Automated system for providing liquidity to securities markets

A method, performed by a computer system including at least three storage devices maintaining multiple databases, a supervisory computer, a controller, and at least three data terminals, for managing a plurality of internally linked investor portfolios, each having an inventory including numerous and diverse securities traded in securities markets at varying prices which fluctuate upwards and downwards and each having separate portfolio objectives represented by a specified desired mix of investments in securities and cash reserves comprising the computer-performed steps of:

• updating data files maintained in a mass storage device connected to a controller central processing unit on a daily basis to reflect corporate actions relating to all managed securities;
• updating data files maintained in a mass storage device connected to an investor central processing unit on an ongoing basis with current market information concerning the variance of the price fluctuations of each managed security;
• updating data files maintained in a mass storage device connected to an investor central processing unit on an ongoing basis with current market information concerning the normal price of each managed security;
• analyzing and altering the desired mix of investments in securities and cash reserves for each investor based on changes in portfolio objectives and according to algorithms customized for each investor as implemented by a central processing unit;
• analyzing said variance data, said normal price data and said portfolio objectives according to algorithms developed and maintained within a central processing unit;
• generating one or more sets of buy and/or sell orders for securities at specific prices by a controller central processing unit;
• offering all buy and sell orders first through internal client investor central processing units to other internally linked investors for real time matching and execution;
• electronically executing the buy and sell orders which have been first offered to other internally linked investors;
• offering any buy and sell orders remaining unexecuted after having been offered to said other internally linked institutional investors through external central processing units to external automated traders for substantially real time matching and execution;
• and
• electronically executing the buy and sell orders which have been offered to external automated traders.

An on-line interactive event-driven investment processing system for providing added liquidity to continuous auction markets for investment securities and for managing in a real-time environment the interaction of one or more large portfolios of investment securities with each other and with the securities markets, wherein each portfolio has an inventory including numerous and diverse securities and each portfolio has separate portfolio objectives represented by a specified desired mix of investments in securities and cash reserves through generation of trading decisions in the form of buy and sell orders on behalf of each of those portfolios comprising:

• first mass storage means within a central processing unit for collecting and storing securities transaction data and price quotation data both from a plurality of securities markets external to the system and from buy and sell orders and transactions generated internal to the system;
• controller means for accessing data stored in said first storage means, for analyzing the data stored in said first storage means and for substantially simultaneously transacting multiple purchases and sales of a plurality of securities for one or more of the investor portfolios;
• second mass storage means coupled to said controller means for collecting and storing data for each investor portfolio concerning that particular portfolio and for storing buy and sell orders on behalf of that particular portfolio;
• investor computer means for maintaining each investor portfolio wherein said investor computer means is coupled to said second storage means for analyzing data concerning the portfolio of that particular investor and for generating buy and sell orders for transmission to said second storage means on behalf of that portfolio in order to retain the portfolio objectives while also providing liquidity to the securities market;
• third mass storage means coupled to said controller means for collecting and storing data concerning the portfolios of all investors using the system;
• supervisory computer means coupled to said third storage means for supervising and ensuring the proper functioning of the system;
• external data terminal means coupled to said controller means for linking said controller means to external automated securities brokers and exchanges and for transmitting orders and transaction data to external automated securities brokers and exchanges;
• trade data terminal means coupled to said controller means for reporting all executed sales internal to the system to a central reporting house;
• and
• settlement data terminal means coupled to said controller means for reporting all trades involving individual securities for settlement purposes to an external organization.