S. Patent App. No. 62/371,098,
entitled System and Method for Interconnectivity of Servers Within
a Distributed Network, filed Aug. 4, 2016, the entire contents of
which are incorporated herein by reference.
[0003] Due to the complexity and diversity of the inventions it is
necessary to disclose in a four application filing process, where
the applications may be a combination of continuations or
continuations in part, and all incorporated by reference in their
entirety. The first application entitled "System and Method for
Distributed Trading Platform" claims priority to provisional
application 62/371,098 filed Aug. 4, 2016. This application will
introduce a system of systems generally covered for both context
and continuity. Application one, herein, discloses an overview of
the systems elements as outlined in FIG. 26 with a specific focus
on the underlying communications architecture, and how it may be
implemented on a legacy trading network.
TECHNICAL FIELD
[0004] This disclosure relates generally to exchange trading
systems and servers, operating in a coordinated, centralized and
integrated systems of computers and servers; and the evolution to
the simultaneous implementation of new systems and methods for a
communications infrastructure across legacy systems that are
implemented such that a distributed trading architecture operating
across the legacy systems can operate independently on diverse
platforms.
BACKGROUND
[0005] This disclosure relates generally to exchange trading
systems and servers, operating in a coordinated, centralized and
integrated systems of computers and servers; and the evolution to
the simultaneous implementation of new systems and methods for a
communications infrastructure across legacy systems that are
implemented such that a distributed trading architecture operating
across the legacy systems can operate independently on diverse
platforms.
[0006] This approach allows collaboration between systems running
on different operating systems, programming languages, and
computing hardware to operate as distributed objects using remote
method invocations for message passing through communications
primitives. This occurs between OSI layers 2-4 and bound down at
layer 5. This system is predicated on the use of one centralized
server or collocated bank of servers operating as one, this is done
to facilitate, and speed up electronic trading for the distributed
trading system. Further, the distributed trading system implements
a centralized ledger, centralized authentication and distributed
information transfer between parties.
[0007] Generally, the application discloses implementing a
Blockchain Ledger in support of a distributed ledger based peer to
peer transaction, executed in a centralized server of a licensed
exchange operating on a legacy network. The invention discloses an
embodiment of communicating across the existing networks by
implementing an object request brokered communications channel for
message passing in support of a centralized leger that documents a
distributed secure peer to peer transaction.
[0008] Within the current network structure of Public Stock
Exchanges, there are inefficiencies that can be solved by a
proprietary application of emerging technologies. Currently a
registered broker dealer must deal with many middle men, and stops
when fulfilling a trade. This can be erradicated by the inclusion
of a Distributed Market Exchange. By removing a centralized server
for order matching, an inclusion of peer to peer transaction may
not only make trading faster and more secure. It may negate and
eliminate the ability for firms outside of the ones engaging in
trade to influence the trade, for example front-running of trades
would be impossible. This system may be completely compliant with
upcoming SEC regulations and future proof the market against other
emerging technologies.
[0009] High-frequency trading (HFT) is a program trading platform
that uses powerful computers to transact a large number of orders
at very fast speeds. High-frequency trading uses complex algorithms
to analyze multiple markets and execute orders based on market
conditions. Typically, the traders with the fastest execution
speeds are be more profitable than traders with slower execution
speeds. As of 2009, it is estimated more than 50% of exchange
volume comes from high-frequency trading orders.
[0010] Front running is the unethical practice of a stockbroker
executing orders on a security for its own account while taking
advantage of advance knowledge of pending orders from its
customers. The front running broker either buys for its own account
before filling customer buy orders that drive up the price, or
sells for its own account before filling customer sell orders that
drive down the price. Front running is considered unethical since
the broker is making a profit at the direct expense of its own
customers. Companies can achieve this faster information through
co-location.
[0011] Co-locating computers owned by HFT firms and proprietary
traders in the same premises where an exchange's computer servers
are housed, enables HFT firms to access stock prices a split second
before the rest of the investing public. Co-location has become a
lucrative business for exchanges, which charge HFT firms millions
of dollars for the privilege of "low latency access." As Lewis
explains in "Flash Boys," the huge demand for co-location is a
major reason why some stock exchanges have expanded their data
centers substantially. While the old New York Stock Exchange
building occupied 46,000 square feet, the NYSE Euronext data center
in Mahwah, N.J. is almost nine times larger, at 398,000 square
feet.
[0012] A type of HFT trading wherein an exchange will "flash"
information about buy and sell orders from market participants to
HFT firms for a few fractions of a second before the information is
made available to the public. Flash trading is controversial
because HFT firms can use this information edge to trade ahead of
pending orders, which can be construed as front running. U.S.
Senator Charles Schumer had urged the Securities and Exchange
Commission in July 2009 to ban flash trading, saying that it
created a two-tiered system where a privileged group received
preferential treatment, while retail and institutional investors
were put at an unfair disadvantage and deprived of a fair price for
their transactions.
[0013] The time that elapses from the moment a signal is sent to
its receipt. Since lower latency equals faster speed,
high-frequency traders spend heavily to obtain the fastest computer
hardware, software and data lines so as execute orders as speedily
as possible and gain a competitive edge in trading. The biggest
determinant of latency is the distance that the signal has to
travel, or the length of the physical cable (usually fiber-optic)
that carries data from one point to another. Since light in a
vacuum travels at 186,000 miles per second or 186 miles a
millisecond, a HFT firm with its servers co-located right within an
exchange would have a much lower latency--and hence a trading
edge--than a rival firm located miles away. Interestingly, an
exchange's co-location clients receive the same amount of cable
length regardless of where they are located within the exchange
premises, so as to ensure that they have the same latency.
[0014] Bitcoin is a digital asset and a payment system invented by
Satoshi Nakamoto. Nakamoto introduced the idea on 31 Oct. 2008 to a
cryptography mailing list, and released it as open-source software
in 2009. There have been several high profile claims to the
identity of Satoshi Nakamoto; however, none of them have provided
proof beyond doubt that back up their claims.
[0015] The system is peer-to-peer and transactions take place
between users directly, without an intermediary. These transactions
are verified by network nodes and recorded in a public distributed
ledger called the blockchain, which uses bitcoin as its unit of
account. Since the system works without a central repository or
single administrator, the U.S. Treasury categorizes bitcoin as a
decentralized virtual currency. Bitcoin is often called the first
cryptocurrency, although prior systems existed and it is more
correctly described as the first decentralized digital currency.
Bitcoin is the largest of its kind in terms of total market
value.
[0016] Bitcoins are created as a reward for payment processing work
in which users offer their computing power to verify and record
payments into a public ledger. This activity is called mining and
miners are rewarded with transaction fees and newly created
bitcoins. Besides being obtained by mining, bitcoins can be
exchanged for other currencies, products, and services. When
sending bitcoins, users can pay an optional transaction fee to the
miners.
[0017] In February 2015, the number of merchants accepting bitcoin
for products and services passed 100,000. Instead of 2-3% typically
imposed by credit card processors, merchants accepting bitcoins
often pay fees in the range from 0% to less than 2%. Despite the
fourfold increase in the number of merchants accepting bitcoin in
2014, the cryptocurrency did not have much momentum in retail
transactions. The European Banking Authority and other sources have
warned that bitcoin users are not protected by refund rights or
chargebacks. The use of bitcoin by criminals has attracted the
attention of financial regulators, legislative bodies, law
enforcement, and media. Criminal activities are primarily centered
around darknet markets and theft, though officials in countries
such as the United States also recognize that bitcoin can provide
legitimate financial services.
[0018] A blockchain is a public ledger of all Bitcoin transactions
that have ever been executed. It is constantly growing as
`completed` blocks are added to it with a new set of recordings.
The blocks are added to the blockchain in a linear, chronological
order. Each node (computer connected to the Bitcoin network using a
client that performs the task of validating and relaying
transactions) gets a copy of the blockchain, which gets downloaded
automatically upon joining the Bitcoin network. The blockchain has
complete information about the addresses and their balances right
from the genesis block to the most recently completed block.
[0019] Typical exchanges today operate on private networks and
private servers behind deep firewalls. They offer access to their
system through a computer configured to access their network for
receiving information, or allowing trade information messages to
occur. As an example, Bloomberg's Trade book operates behind the
global Bloomberg network. Making wholesale changes to these
networks are difficult or near impossible. They have been build up
over the years to meet the numerous missions Bloomberg operating
companies require; gaining access for any purpose requires years of
planning. The precious metals trading platform this application
proposes may implement on an existing platform across legacy
networks with an existing exchange for many strategic reasons,
including credibility, access, regulations.
[0020] The challenge for this will be disruption to any other
operation using the closed system of networks and servers. This
implementation would be further complicated by using the
centralized proxy based system with a decentralized system pointed
to a single server for ledger management.
[0021] The utilization of a distributed ledger is the most robust
technological advancement in transaction mechanisms within the last
decade. Applicable to a plurality of opportunities, the system and
methods disclosed herein utilize a distributed ledger and
authentication system through a specialized process. The invention
may use a distributed ledger to represent a basket of rare-earth
metals, track the distribution of this basket through a shipping
network, create a coin representing the market value of the basket,
trade the coin on an exchange network, and maintain and optimize
the fulfillment and ultimate delivery of the basket to its ending
location.
[0022] An exchange-traded fund (ETF) is an investment fund traded
on stock exchanges, much like stocks. An ETF holds physical assets
such as stocks, bonds or commodities. With a focus on the last, the
applicants cite as a non-limiting example of an ETF, precious
metals backed ETFs, e.g. SPDR Gold Shares ETF; iShares Silver Trust
ETF; and ETFS (GLTR) Precious Metals Baskets Trust. GLTR, it is a
physically backed ETF with broader baskets of physical metals,
rather than holding just one precious metal its portfolio includes
physical gold, physical silver, physical platinum and physical
palladium. Each of these ETFs sited above generally operate with an
arbitrage mechanism designed to keep it trading close to its net
asset value, although deviations can occasionally occur. Most ETFs
track an index, such as a stock index or bond index. ETFs may be
attractive as investments because of their low costs, tax
efficiency, and stock-like features. By 2013, ETFs had become the
most popular type of exchange-traded product.
[0023] Generally, all ETFs derive their value from the current
value of an underlying portfolio of assets. The ETF is traded
intraday on the same exchange as the underlying basket creating
arbitrage opportunities. These arbitrage opportunities stabilize
the price of the ETF forcing its Net Asset Value (NAV) to avoid
being over or undervalued relative to the basket of its
representative portfolio. The basket of rare earth metals will
behave similarly. The current market value of individual
commodities contained therein will value the basket. Although the
basket's value will fluctuate due to market demand, on the delivery
of the contract the value will revert to the NAV. This put-call
parity is a normal occurrence within a market involving derivatives
and the arbitrage opportunities are expected.
[0024] What is needed are systems and methods the allows the
formation of a distributed network bound down to the networks at
layer 5, pointed to a server and port, where it is picked off by a
network appliance collocated proximate to the servers, wherein the
appliance is configured to forward traffic to a second server,
carrying messages to the second server to be incorporate in a
record related to the messages, and stored back in the second
server. The key to this approach is messaging such that the traffic
and messages are "invisible" to the legacy networks.
[0025] Aspects and applications presented here are described below
in the drawings and detailed description. Unless specifically
noted, it is intended that the words and phrases in the
specification and the claims be given their plain, ordinary, and
accustomed meaning to those of ordinary skill in the applicable
arts. The inventors are fully aware that they can be their own
lexicographers if desired. The inventors expressly elect, as their
own lexicographers, to use only the plain and ordinary meaning of
terms in the specification and claims unless they clearly state
otherwise and then further, expressly set forth the "special"
definition of that term and explain how it differs from the plain
and ordinary meaning. Absent such clear statements of intent to
apply a "special" definition, it is the inventors' intent and
desire that the simple, plain and ordinary meaning to the terms be
applied to the interpretation of the specification and claims.
[0026] The inventors are also aware of the normal precepts of
English grammar. Thus, if a noun, term, or phrase is intended to be
further characterized, specified, or narrowed in some way, then
such noun, term, or phrase will expressly include additional
adjectives, descriptive terms, or other modifiers in accordance
with the normal precepts of English grammar. Absent the use of such
adjectives, descriptive terms, or modifiers, it is the intent that
such nouns, terms, or phrases be given their plain, and ordinary
English meaning to those skilled in the applicable arts as set
forth above.
[0027] Further, the inventors are fully informed of the standards
and application of the special provisions of 35 U.S.C. .sctn. 112,
6. Thus, the use of the words "function," "means" or "step" in the
Detailed Description or Description of the Drawings or claims is
not intended to somehow indicate a desire to invoke the special
provisions of 35 U.S.C. .sctn. 112, 6, to define the systems,
methods, processes, and/or apparatuses disclosed herein. To the
contrary, if the provisions of 35 U.S.C. .sctn. 112, 6 are sought
to be invoked to define the embodiments, the claims will
specifically and expressly state the exact phrases "means for" or
"step for, and will also recite the word "function" (i.e., will
state "means for performing the function of . . . "), without also
reciting in such phrases any structure, material or act in support
of the function. Thus, even when the claims recite a "means for
performing the function of . . . " or "step for performing the
function of . . . ", if the claims also recite any structure,
material or acts in support of that means or step, or that perform
the recited function, then it is the clear intention of the
inventors not to invoke the provisions of 35 U.S.C. .sctn. 112, 6.
Moreover, even if the provisions of 35 U.S.C. .sctn. 112, 6 are
invoked to define the claimed embodiments, it is intended that the
embodiments not be limited only to the specific structure, material
or acts that are described in the preferred embodiments, but in
addition, include any and all structures, materials or acts that
perform the claimed function as described in alternative
embodiments or forms, or that are well known present or
later-developed, equivalent structures, material or acts for
performing the claimed function.
BRIEF DESCRIPTION OF THE FIGURES
[0028] A more complete understanding of the systems, methods,
processes, and/or apparatuses disclosed herein may be derived by
referring to the detailed description when considered in connection
with the following illustrative figures. In the figures,
like-reference numbers refer to like-elements or acts throughout
the figures. The presently preferred embodiments are illustrated in
the accompanying drawings, in which:
[0029] FIG. 1 depicts the Open Systems Interconnect Model (OSI
Model).
[0030] FIG. 2 depicts the terminal description.
[0031] FIG. 3 depicts the basic datagram between two terminals.
[0032] FIG. 4 depicts a SOCKS5 proxy
[0033] FIG. 5 depicts a datagram with a SOCKS5 proxy.
[0034] FIG. 6 depicts an OSI connectivity model.
[0035] FIG. 7 depicts a traditional stock market exchange
connection model.
[0036] FIG. 8 depicts two companies connected to similar
servers.
[0037] FIG. 9 depicts a single firm trade timing diagram.
[0038] FIG. 10 depicts a front running timing diagram.
[0039] FIG. 11 depicts three companies connecting to stock exchange
servers.
[0040] FIG. 12 depicts a traditional trade.
[0041] FIG. 13 depicts a front running trade.
[0042] FIG. 14 depicts Bitcoin's Blockchain.
[0043] FIG. 15 depicts a simple Distributed Object Brokered
Interface.
[0044] FIG. 16 depicts an OSI Model with ORB proxy.
[0045] FIG. 17 depicts an ORB proxy.
[0046] FIG. 18 depicts a representation of differentiation in code
between distributed objects by type.
[0047] FIG. 19 depicts a decentralized market exchange diagram.
[0048] FIG. 20 depicts connection sets amongst items in the
decentralized market exchange diagram.
[0049] FIG. 21 depicts the ledger distribution after trade.
[0050] FIG. 22 depicts the portfolio distribution after trade.
[0051] FIG. 23 depicts an example of matching full order volume
when spread between decentralized and centralized exchanges.
[0052] FIG. 24 depicts the distributed router network.
[0053] FIG. 25 depicts common object request brokered
architectures.
[0054] FIG. 26 depicts an overview of the system of systems.
[0055] Elements and acts in the figures are illustrated for
simplicity and have not necessarily been rendered according to any
particular sequence or embodiment.
DESCRIPTION
[0056] In the following description, and for the purposes of
explanation, numerous specific details, process durations, and/or
specific formula values are set forth in order to provide a
thorough understanding of the various aspects of exemplary
embodiments. It will be understood, however, by those skilled in
the relevant arts, that the apparatus, systems, and methods herein
may be practiced without these specific details, process durations,
and/or specific formula values. It is to be understood that other
embodiments may be utilized and structural and functional changes
may be made without departing from the scope of the apparatus,
systems, and methods herein. In other instances, known structures
and devices are shown or discussed more generally in order to avoid
obscuring the exemplary embodiments. In many cases, a description
of the operation is sufficient to enable one to implement the
various forms, particularly when the operation is to be implemented
in software. It should be noted that there are many different and
alternative configurations, devices, and technologies to which the
disclosed embodiments may be applied. The full scope of the
embodiments is not limited to the examples that are described
below.
[0057] In the following examples of the illustrated embodiments,
references are made to the accompanying drawings which form a part
hereof, and in which is shown by way of illustration various
embodiments in which the systems, methods, processes, and/or
apparatuses disclosed herein may be practiced. It is to be
understood that other embodiments may be utilized and structural
and functional changes may be made without departing from the
scope.
[0058] The utilization of a distributed ledger is the most robust
technological advancement in transaction mechanisms within the last
decade. Applicable to a plurality of opportunities, the systems and
methods disclosed herein utilize a distributed ledger and
authentication system through a specialized process. A distributed
ledger may be used to represent a basket of rare-earth metals,
track the distribution of this basket through a shipping network,
create a coin representing the market value of the basket, trade
the coin on an exchange network, and maintain and optimize the
fulfillment and ultimate delivery of the basket to its ending
location.
[0059] Coal burning power plants, regardless of whether or not they
are producing energy that is used, produce a byproduct known as fly
ash. Normally considered a waste product, fly ash is not only
costly to transport but costly to store due to environmental
regulation. Through a proprietary process rare earths and other
commodities may be extracted from fly ash and other metal-bearing
feedstock. These extracted materials may be represented by a
basket. The basket of materials may be traded on a commodities
exchange in order for liquidation. The expectation is that coal
burning power plants will subscribe to the network in order to
monetize their waste product. Coal-burning power plants and fly ash
are used as examples herein but these same systems and methods may
be applied to other plants and waste streams not explicitly
disclosed herein.
[0060] Due to the high volume of rare earth metals in fly ash,
traditional commodities exchanges will not work due to price
sensitivity. The use of proprietary distributed ledger technology
is necessary in order to revolutionize the process. Each basket of
rare earth metals created will be assigned a hash-code on the
distributed ledger. This hash-code will remain alive throughout the
life of the basket, timing out on its eventual delivery. The ledger
will also provision each user with a hash-code that will be applied
to a basket indicating current ownership. The code will also
represent the basket of rare earth metals to be traded on a
proprietary exchange. Users will also be able to trade derivative
contracts based on future delivery of the basket using a smart
contract application in place.
[0061] An exchange-traded fund (ETF) is an investment fund traded
on stock exchanges, much like stocks. An ETF holds physical assets
such as stocks, bonds or commodities. With a focus on the last, the
applicants cite as a non-limiting example of an ETF, precious
metals backed ETFs, e.g. SPDR Gold Shares ETF; iShares Silver Trust
ETF; and ETFS (GLTR) Precious Metals Baskets Trust. GLTR, it is a
physically backed ETF with broader baskets of physical metals,
rather than holding just one precious metal its portfolio includes
physical gold, physical silver, physical platinum and physical
palladium. Each of these ETFs sited above generally operate with an
arbitrage mechanism designed to keep it trading close to its net
asset value, although deviations can occasionally occur. Most ETFs
track an index, such as a stock index or bond index. ETFs may be
attractive as investments because of their low costs, tax
efficiency, and stock-like features. By 2013, ETFs had become the
most popular type of exchange-traded product.
[0062] Generally, all ETFs derive their value from the current
value of an underlying portfolio of assets. The ETF is traded
intraday on the same exchange as the underlying basket creating
arbitrage opportunities. These arbitrage opportunities stabilize
the price of the ETF forcing its Net Asset Value (NAV) to avoid
being over or undervalued relative to the basket of its
representative portfolio. The basket of rare earth metals will
behave similarly. The current market value of individual
commodities contained therein will value the basket. Although the
basket's value will fluctuate due to market demand, on the delivery
of the contract the value will revert to the NAV. This put-call
parity is a normal occurrence within a market involving derivatives
and the arbitrage opportunities are expected.
[0063] The proprietary exchange itself will operate and fluidly
maintain a distributed network through a plurality of micro
networks amongst its users. The micro networks will operate
transactions within a small number of users. This increases the
speed and efficiency of the exchange network. At predetermined time
intervals, each user will send their most up to date chain of
transactions representing the net change in assets over the
time-period to a centralized exchange for compilation and the other
networks of users. The centralized exchange will document and store
the complete ledger in order to mitigate the threat of fraudulent
transactions. The exact specifications and definition of the
transactions are defined therein.
[0064] The centralized network of servers may manage the
manufacture and distribution network of products in and from the
process. The distributed ledger offers unparalleled accuracy in
supply chain management, consistently maintaining an accurate
location in the process. This will limit or completely negate the
potential loss of material in the process and further develop the
intricate system. Successful implementation will not only redefine
commodities trading but also supply chain management.
[0065] In a non-limiting example, implementing a Common Object
Request Brokered Architecture, or CORBA, enables communication
between software written in different languages and running on
different computers. Implementation details from specific operating
systems, programming languages, and hardware platforms are all
removed from the responsibility of developers. CORBA normalizes the
method-call semantics between application objects residing either
in the same address-space (application) or in remote address-spaces
(same host, or remote host on a network). Version 1.0 was released
in October 1991.
[0066] CORBA uses an interface definition language (IDL) to specify
the interfaces that objects present to the outer world. CORBA then
specifies a mapping from IDL to a specific implementation language
like C++ or Java. Standard mappings exist for Ada, C, C++, C++11,
COBOL, Java, Lisp, PL/I, Object Pascal, Python, Ruby and Smalltalk.
Non-standard mappings exist for C#, Erlang, Perl, Tcl and Visual
Basic implemented by object request brokers (ORBs) written for
those languages.
[0067] The CORBA specification dictates there shall be an ORB
through which an application would interact with other objects.
This is how it is implemented in practice:
[0068] The application simply initializes the ORB, and accesses an
internal Object Adapter, which maintains things like reference
counting, object (and reference) instantiation policies, and object
lifetime policies.
[0069] The Object Adapter is used to register instances of the
generated code classes. Generated code classes are the result of
compiling the user IDL code, which translates the high-level
interface definition into an OS- and language-specific class base
for use by the user application. This step is necessary in order to
enforce CORBA semantics and provide a clean user process for
interfacing with the CORBA infrastructure.
[0070] Some IDL mappings are more difficult to use than others. For
example, due to the nature of Java, the IDL-Java mapping is rather
straightforward and makes usage of CORBA very simple in a Java
application. This is also true of the IDL to Python mapping. The
C++ mapping requires the programmer to learn datatypes that predate
the C++ Standard Template Library (STL). By contrast, the C++11
mapping is easier to use, but requires heavy use of the STL. Since
the C language is not object-oriented, the IDL to C mapping
requires a C programmer to manually emulate object-oriented
features.
[0071] In order to build a system that uses or implements a
CORBA-based distributed object interface, a developer must either
obtain or write the IDL code that defines the object-oriented
interface to the logic the system will use or implement. Typically,
an ORB implementation includes a tool called an IDL compiler that
translates the IDL interface into the target language for use in
that part of the system. A traditional compiler then compiles the
generated code to create the linkable-object files for use in the
application.
[0072] FIG. 1 depicts physical method for the Open Systems
Interconnection model (OSI model) which is a conceptual model that
characterizes and standardizes the communication functions of a
telecommunication or computing system without regard to their
underlying internal structure and technology. Its goal is the
interoperability of diverse communication systems with standard
protocols. The model partitions a communication system into
abstraction layers. The original version of the model defined seven
layers. A layer serves the layer above it and is served by the
layer below it. For example, a layer that provides error-free
communications across a network provides the path needed by
applications above it, while it calls the next lower layer to send
and receive packets that comprise the contents of that path. Two
instances at the same layer are visualized as connected by a
horizontal connection in that layer.
[0073] The focus of this application is a session based (layer 5)
binding down to 4-2 using and exploiting the primitive messaging
between the layers to invoke an object request brokered
communication to effect a "black channel" communication in an
existing network to not disrupt operations of the networks stock
exchange system. The Black Channel effectively supports what is
termed an asset backed "dark pool" of securities.
[0074] FIG. 2 depicts terminal A and terminal B sitting on a
trading desk, riding on the same networks and connected to the same
local server 5, where 5 is pointed to a second server, in support
of stock trades, where terminal B is in support of dark pool asset
trades.
[0075] FIG. 3 better illustrates the standard trading platform 10
collocated with Dark Terminal B 20 riding on the same local
networks and local server 5, both pointed to a second server. The
trading terminal bound by SOCKS5 and the dark terminal bound for
layer 2 forwarding through the black channel. The black channel
data is bound out through the Black channel stacks in the Terminal
B Dark Pool process 43.
[0076] FIG. 4 illustrates the preferred embodiment for the physical
method for a SOCKS5 Proxy 50. Socket Secure (SOCKS) is an Internet
protocol that exchanges network packets between a client and server
through a proxy server. SOCKS5 additionally provides authentication
so only authorized users may access a server. Practically, a SOCKS5
server proxies TCP connections to an arbitrary IP address, and
provides a means for UDP packets to be forwarded. Without the
specific SOCKS5 address, the data cannot pass through the proxy to
the server or output location.
[0077] FIG. 5 illustrates the preferred embodiment for the physical
method for a SOCKS5 Proxy as represented in the datagram of the OSI
Model. The OSI Model is displayed to show the transfer of
information from an application running on Terminal A to a similar
application on Terminal C 30. The model is expanded to show the
suffixes and prefixes added to the data (represented by [DATA]) to
facilitate the transfer of information between layers. At Layer 5,
the session layer, a SOCKS5 proxy is added and this change is
delineated by the "(S5)" suffix and prefix to the networking
packet. Both the server the networking packet passes through and
Terminal B have the SOCKS5 proxy to allow the information through.
If these did not have the SOCKS5 proxy, the information would be
abandoned.
[0078] FIG. 6 illustrates the preferred embodiment for the physical
method for an OSI Connectivity Model. The OSI Model is displayed to
show the transfer of information from an application running on
Terminal A to a similar application on Terminal C. In this case,
the information is bound down to the network Layer at Layer 3 then
connected through a server via a SOCKS5 Proxy then passed on to
Terminal C.
[0079] FIG. 7 illustrates the preferred embodiment for the physical
method of a traditional stock exchange connection model. In the
traditional stock exchange model, a company consists of a plurality
of Terminals each connected to a Trade Server. The trade server
connects to each of the Stock Exchange Servers.
[0080] FIG. 8 illustrates the preferred embodiment for the physical
method of a traditional stock exchange connection model with at
least two companies connected to the various exchanges.
[0081] FIG. 9 illustrates the preferred embodiment for the physical
method for the timing of a trade originating from a single source,
and being delivered to a plurality of sources. When a trade server
sends out an order for stocks, currently they are all sent at the
same time. But because of latency issues they reach the different
exchanges at different times. This causes issues when executing
orders that exceed the volume held in at least one exchange. The
speed of the transaction is almost entirely dependent on the
location of the Broker/Dealer in reference to the exchange.
[0082] FIG. 10 illustrates the preferred embodiment for the
physical method of an example of front running. Front running is
the unethical practice of a broker trading an equity in his
personal account based on advanced knowledge of pending orders from
the brokerage firm or from clients, allowing him to profit from the
knowledge. It can also occur when a broker buys shares in his
personal account ahead of a strong buy recommendation that the
brokerage firm is going to make to its clients. Front running is
possible because one broker may be closer to a certain exchange and
can then race their order in front of another order (the original
order) to pull their shares, replacing them at a higher price or
buy the shares and replace them at a higher price.
[0083] FIG. 11 illustrates the preferred embodiment for the
physical method of at least three companies connecting to a
plurality of stock exchange servers.
[0084] FIG. 12 illustrates the preferred embodiment for the
physical method of a traditional trade between two companies. This
diagram shows a hypothetical order where Company B has posted 100
shares at $1.00/share across three exchanges. Company A wishes to
purchase these shares. At time 0, Company B posts the shares on the
three stock exchanges with volumes of 20, 30, and 50, respectively.
At time 1, the trader operating the terminal at company A puts in
the order for 100 shares for $100. At time 2, the trade server
looks to the exchanges to check their volumes and all at one time
blasts out an order for the shares, eventually matching the volume
necessary to complete the order. At time 2.1, the trade is complete
and Company A receives the shares, Company B is compensated for the
sale of securities.
[0085] FIG. 13 illustrates the preferred embodiment for the
physical method of an example of front running using the model
presented in FIG. 12. This diagram shows a hypothetical order where
Company B has posted 100 shares at $1.00/share across three
exchanges. Company A wishes to purchase these shares. At Time 0,
Company B posts the shares on the three stock exchanges with
volumes of 20, 30, and 50, respectively. At time 1, the trader
operating the terminal at company A puts in the order for 100
shares for $100. At time 2, the trade server looks to the exchanges
to check their volumes and all at one time blasts out an order for
the shares, eventually matching the volume necessary to complete
the order. At time 3, Company C engages in front running by seeing
Company A's order to the first stock exchange which has a volume of
20 shares, then goes to the other two exchanges to buy the other
shares before Company A can reach them. Company B receives the
money from all of the shares, Company A gets the 20 shares executed
at a price of $20.00. Company C then places the shares of the other
two exchanges back on the market at $1.01 a share. At time 4,
Company A's algorithm allows the trade to be continued even with
the higher price. At time 4.1, Company A receives the other 80
shares at $80.80 and company C receives a profit of $0.80 on the
trade
[0086] FIG. 14 illustrates the preferred embodiment for the
physical method of an example of the cryptocurrency, Bitcoin's,
blockchain and its processes. Blockchain can be thought of as a
publicly distributed ledger for transactions between two parties.
When a transaction was made between two parties, the block in the
ledger would be updated when two or more entities not involved in
the transaction authenticate the trade. Once the trade is
authenticated, the object (currency, stock, precious metals, etc.)
changes ownership. This negates the need for a physical
transferable object. It becomes virtually impossible to cheat the
system as everyone has access to the public ledger. The
cryptocurrency, Bitcoin, implemented a blockchain as a way of
securing transactions while keeping the two agents of the trade
anonymous. The publicity of the ledger (a representation of which
can be found at blockchain.info) offers an extra level of security
for the cryptocurrency as anyone can view and check the ledger for
inconsistencies. Step 1 involves four parties in the trade (A, B,
C, and D) the public Ledger (blockchain) would include blocks of
previous trades. The lines represent the possible connections
between the four agents of trade. Step 2 shows the transaction
between A and D, where D is the seller and A is the buyer. A
becomes the new owner of the bitcoin, and D receives compensation
from A. Normally for the bitcoin ledger, it will not show the
monetary transaction, but for sake of example it is included to
show a wider variance in possibilities. The transaction creates a
block in the blockchain. The transaction is not effective until the
ledger is verified by at least one other party not included in the
transaction. Step 3 represents, the ledger held by both agents A
and D being sent out to their neighbors, B and C. The two ledgers
must match for the bitcoin to change assignment. Finally, once the
transaction is verified the ledger is updated to show an
authenticated trade and the bitcoin is assigned to its new owner.
The average time for the authentication is around 8 to 10 minutes
(Step 4). There is no physical representation of the Bitcoin
cryptocurrency, each bitcoin is issued at 64-bit address. Each
agent of trade is also issued a 64-bit address that is referred to
as their "wallet". When a bitcoin is transacted the ledger changes
the association of the bitcoin address to the new owner's wallet
address to complete the transaction. Before this assignment takes
place, the ledger is referenced to ensure that the current owner of
the bitcoin has complete ownership. This authentication is done
through blocks of servers referred to as miners. "Miners" or
parties who run servers to authenticate the transaction are
compensated in bitcoin for every 210,000 blocks of transactions
that they authenticate. The miners are given a program that
automatically finds blocks to authenticate and updates the ledger
for every transaction. By having the ledger be distributed between
pluralities of users, it secures the transactions by making
cheating the system virtually impossible. If the transaction
ledgers do not match up then the transaction is voided and not
completed. Whenever a trade is initialized the program distributed
to the miners queries the distributed ledger searching for the path
of bitcoin, to ensure the initial owners are the true owners of the
coin. If everything checks out the transaction continues following
the steps listed above.
[0087] FIG. 15 illustrates the preferred embodiment for the
physical method of a simple diagram representing the Distributed
Object Brokered Interface. In distributed computing, an object
request broker (ORB) is a middleware which allows program calls to
be made from one computer to another via a computer network,
providing location transparency through remote procedure calls.
ORBs promote interoperability of distributed object systems,
enabling such systems to be built by piecing together objects from
different vendors, while different parts communicate with each
other via the ORB. Each aspect within the distribution can directly
connect to another, without the need for a middle man to transact
the communication.
[0088] FIG. 16 illustrates the preferred embodiment for the
physical method of the application of the OSI Model with an ORB
Proxy. Within the expanded OSI model, the interconnectivity of two
terminals happens by binding down the communication to the DATA
Link which operates within CORBA and a Layer 5 ORB Proxy. The
Common Object Request Broker Architecture (CORBA) is a standard
defined by the Object Management Group (OMG) designed to facilitate
the communication of systems that are deployed on diverse
platforms. CORBA enables collaboration between systems on different
operating systems, programming languages, and computing hardware.
CORBA uses an object-oriented model although the systems that use
CORBA do not have to be object-oriented. CORBA is an example of the
distributed object paradigm.
[0089] FIG. 17 illustrates the preferred embodiment for the
physical method representing the ORB Proxy. If the client is behind
a very restrictive firewall or transparent proxy server environment
that only allows HTTP connections to the outside through port 80,
communication may be impossible, unless the proxy server in
question allows the HTTP CONNECT method or SOCKS connections as
well. At one time, it was difficult even to force implementations
to use a single standard port--they tended to pick multiple random
ports instead. As of today, current ORBs do have these
deficiencies. Due to such difficulties, some users have made
increasing use of web services instead of CORBA. These communicate
using XML/SOAP via port 80, which is normally left open or filtered
through a HTTP proxy inside the organization, for web browsing via
HTTP. Recent CORBA implementations, though, support SSL and can be
easily configured to work on a single port. Some ORBS, such as TAO,
omniORB and JacORB also support bidirectional GIOP, which gives
CORBA the advantage of being able to use callback communication
rather than the polling approach characteristic of web service
implementations. Also, most modern firewalls support GIOP &
IIOP and are thus CORBA-friendly firewalls.
[0090] FIG. 18 is a representation of the differentiation of code
between distributed objects. Each company within the new proposed
system will have a plurality of terminals connected to a trade
server. The terminals will have a distributed object brokered
interface that is a specific code set to the terminals. Only the
terminals within a company will be able to talk to that company's
trade server. The trade server of each company will have a
distributed object brokered interface that is nested within a
specific router, allowing the server to connect to the information
exchange. It protects the interface by not exposing the source code
in any way to the trade server. The authentication server also has
a distributed object brokered interface which can authenticate any
transactions that occur between two trading servers through the
routers. The routers and the authentication server also have
specific code blocks representative of their specific use within
the system. The distributed object within the system can only be
communicated to by the specific router, and that router can only
accept information from other routers or the authentication
server.
[0091] FIG. 19 illustrates the preferred embodiment for the
physical method of a Decentralized Market Exchange. This diagram
represents the model of how an exchange would function. The actual
exchange consists of a plurality of companies that are
interconnected through the routers that are nested within their
trading servers. The company specific terminals have access to
market information that is supplied through the routers
specifically. These peer to peer transactions only need a
centralized authentication server to ensure the fairness of all of
the trades that pass within the "cloud-based" exchange. In theory,
the Authentication Server is not directly part of the exchange but
acts as a storage mechanism to facilitate the audit trail of the
transactions.
[0092] FIG. 20 illustrates the preferred embodiment for the
physical method of the connection sets between members of the
distributed network. Connection set 1--the interconnection between
the terminals of various companies allows for a speedier
information transfer from their company specific routers when
facilitating trades. If a trade is facilitated then it passes to
connection set 2. Connection set 2--this connection shows the
distribution of the exchange where the transfer happens between the
two routers, but is authorized by the external Authentication
Server.
[0093] FIG. 21 illustrates the preferred embodiment for the
physical method of the ledger distribution following a trade in the
decentralized system. This represents a transaction between Company
A and Company B following the ledger. At time 1, a trade is
initiated between a Terminal at Company A and a terminal at Company
B. The routers within the trade servers also execute the
transaction at the time of the trade. At time 2, Company A's ledger
represent A buying from B and Company B's ledger represents B
selling to A. This information is passed from the distributed
object within the terminal to the specific distributed object
within a specific router. At time 3, the two ledgers are then
passed down to the Authentication Server. At time 4 because the two
ledgers match, the trade is authenticated and stored within the
Master Ledger.
[0094] FIG. 22 illustrates the preferred embodiment for the
physical method of the portfolio distribution after a trade. This
diagram follows the portfolio of a transaction between Company A
and Company B. At time 1, once the trade has been initiated between
the two terminals at Company A and Company B, their portfolio
immediately changes to represent the transaction. Company A adds
the product and loses the money. The opposite happens for Company
B. At times 2-4 the similar ledger authentication steps occur as
listed in FIG. 21. At step 5, the authentication server sends back
a confirmation code to the Routers allowing those objects of the
transaction to be traded again.
[0095] FIG. 23 illustrates the preferred embodiment for the
physical method for matching full order volume when volume is
spread between Decentralized and Centralized Exchanges. Company A
wants to buy 100 shares of Company B for $100 but the decentralized
exchange cannot match the order volume. At time 0, Company B posts
50 shares of its stock to both the Decentralized Market Exchange
and the Stock Exchange Server for a total of 100 shares at $100. At
time 1, Company A posts a buy order for 100 shares at $100 dollars.
This follows the diagrams in slides 21, 22. At time 2, only 50 of
those shares are transacted as the portfolio changes, as that was
the volume from the Decentralized market exchange. At time 3, when
the ledger is sent from the routers within the company to the
Authentication server, it becomes known that Company A still wishes
to buy 50 more shares of Company B to complete their order. At time
4, the authentication server then acts on the behalf of Company A
to see that the Stock Exchange Server with the distributed object
brokered interface has the necessary volume to complete the trade.
At time 5, the shares are assigned to company A.
[0096] FIG. 24 provides an overview of Cisco Transport Manager in a
geographically redundant high availability configuration with the
cluster configuration connected to a switch or router network. Each
location consists of a one- or two-node Cisco Transport Manager
local redundancy configuration (a two-node configuration is
shown).
[0097] FIG. 25 illustrates the high-level paradigm for remote
inter-process communications using CORBA. The CORBA specification
further addresses data typing, exceptions, network protocols,
communication timeouts, etc. For example: Normally the server side
has the Portable Object Adapter (POA) that redirect calls either to
the local servants or (to balance the load) to the other servers.
The CORBA specification (and thus this figure) leaves various
aspects of distributed system to the application to define
including object lifetimes (although reference counting semantics
are available to applications), redundancy/fail-over, memory
management, dynamic load balancing, and application-oriented models
such as the separation between display/data/control semantics (e.g.
see Model-view-controller), etc. In addition to providing users
with a language and a platform-neutral remote procedure call (RPC)
specification, CORBA defines commonly needed services such as
transactions and security, events, time, and other domain-specific
interface models.
[0098] FIG. 26 depicts an overview of the system, method, process,
and utility associated with the liquidation of fly ash. 2700
represents the coal burning power plant industry, regardless of
whether or not they are producing energy that is used, produce a
byproduct known as fly ash. Normally considered a waste product,
fly ash is not only costly to transport but costly to store due to
environmental regulation. These producers of fly ash may sell or
willingly distribute the waste to other potential owners who may
store the product.
[0099] The unique process developed by the applicants, can extract
a plurality of rare earth metals and other valuable mineral
products. These rare earth metals and other products can be
commoditized and sold on exchanges for liquidation. Producers and
owners of stockpiled fly ash may engage in a "feedstock agreement"
2620 encompassing the producers/owners commitment to subscribe to
the exchange 2600 allowing release of feedstock for subsequent
processing and sale of products. A subscription allows the
subscriber to move fly ash from their storage facilities to process
2675 for producing a portfolio of valuable mineral products,
including but not limited to rare earth metals, fertilizer, and
various industrial chemicals. This subscription begins the process
of eventual liquidation.
[0100] After the subscription agreement 2620 is established between
registrant and an owner or producer of fly ash, the fly ash may be
stockpiled 2650 at either the registrant's facility or left in
place at the owners site for eventual extraction. Each individual
shipment, or allotment of fly ash can be logged into a distributed
ledger 2650. A hash code 2660 may represent a specific
shipment/allotment and may track the shipment through the
procurement process.
[0101] In order to quantify the composition of individual
shipments/allotments stored within 2650, each shipment/allotment
may be randomly sampled and analyzed. The resulting analysis is an
inventory of the minerals and metals found within the fly ash. The
ledger holding the hash code representing an individual
shipment/allotment may be amended to include a relative
composition. A random sample 2612 of fly ash is sent to a lab 2610
for analysis to determine the shipment's/allotment's value in the
form of an assay 2611. The assay results may be correlated to the
spot rate of the commodities contained therein.
[0102] The processes 2675 may be predicated on the use of one or
more Smart Contracts. Smart Contracts are computer protocols
intended to facilitate, verify, or enforce the negotiation or
performance of a contract. Many contractual clauses may be made
partially or fully self-executing, self-enforcing, or both. The aim
with smart contracts is to provide security and traceability that
is superior to traditional contract law and to reduce other
transaction costs associated with contracting.
[0103] Smart contracts have been used primarily in association with
cryptocurrencies. The most prominent smart contract implementation
is the Ethereum blockchain platform. Once the composition of the
fly ash is determined, a smart contract system 2607 logs the value
of the commodities based on the spot rate of the commodity composed
therein. The smart contract architecture can also incorporate
specific contract direction that a subscriber may dictate as part
of an order.
[0104] This spot rate is used to price the shipment of commodities
associated with the fly ash. A value representing the shipment's
specific value is amended to the shipment's hash code stored within
the distributed ledger 2660.
[0105] The embodiment of the process of receiving an input of fly
ash 2675 and outputting a tradeable commodity 2644, logged with a
hash code; where the Hash code is the same as a hash function. A
hash function is any function that can be used to map data of
arbitrary size to data of fixed size. The values returned by a hash
function are called hash values, hash codes, digests, or simply
hashes. One use is a data structure called a hash table, widely
used in computer software for rapid data lookup. Hash functions
accelerate table or database lookup by detecting duplicated records
in a large file.
[0106] The stockpiled fly ash 2650 is sent to the process stage
2675; the approaches and processes for extracting commodities from
fly ash will be contained in the first CIP and co-pending
application following this application and covered in much greater
detail. An appliance 2665 is collocated with the process control
system of 2675 in order to control and manage the global supply
chain of the fly ash through the chemical and physical processes of
extraction, generally 2640 through 2676.
[0107] Further, 2665 facilitates the methods used to track the
material for continue updating into the ledger within each stage to
transactional change. The appliance adjusts the location value
associated with the hash code 2660 representing a shipment of fly
ash. The appliance also has the ability to label the outputs from
the process as unique 2642, 2643, 2644, 2645. The entire supply
chain is embodied therein. The supply chain is further defined as
the process of process control, distribution of product,
distribution of regents, and executing the chain of custody of the
product.
[0108] 2640 is the embodiment of the chemical and physical
processes for the procurement of commodities and rare earth metals
from fly ash. The processes contained within 2641, 2642, 2643,
2644, 2645, 2660 are the various steps within the process.
Shipments of the fly ash are input into the system. Tracked by a
hash code associated with 2660, the shipments move through the
processes 2641, 2642, 2643 and are turned into commodities and rare
earth metals. At the end of the processes, the commodities and rare
earth metals produced are given unique hash codes 2644, 2645. The
hash codes are used as representation of the items on the exchange
platform 2600. The hash codes are amended to the ledger creating
the tradeable commodity.
[0109] The first step in the process of converting a shipment of
fly ash to commodities and rare earth metals is the extraction of
one or more products. Each sub-stage contained within the process
2641 is controlled via a smart contract object 2660. The smart
contract object 2660 is driven by data received from the smart
contract appliance 2665, and the various data inputs from the
exchange platform 2600 and provides various process control inputs
associated with, but not limited to, the optimal pumping rate, stir
rate, mixture ratios, amounts, and volume to maximize efficiency of
processing system 2675.
[0110] Receiving the output from the first step in the procurement
process 2641, a first option is to store the resulting products.
Process intermediates may also be stockpiled for future use in
process 2643.
[0111] Contaminants may be removed to create purified products
which may be distributed to steps 2642 and 2643 improving the
efficiency of extracting rare earth metals. The whole process is
logged continuously by an appliance or appliances 2665 monitoring
the supply chain.
[0112] In the event that the process intermediate is received by
2641 is not decided for storage 2642, the product will enter the
procurement process. Through a proprietary chemical leaching
solution, the product entered into this stage is transformed into
rare earth metals. There are two outputs from this process: rare
earth metals 2644 and an excess product 2645 that has the
opportunity for future refinement but no immediate value. The
excess product in 2646 will be moved to a similar storage facility
as the product given to 2642.
[0113] Rare earth metals extracted from the chemical leaching
solution 2643 are each assigned a new unique hash code. These hash
codes are used to liquidize these commodities on a proprietary
exchange 2600. The commodities created 2676, 2677, 2678 are shipped
to their final destinations through the use of various supply chain
fulfillment methods 2691, 2682. The excess product created is moved
to a storage area 2642 with the potential for later refinement.
[0114] The smart contract application 2607 receives data from the
exchange platform 2600 and acts as a guide for the exact
specifications of production outlined in the embodiment included
with the process control 2640, 2665. The smart contract application
also creates tradeable derivatives that are based on the rare earth
metal commodity outputs 2644 from the refinement process 2643.
[0115] In an embodiment of the proprietary exchange itself will
operate and fluidly maintain a distributed network through a
plurality of micro networks amongst its users. The micro networks
will operate transactions within a small number of users. This
increases the speed and efficiency of the exchange network. At
predetermined time intervals, each user will send their most up to
date chain of transactions representing the net change in assets
over the time-period to a centralized exchange for compilation and
the other networks of users. The centralized exchange may document
and store the complete ledger in order to mitigate the threat of
fraudulent transactions. The exact specifications and definition of
the transactions are defined therein. The system may be
peer-to-peer and transactions can take place between users
directly, without an intermediary. These transactions may be
verified by network nodes and recorded in a distributed ledger that
houses hash codes representing the commodity. When a transaction is
made between two parties, a block in the ledger is updated when two
or more entities not involved in the transaction authenticate a
trade. Once a trade is authenticated, an object (currency, stock,
etc.) changes ownership. This negates the need for a physical
transferable object.
[0116] Market participants may subscribe to the exchange platform
2600 in order to trade commodities.
[0117] In a non-limiting example of the Tokenization process, FIG.
27 depicts block 2800 as a distributed data base record that stores
what is called a distributed ledger 2801. The distributed ledger
has two faces, a private face and a public face. The private face
belongs to the exchange's owner and is used as a way to keep notes
and private data secure from the public side. The ledger is created
upon creation of a Token. The Token represents a present value of
the underlying asset. As further example, a feedstock agreement is
established at T.sub.1 and documented in a datagram 2799. Datagram
2799 is then transmitted through a proprietary and secure network
to the exchange 2600 for logging in the distributed ledger 2800.
Once established, the ledger then publishes to the public side of
the ledger a first posting in what would otherwise be known as the
Blockchain for the asset. The asset has a value, but it is unknown
at this point. At T.sub.2 the commodity is evaluated, and, in the
case of a mineral, sampled 2804, assayed, and documented at 2802.
Each ach step is transmitted securely to the exchange, noting the
ledger record it pertains to, is then sent to the distributed
ledger database and entered as a new entry to the Blockchain, each
entry represent a value change in the process of the underlying
commodity, again in this case a mineral bearing substance.
[0118] At some point in the asset life, the commodity is designated
to fulfil a supply contract also known as a smart contract. The
smart contract is established with milestones that are or must be
achieved throughout its process life. The smart contract is managed
by the exchange owner as part of the exchange services; fees for
this are paid directly to the exchange. All transactions created in
the above process are sent to the distributed ledger and logged to
either the public or private side depending on the records
type.
[0119] As discussed earlier, the smart contract 2607 has the
ability to execute certain tasks automatically, once the buy signal
is released based on a buyer, the ledger sends a notification to
the smart contract the initiate the process 2675 and process the
raw materials per the ledgers records, i.e., gold, platinum, or
bananas into banana bread, it makes no difference to the over lying
control process and smart contract.
[0120] The smart contract 2607 sends an authorization the plant
control processor 2640 running in appliance 2665. Logic software
2660 accepts the instruction and initiates the process. The
acceptance of this process initiation is a one way event, there is
no going back. As an example, assume the underlying process is to
process cattle into beef, once the cow enters the stock yard, and
processing plant, there is no going back, the process is committed
to.
[0121] Steps 2641, 2642, 2643 each generate a data record of the
process, these records as with the others is passed out of the
plant to the plant control, and logged into the distributed ledger
2800 as a new record. Each phase of the process from start to
finish may, or may not represent a value change, only the
predetermined terms and conditions of the smart contract will
affect value.
[0122] Next, the refined commodity is labeled and shipped. As an
example, Product A could be sand in the form of silicon dioxide,
Product B 2677 could be iron, and Product C 2678 could be gold,
each by the smart contract will be individually reported back to
the ledger as a process event, in the case of the formation of a
finished product, the value from the smart contract will reflect in
the record e.g. 2811, 2812, 2813.
[0123] In the final step 2900 fulfillment and distribution, the
smart contract 2607 may have instructions to release funds on the
shipment of the products FOB the shipping dock, that would mean,
the asset owner, all the way down to the plant owner gets paid, the
token is terminated and disbursed per the smart contract. Any
services agreements, trucking agreements, e.g. 2681 and 2682 for
transportation are paid as well. In one final step, the end user,
consumer consumes the product, and reports back to the exchange
through a partner data base, the product is gone, and needs more
product, the cycle is repeated, the smart contract is established,
and the next batch of product is processed.
[0124] A centralized network of servers may manage the distribution
and shipping network of the rare earth metals. A distributed ledger
offers unparalleled accuracy in supply chain management,
consistently maintaining an accurate location in the process. It
may limit or completely negate the potential loss of material in
the process and further develop the intricate system.
[0125] In trading and sales operations, quantitative analysts work
to determine prices, manage risk, and identify profitable
opportunities. Historically this was a distinct activity from
trading but the boundary between a desk quantitative analyst and a
quantitative trader is increasingly blurred, and it is now
difficult to enter trading as a profession without at least some
quantitative analysis education. In the field of algorithmic
trading it has reached the point where there is little meaningful
difference. Front office work favors a higher speed to quality
ratio, with a greater emphasis on solutions to specific problems
than detailed modeling. FOQs typically are significantly better
paid than those in back office, risk, and model validation.
Although highly skilled analysts, FOQs frequently lack software
engineering experience or formal training, and bound by time
constraints and business pressures tactical solutions are often
adopted.
[0126] Algorithmic trading, also called algo trading and black box
trading, encompasses trading systems that are heavily reliant on
complex mathematical formulas and high-speed computer programs to
determine trading strategies. These strategies use electronic
platforms to enter trading orders with an algorithm which executes
pre-programmed trading instructions accounting for a variety of
variables such as timing, price, and volume. Algorithmic trading is
widely used by investment banks, pension funds, mutual funds, and
other buy-side (investor-driven) institutional traders, to divide
large trades into several smaller trades to manage market impact
and risk.
[0127] Algorithmic trading may be used in any investment strategy
or trading strategy, including market making, inter-market
spreading, arbitrage, or pure speculation (including trend
following). The architecture and functionality of smart contracts
allow for the incorporation of subscriber strategies that apply
algorithmic trading methods. The investment decision and
implementation may be augmented at any stage with algorithmic
support or may operate completely automatically.
[0128] Many types of algorithmic or automated trading activities
can be described as high-frequency trading (HFT), which is a
specialized form of algorithmic trading characterized by high
turnover and high order-to-trade ratios. As a result, in February
2012, the Commodity Futures Trading Commission (CFTC) formed a
special working group that included academics and industry experts
to advise the CFTC on how best to define HFT.
[0129] HFT strategies utilize computers that make elaborate
decisions to initiate orders based on information that is received
electronically, before human traders are capable of processing the
information they observe. Algorithmic trading and HFT have resulted
in a dramatic change of the market microstructure, particularly in
the way liquidity is provided.
[0130] Next generation trading platforms may require information
about the trading environment, and the relationship to them. The
performance of the described trading platform using cryptographic
hashes and smart contracts provides the opportunity to limit market
contagion resulting from HFT techniques, where a feedback spiral
emerges with no apparent external cause. This information may be
generated from multiple sources to include data from social media,
global predictions, etc. These data sources may generate
information about the environment including measurements and
measurement classification. These systems are similar to those in
planetary physics.
[0131] The process of trading is not much different today then is
was 30 years ago, just incredibly faster; features or applications
are specified for a desired software product they are coded in any
one of a number of languages, competitively purchased; integrated
into an existing ecosystem; and implemented as another product. If
another feature is desired, it is integrated into yet another
application or code block; this approach is referred to as
"federated" systems. A key tenant to low cost systems in the future
may be a deliberate movement away from federated features and
systems, to fully integrated systems design and integrated
systems.
[0132] Now with a focus on active this new platform, the data
required to support new trading features are to some extent common;
a data type 1; data type 2. In either case, simply sharing data
from the disparate data sources to improve knowledge of the trading
environment requires re-thinking how disparate data can be
processed, in particular consideration for the fusion of data into
information.
[0133] Those skilled in the art of state estimation, robotics,
advanced defense avionics understand academically that data-fusion
is the art of combining data or data derived from disparate sources
such that the resulting information is in some sense "better" than
would be possible when these sources were used individually. This
process is predicated on the covariance (or the measure of how much
two variables vary together) of non-independent sources. The term
"better" in the case above can mean more accurate, more complete,
more dependable, or refer to the result of an emerging view or
state estimation.
[0134] The data sources for a fusion process are not specified to
originate from identical sources which may or may not be spatially
and temporally aligned. Further one can distinguish direct fusion,
indirect fusion and fusion of the outputs of the former two. Direct
fusion is the fusion of data from a set of heterogeneous or
homogeneous data sources and history values of data, while indirect
fusion uses information sources like a prior knowledge about the
data and human input. Sensor fusion is also known as information
fusion through an implementation of the probability theory.
[0135] Probability theory is the mathematical study of phenomena
characterized by randomness or uncertainty. More precisely,
probability is used for modeling situations when the result of a
measurement, realized under the same circumstances, produces
different results. Mathematicians and actuaries think of
probabilities as numbers in the closed interval from 0 to 1
assigned to "events" whose occurrence or failure to occur is
random. Two crucial concepts in the theory of probability are those
of a random variable and of the probability distribution of a
random variable.
[0136] Implementing the features described above with data
available requires reliable real-time estimates of system state.
Unfortunately, the complete state is not always observable. State
Estimation takes all the data obtained and uses it to determine the
underlying behavior of the system at any point in time. It includes
fault detection, isolation and continuous system state
estimation.
[0137] There are two parts to state estimation: modeling and
algorithms. The overall approach is to use a model to predict the
behavior of the system in a particular state, and then compare that
behavior with the actual measurements from the instruments to
determine which state or states is the most likely to produce the
observed system behavior.
[0138] This is not well understood or currently widely implemented
in the trading industry, today the majority of systems, algorithms
used or understood and practiced is that logical decisions made
linearly and deterministically. If use cases require higher
confidences in specific data sets, the data sets need to be better
resulting in the undesired effect of additional cost and schedule
increases. The trading environment today is neither linear nor
deterministic; use cases are infinite; and the perverse variability
of the data and potential changes cannot be modeled. The
variability of the problem identified above includes aspects other
than just spatial; temporal relationships are part of the
fundamental intellectual structure (together with space and number)
within which events must be sequenced, quantify the duration of
events, quantify the intervals between them, and compare the state
of objects.
[0139] Sharing information and data with other applications is
anticipated and desired; however data received and reported is
historical in nature and received asynchronously. Timing errors can
induce more error in the system than bad data. These and other
issues can be addressed with the introduction of a suite of
algorithms based on re-thinking the approach of federated
applications and focusing on an integrated systems solution based
on state estimation.
[0140] With respect to systems design, methods and tools must be
developed to support the inevitable evolution about to happen in
the global trading industry, an evolution from federated systems to
fully integrated; the trading industry is not ready nor are they
aware of the steps required. As it stands today, there is much art
published documenting the research and development in the area of
procedure analysis and design. This patent describes a system and
methods necessary to implement a methodology that may facilitate
and support advanced trading systems design, test, verification,
and validation.
[0141] For the sake of convenience, the operations are described as
various interconnected functional blocks or distinct software
modules. This is not necessary, however, and there may be cases
where these functional blocks or modules are equivalently
aggregated into a single logic device, program or operation with
unclear boundaries. In any event, the functional blocks and
software modules or described features can be implemented by
themselves, or in combination with other operations in either
hardware or software.
[0142] Having described and illustrated the principles of the
systems, methods, processes, and/or apparatuses disclosed herein in
a preferred embodiment thereof, it should be apparent that the
systems, methods, processes, and/or apparatuses may be modified in
arrangement and detail without departing from such principles.
Claim is made to all modifications and variation coming within the
spirit and scope of the following claims.
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