Establishing an Inventory Management and Trading Application for Alternative, Illiquid Repurchase Agreement Markets
The invention relates to a system and method for repo trading. The invention facilitates the inventory collection, organization, and search of the long and short positions of financial instruments such as corporate bonds and equities through the provision of a database. The invention also provides users with the ability to match borrowers and lenders with opposing positions for financial instruments. In a second embodiment the invention provides a system for creating pseudo-securities, from a diverse population of corporate bonds or equities that meet parameters specified by a user.
1 . An electronic trading system for facilitating a repo transaction between a seller and a buyer, said system comprising:
a central computer including a memory for storage of offers and bids for a financial instrument for a repo transaction;
a first user terminal in communication with said central computer, wherein said first user terminal is configured to accept data related to at least one of said offers for a financial instrument for a repo transaction;
a second user terminal in communication with said central computer, wherein said second user terminal is configured to accept data related to at least one of said bids for a financial instrument for a repo transaction, wherein said data accepted from said first user terminal and said second user terminal is stored in said memory; and
a search mechanism to automatically search said memory for matches for counterparts.
2 . The system of claim 1 , wherein said first user terminal and said second user terminal are the same terminal.
3 . The system of claim 1 , further including an alert mechanism for notifying a user when offers or bids that match said user's criteria are entered into the system.
4 . The system of claim 1 , further including an alert mechanism for notifying a user when a trade is executed that matches said user's requirements.
5 . The system of claim 1 , wherein at least one of said offers or bids is automatically cleared from said memory when a trade is executed.
6 . The system of claim 1 , wherein at least one of said offers or bids is updated to show the amount of an offer or bid that remains available for a repo trade when said offer or bid trades for less than the entire amount that was entered into said memory.
7 . An electronic trading system for facilitating a repo transaction between a seller and a buyer, said system comprising:
a central computer including a memory for storage of offers and bids for a financial instrument for a repo transaction;
a first user terminal in communication with said central computer, wherein said first user terminal is configured to accept data related to at least one of said offers for a financial instrument for a repo transaction; and
a second user terminal in communication with said central computer, wherein said second user terminal is configured to accept data related to at least one of said bids for a financial instrument for a repo transaction, wherein said data accepted from said first user terminal and said second user terminal is stored in said memory; and
a search mechanism wherein a user can search said memory for counterparts.
8 . The system of claim 7 , wherein said first user terminal and said second user terminal are the same terminal.
9 . The system of claim 7 , wherein said search uses predefined search criteria.
10 . The system of claim 9 , wherein said search criteria can include the: term of the repo transaction, rating of the financial instrument, issuer of the financial instrument, currency of the trade, size of bid wanted, size of offer wanted or an identification number assigned to a financial instrument.
11 . A method for use in an electronic trading system for facilitating repo trading between a seller and a buyer, said method comprising:
entering data related to at least one offer for a financial instrument for a repo transaction into a storage memory in a central computer;
entering data related to at least one bid for a financial instrument for a repo transaction into a storage memory in a central computer;
searching said memory of offers and bids in order to find a matching offer or bid for a counter-position;
displaying said matched offers and bids; and
executing a trade for at least one of said matched offer or bid.
12 . The method of claim 11 , comprising the additional step of updating the memory when a trade is executed.
13 . The method of claim 11 , wherein said step of searching is performed automatically when said offers and bids are entered.
14 . The method of claim 13 , comprising the additional step of providing an alert at a user terminal when matching offers or bids are located.
15 . The method of claim 13 , comprising the additional step of providing an alert at a user terminal when a trade is executed that matches said user's requirements.
16 . The method of claim 11 , wherein said step of searching is performed by a user.
17 . The method of claim 16 , wherein said step of searching is performed by a user using predefined criteria.
18 . The method of claim 17 , wherein said predefined criteria can include the term of the repo transaction, the rating of the financial instrument, the issuer of the financial instrument, currency of the trade, the size of the bid wanted, the size of the offer wanted, or an identification number assigned to the financial instrument.