Computer based matching system for party and counterparty exchanges
A computer based system is disclosed which enables a buyer and a seller to be efficiently matched. The system can comprise a web based foreign exchange platform in which parties and counterparties post their requirements. A computer identifies and matches reciprocal, offsetting positions and effects a trade at a price which is the mid-point of the Interbank bid/offer spread. The system is fast, efficient and fair, as well as being significantly cheaper than conventional foreign exchange systems.
1. A computer based system which enables a party and counterparty to be efficiently matched, comprising:
a first computer terminal into which the party inputs details of a potential first financial transaction to buy an amount of a first currency using a second currency,
a second computer terminal into which the counterparty inputs details of a potential second financial transaction to sell an amount of that first currency and to receive the second currency or another currency,
a computer network connecting the first and second terminals;
characterized in there being:
(a) a computer program that allocates to each currency a unique identifier such that each possible combination of currencies to be bought and sold by parties and counterparties is uniquely identifiable by a total combination identifier that is a single binary number derived from a unique binary identifier assigned to each currency and wherein a total of combinations T(n, x) is the number of total combination identifiers and is calculated by the formula:
T ( n, x )= C ( n, x )+ C ( n, x− 1)+ C ( n, x− 2)+ . . . + C ( n, 2)
where n is a positive integer that represents the number of currencies corresponding to a current currency trade, x is a positive integer such that x≧2 and x≦n, and wherein C(n, x) represents one of the total combinations given n and x, the system supports up to 20 currencies environment with a maximum of 6 participants to a transaction; and
(b) a computer program arranged to determine, prior to the first and second transactions occurring, a net payment position if either the first and second transactions were to occur only in part and to complete each transaction on the basis of the net payment position.
2. The computer based system as claimed in claim 1 wherein there are several party/counterparty pairs in a connected series of financial transactions such that only by combining all of the connected transactions are all of the parties and counterparties satisfied in whole or part.
3. A computer based system as claimed in claim 1 wherein the Internet comprises some of the network connecting the first and second terminals.
4. The computer based system as claimed in claim 1 wherein the program is designed to identify and complete transactions in first in—first out (FIFO) order limited only by a set of user defined parameters and transaction system rules.
5. The computer based system of claim 1 in which each unique identifier is an assignment value number in the form 10 N , with N being different for each currency.
6. The computer based system of claim 5 in which the assignment value combination identifier for a given combination of currencies is calculated by adding the unique identifiers for each currency in that combination.
7. The computer based system of claim 1 in which a match between a combination of currencies to be bought and a combination of currencies to be sold is identified by a program able to calculate combination identifiers for all possible combinations to be bought and to be sold and to identify a match where a combination identifier for a combination to be sold equals a combination identifier for a combination to be bought.
8. The computer based system of claim 7 in which the amount of currency available for matching in any given combination is determined by a calculation which involves converting the currencies in that combination to a base currency.
9. A method of completing a foreign exchange transaction for a party, comprising the steps of:
(a) defining a foreign exchange requirement relating to the party offering buying an amount of a first currency using a second currency the using a web browser;
(b) sending the requirement via the Internet to a server; and
(c) processing that requirement by identifying one or more matching counterparties offering to sell an amount of that first currency and to receive the second currency or another currency using (i) a computer program that allocates to each of the different kinds of currencies a unique identifier such that each possible combination of kinds of foreign exchange to be bought and sold is uniquely identifiable by a total combination identifier that is a single binary number derived from the unique binary identifier assigned to each currency and wherein a total of combinations T(n, x) is the number of total combination identifiers and is calculated by the formula:
T ( n, x )= C ( n, x )+ C ( n, x− 1)+ C ( n, x− 2)+ . . . + C ( n, 2)
where n is a positive integer that represents the number of currencies corresponding to a current currency trade, x is a positive integer such that x≧2 and x≦n, and wherein C(n, x) represents one of the total combinations given n and x; the method supports up to 20 currencies environment with a maximum of 6 participants to a transaction and (ii) a computer program arranged to determine prior to the transaction occurring a net payment position between the party and the or each counterparty if either the first and second transactions were to occur only in part and to subsequently complete the transaction between the party and the or each counterparty on the basis of the net payment position.
10. A computer terminal configured as a server and programmed to process a foreign exchange transaction between a party and a counterparty, the transaction relating to different kinds of currencies, in which the server is programmed to (a) allocate to each of the different kinds of currency a unique identifier such that each possible combination of currencies to be bought and sold by parties and counterparties is uniquely identifiable by a total combination identifier that is a single binary number derived from the unique binary identifier assigned to each currency and wherein a total of combinations T(n, x) is the number of total combination identifiers and is calculated by the formula:
T ( n, x )= C ( n, x )+ C ( n, x− 1)+ C ( n, x− 2)+ . . . + C ( n, 2)
where n is a positive integer that represents the number of currencies corresponding to a current currency trade, x is a positive integer such that x≧2 and x≦n, and wherein C(n, x) represents the number of combinations given n and x; the server supports up to 20 currencies environment with a maximum of 6 participants to a transaction and (b) to determine, prior to the transaction occurring, a net payment position between the party and a counterparty if the transaction were to occur only in part and to complete the transaction between the party and the counterparty on the basis of the net payment position.
11. A computer terminal acting as a client, in which the client accepts from a party a foreign exchange requirement and sends that requirement to a server as defined in claim 10 .
12. A method of obtaining foreign exchange comprising the following steps:
(a) defining, by a party offering to buy an amount of a first currency using a second currency, a foreign exchange requirement using a web browser;
(b) defining, by a counterparty offering to sell an amount of that first currency and to receive the second currency or another currency, a foreign exchange requirement using a web browser,
(c) sending, by the party, the requirement via the Internet to a remote computer which processes or enables the processing of that requirement using a computer program arranged to (i) allocate to each of the different kinds of currencies a unique identifier such that each possible combination of kinds of currency to be bought and sold is uniquely identifiable by a total combination identifier that is a single binary number derived from a unique binary identifier assigned to each currency and wherein a total of combinations T(n, x) is the number of total combination identifiers and is calculated by the formula:
T ( n, x )= C ( n, x )+ C ( n, x− 1)+ C ( n, x− 2)+ . . . + C ( n, 2)
where n is a positive integer that represents the number of currencies corresponding to a current currency trade, x is a positive integer such that x≧2 and x≦n, and wherein C(n, x) represents one of the total combinations given n and x: the method supports up to 20 currencies environment with a maximum of 6 participants to a transaction and (ii) to determine, prior to the foreign exchange occurring a net payment position if either the first and second transactions were to occur only in part and subsequently to complete the foreign exchange transaction between the party and the counterparty on the basis of the net payment position; and
(d) the party receives foreign exchange in satisfaction of its requirement.