Source: http://www.google.com/patents/US20040039685?ie=ISO-8859-1&dq=5166694
Timestamp: 2014-03-07 09:09:02
Document Index: 73338176

Matched Legal Cases: ['art 1', 'art 2', 'art 2', 'art 1', 'art 20', 'art 20', 'art 5', 'art 25', 'art 0']

Patent US20040039685 - Auction system and method for pricing and allocation during capital formation - Google PatentsSearch Images Maps Play YouTube News Gmail Drive More »Sign inAdvanced Patent SearchPatentsTechniques are provided for an auction system that is used for pricing and allocating equity securities. Information about an offering to accept bids for equity shares is provided to qualified potential purchasers and non-qualified potential purchasers. Bids from potential purchasers for equity shares...http://www.google.com/patents/US20040039685?utm_source=gb-gplus-sharePatent US20040039685 - Auction system and method for pricing and allocation during capital formationAdvanced Patent SearchPublication numberUS20040039685 A1Publication typeApplicationApplication numberUS 10/632,818Publication dateFeb 26, 2004Filing dateAug 4, 2003Priority dateJun 15, 1999Also published asUS6629082, US7587358, US8117112, US20100017344Publication number10632818, 632818, US 2004/0039685 A1, US 2004/039685 A1, US 20040039685 A1, US 20040039685A1, US 2004039685 A1, US 2004039685A1, US-A1-20040039685, US-A1-2004039685, US2004/0039685A1, US2004/039685A1, US20040039685 A1, US20040039685A1, US2004039685 A1, US2004039685A1InventorsWilliam Hambrecht, Othar Hansson, Jordan Hayes, Alan Katz, Charles Ocheret, Matt ReganOriginal AssigneeW.R. Hambrecht + Co., A California CorporationExport CitationBiBTeX, EndNote, RefManReferenced by (28), Classifications (11), Legal Events (5) External Links: USPTO, USPTO Assignment, EspacenetAuction system and method for pricing and allocation during capital formationUS 20040039685 A1Abstract Techniques are provided for an auction system that is used for pricing and allocating equity securities. Information about an offering to accept bids for equity shares is provided to qualified potential purchasers and non-qualified potential purchasers. Bids from potential purchasers for equity shares are received through a communication network. Bids are accepted and offered to be accepted only from qualified potential purchasers. A non-qualified potential purchaser submits a bid through a qualified potential purchaser. A clearing priced for the offered shares is determined based on the received bids. Images(19) Claims(1)
BEST MODE FOR CARRYING OUT THE INVENTION [0018] Overview [0019] An Auction Pricing Mechanism in accordance with the invention is a method of price determination for capital formation that can result in substantial benefits for companies seeking to raise capital through the sale of equity into the public market. An equity offering employing an auction in accordance with a present embodiment of the invention differs substantially from traditional underwritten public offerings in which underwriters employ a �book building� sales technique. In a �book building� process, the price at which shares are sold is determined by negotiation. A lead underwriter represents an offering company to investors and the investors to the offering company in the negotiation. In offerings conducted by auction in accordance with the invention, equity will generally be sold directly to the public by an offering company at a price determined by investors bidding for shares. Bids may be subject to a minimum price or range set by the offering company. An may serve as the Auction Advisor, and may provide a system upon which the auction is run and assists the offering company in marketing the offering and running the auction. Offerings conducted by such auction process may be run on the basis of a specific number of shares to be sold or amount of capital to be raised. [0020] An equity offering auction in accordance with the invention provides a number of significant advantages over a traditional underwritten offering. Foremost, such auction provides a logical and precise method of determining valuation based upon market demand rather than the �book building� process. In the traditional �book building� process, companies are encouraged to �leave something on the table� in order to fill the underwriter's order book. In an auction in accordance with the invention, the offering can be more readily priced at the maximum valuation that the market can bear. In addition, due to the manner in which shares in such auction are allocated (see below), shares may be placed with those seeking long-term investment rather than the ability to �flip� the stock. This differs significantly from the traditional underwritten offering where shares are often placed with the underwriter's best customers who expect to have the ability to quickly sell those shares for a profit due to the discount on valuation that is typically built into the initial public offering price. In an auction in accordance with the invention, this discount can be readily eliminated and therefore, investors have no short-term incentive to sell their holdings. The auction system also can provide greater exposure to the retail market as individual investors have the ability to bid on offerings. This may have the effect of increasing demand over that of typical underwritten offering where the retail market is largely ignored relative to institutional buyers. Finally, due to the relatively low cost structure of the Underwriter, and the automation of the offering process, companies utilizing the auction process should be able to realize significant savings over the underwriting discounts charged in typical offerings as well as avoid unnecessary dilution by utilizing the auction to raise smaller amounts of capital than typically required by underwriters in traditional offerings. [0021] How The Auction Mechanism Works [0022] Offerings utilizing an auction in accordance with the invention will be conducted through the use of a software system developed. This system will handle multiple aspects of the offering process, including subscription, pricing and allocation. [0023] Subscription [0024] Equity offering transactions conducted by auction will be available, to both institutional and retail investors. In order to participate in any given offering investors must be registered with a designated Underwriter. It is expected that institutional investors will be able to register directly with such Underwriter, but that retail investors will typically participate via on-line brokerage firms. On the day the shares become available for sale by the offering company registered investors can submit bids on the offering electronically through a web-based interface maintained by the Underwriter, as the, Auction Advisor. Any investor making a bid will indicate the number of shares such investor would be willing to purchase (�Bid Quantity�) and the price per share such investor would be willing to pay (�Bid Price�). No bid will be considered valid until immediately available funds in an amount equal to the total dollar value of such investor's bid are deposited into an escrow account established in connection with the offering. On the last day which the shares are available for sale by the offering company to investors, the offering company will stop accepting bids after the close of trading on the New York Stock Exchange (the �Auction Close�). [0025] Pricing [0026] The price at which the offered stock is sold to investors will be determined following the Auction Close. All valid bids received by the offering company will be arranged by price in descending order. An accounting firm unaffiliated with the offering company (the �Auction Auditor�) will, starting from the bid with the highest price and working downward, sum up the bid quantities (the �Rolling Accumulation�). At the bid price at which Rolling Accumulation surpasses the quantity of securities being offered (the �Aggregate Securities�), the Auction Auditor will establish such price as the price at which all investors whose bids are included in the Rolling Accumulation will be allocated shares (the �Clearing Price�). [0027] It will be appreciated that the pricing may be conducted by a computer software algorithm that has access to (prospective) investor bids. [0028] Allocation [0029] All investors whose bids are included in the Rolling Accumulation will be allocated shares. An investor whose bid, price is above the Clearing Price will be allocated such investor's entire Bid Quantity (a �Full Allocation�). [0030] Full Allocation=Bid Quantity [0031] An investor whose bid price equals the Clearing Price will be allocated a fraction of its Bid Quantity (a �Pro Rata Allocation�). The Pro Rata Allocation will be the product of such investor's Bid Quantity and the Aggregate Securities less the sum of the Bid Quantities above the Clearing Price divided by the sum of the Bid Quantities at the Clearing Price, as represented by the formula below: [0032] Any Pro Rata Allocation that results in the allocation of a fraction of a share will be rounded down to the nearest whole number. The additional shares made available due to the rounding mechanism (the �Additional Shares�) will be allocated to the investor at the Clearing Price whose bid contained the highest Bid Quantity. [0033] Closing [0034] Shares will be delivered to investors whose bids are accepted in the auction process four days following the Auction Close (the �Closing Date�). In addition, on the. Closing Date the proceeds from the offering will be released from escrow and the fee payable to the Auction Advisor will be paid. [0035] The Auction Advisor [0036] As Auction Advisor, the Underwriter will assist the offering company in structuring and marketing its offering as well as provide the system upon which the auction can be conducted. Structuring the offering includes activities such as preparing a red herring statement and a prospectus for example. As a fee for its services as Auction Advisor, the Underwriter will typically charge a fee equal to approximately 3-5% of the aggregate proceeds of the offering. The terms and conditions of the Underwriter's role as Auction Advisor generally will be set forth in a Placement Agency Agreement by and between the offering company and the Underwriter. The Placement Agency Agreement generally provides, among other things, for the offering company to make certain representations and warranties to the Underwriter as Auction Advisor and that the offering company will indemnify the Auction Advisor against certain liabilities, including liabilities under the Securities Act of 1933, as amended. [0037] Example of Equity Auction Process [0038] 1 Underwriter signs a non-binding letter of intent with a prospective issuer of securities. The language of the letter of intent will be substantially the same as is customarily employed by other firm commitment underwriters in the industry. [0039] 2 The issuer will file a registration statement. The underwriting arrangements will be clearly described in the relevant sections of the registration statement, including without limitation the Plan of Distribution section of the prospectus therein, and such arrangements will be consistent with the information set forth in this letter. [0040] 3 After the registration statement is filed and electronic and printed preliminary prospectuses become available, the Underwriter may begin accepting indications of interest from investors. [0041] 4 Prior to effectiveness, Underwriter shall represent to the satisfaction of NASD Regulation (�NASD�) that sufficient capital will be available to Underwriter to meet the minimum net capital requirements for an open contractual commitment under SEC Rule 15c31, and obtain a statement expressing �no objections� to the distribution arrangements. The prospective net capital charge will be based on the high end of the range set forth in the �Calculation of Registration Fee� table in the effective registration statement, plus 20% of the maximum aggregate offering price, and be offset as firm bids are accepted. Upon approval of an acceleration request under SEC Rule 461, the offering will become effective with a price range under SEC Rule 430A. At this time, Underwriter will post the Rule 430A prospectus on its website. [0042] 5 After effectiveness, provided Underwriter has demonstrated to NASD's satisfaction that it has sufficient net capital to meet the prospective net capital charge described in paragraph 4, Underwriter No. 1 will open the auction for offers to purchase. Such offers to purchase may be received until the close of the auction. All offers to purchase are revocable until the close of the auction. [0043] 6 After effectiveness, Underwriter will confirm whether pre-effective indications of interest received by Underwriter are firm bids, and will notify selected dealers participating in the auction that they may solicit firm bids and instruct them to confirm which pre-effective indications of interest received by them are firm bids. All such firm bids also are revocable until the close of the auction. Underwriter will advise pre-effective bidders in person, by email, telephone, voicemail, facsimile, mail and/or posting a notice on its website that the registration statement is effective and that the prospectus is available at the website, and request that the pre-effective bidders confirm that their pre-effective indications of interest are firm bids. In cases of verbal notice the advice may be that the prospectus will be posted on the website if it has not yet been posted. (Bidders may consent to electronic prospectus delivery by e-mail, or posting on the website in their account agreements.) All pre-effective bidders who have not finished an email address will be notified in person, by telephone, voicemail, facsimile or mail. Underwriter also may state in the message or in a subsequent message that if pre-effective bidders do not respond by a certain time, their bids will be deemed withdrawn. All indications of interest that are not confirmed prior to the close of the auction shall be deemed withdrawn. The time to confirm that indications of interest are firm bids may vary depending on the facts and circumstances of the particular offering. [0044] 7 The auction will close not earlier than on a publicly disclosed date for the close of the auction. Upon close of the auction Underwriter will determine the clearing price based on 100% of the offered shares, excluding any shares covered by an overallotment option. [0045] 8 Immediately after the close of the auction, the lead Underwriter and any other underwriters will enter into a standard firm commitment underwriting agreement with the issuer to purchase 100% of the underwritten shares at a negotiated price based on the clearing price but at a discount from the public offering price. Although the lead Underwriter expects that the public offering price generally will be the clearing price, the actual public offering price may be at or below the clearing price. Concurrently with execution of the underwriting agreement, the lead Underwriter will take the appropriate net capital charge under SEC Rule 15c31 for an open contractual commitment based on 100% of the shares underwritten by Underwriter No. 1 at the public offering price. [It will be appreciated that the Underwriter's net capital charge may be reduced by contractual commitments, if any, by selected dealers to purchase the shares from Underwriter. In such cases, Underwriter will notify such dealers that they must take the appropriate net capital charge for the securities for which they have so committed.]
[0120] Prospectus materials. [0121] Company background. [0122] Auction results. [0123] Etc. [0124] Multimedia files. [0125] Search engine. [0126] Accounts Database: [0127] Accessible by Auction Order Handler. [0128] Contains registration materials and audit trail, which documents actions taken by users and user-related actions taken by Auction Server and Auction Order Handler. [0129] Algorithms [0130] Pricing (based on number of shares offered). [0131] Order all valid bids by price in descending order. Starting from the Bid with the highest price and working in descending order, sum up the number of shares bid to determine the Rolling Accumulation. [0132] The offering price is the bid price at which the Rolling, Accumulation passes the number of shares offered. [0133] Pricing (based on capital raised). [0134] Order all valid bids by price in descending order. [0135] Starting from the Bid with the highest price and working in descending order, sum up the number of shares bid to determine the Rolling Accumulation. [0136] The offering price is the bid price at which the Rolling Accumulation multiplied by that bid price surpasses the target capital amount. [0137] Allocation [0138] All investors with bid prices included in the Rolling Accumulation will be allocated shares. [0139] Investors with bid prices above the offering price will be allocated their entire bid quantity. [0140] Investors with bid prices equal to the offering price will be allocated a fraction of their bid quantity according to a formula to be defined later. [0141] Transaction Server Components [0142] Referring to the illustrative system diagram of FIG. 1, there is shown an illustrative system level drawing of a transaction server 100 in accordance with a presently preferred embodiment of the invention. In operation, a user may access a wide area communications network such as the internet 102 through a user terminal 104. The terminal 104 may be a personal computer or any device that provides interactive access to the communications network. The user may access an internet Research Information Server 106 by entering the appropriate URL for the Information Server. The Research Information Server 106 provides information concerning an offering. For example, it may provide a full text of a prospectus that describes the proposed offering and may provide an explanation of the rules that will be followed in conducting the offering. These rules may include the rules whereby equity shares in the offering are auctioned on-line over the internet, for example. [0143] The user terminal 104 also may communicate with the transaction server 100 through the communications network, such as the internet 102. The user enters a URL corresponding to the transaction server 100 in order to establish a communications link with the transaction server. A firewall 108 provides security between the transaction server 100 and the internet 102. In a presently preferred embodiment, there are load balancing mechanisms, identified as Hydra Web-1 110-1 and Hydra Web-2 110-2 that are used for load balancing and fault tolerance. Basically, the transaction server, in a present embodiment, comprises a pool of web servers (only two shown) Web transaction server 103-1 and Web transaction server 103-2 are operationally disposed behind the firewall 108. The Hydra Web-1 110-1 and Hydra Web-2 110-2 serve to balance the load of connections between the multiple web servers (only two shown) 103-1, 103-2 that make up the transaction server 100. Also, in the event that one of the multiple web servers 103-1, 103-2 of the transaction server 100 becomes unavailable, then one or, more other web servers of the transaction server 100 may take over the operations of the web server that has experienced a fault. In this matter, the connection load is balanced between the web servers in the pool, and fault tolerance can be achieved more readily. [0144] A first auction database 112-1 and a second auction database 112-2 store information concerning an auction transaction such as auction parameters and even constraints applicable to particular customers who might want to submit bids in connection with the auction. An example of a constraint is a limitation on the total number of shares that may be sold to any one customer. Information can be entered into the first and second databases 112-1 and 112-2 through an access terminal 114 that can be accessed by a administrative terminal 116. In a presently preferred embodiment of the invention, the access terminal 114 employs a graphical user interface. [0145] An account information computer system 118 stores and manages customer account information. Orders submitted by a user such as a user of user terminal 114 are reformatted by the account information computer system 118 into messages that may be sent out via network connections 120-1, 120-2 and 120-3 to market centers such as the NYSE 122, NASDAQ 124 or an auction server 126. In operation, a user submits a bid order in connection with an auction by making a internet connection through user terminal 104 to the transaction server 100 through the firewall 108 and either Hydra Web-1 110-1 or Hydra Web-2 110-2 to a web server 103-1 or web server 103-2. Assuming that the connection is made through Hydra Web-1 110-1 and web server 103-1, then, in a present embodiment, an Interactive Internet Server manages the assembly of Active Server Pages (ASP) of the type made available by Microsoft Corporation. These ASPs are dynamic in that they are produced based upon criteria such as the business rules associated with the particular auction transaction and the appropriate information to be displayed to a particular user. The dynamic production of the ASPs depends upon various sets of business objects resident on the web server 103-1 and connections between the web server 103-1 that manages the production of the ASPs and the auction database 112-1. [0146] Furthermore, when a user submits a bid through a web connection , the account information computer system 118 attaches account information associated with the user to auction bid information contained in an auction database 112-1, 112-2. In this matter, a user bid is associated with a user account and with any auction parameters that may have been set in connection with the auction on which the bid is made. A bid message is created by the account information computer system 118. The bid message is transmitted via a network connection 123 to an auction server 126. The Auction site 126 executes an algorithm to determine the price of the offering. The Auction Server also may execute an algorithm to determine the allocation of shares in the offering. The price and allocation information may be communicated via a message on a network connection 120-3 back to the account information computer system 118. For example, such message may indicate share price and share allocation for any given customer. The computer system 118 associates auction share price and each customer's allocation to the customer's account. It also reports that information to the first and second auction databases 112-1, 112-2. The first and second auction databases 112-1, 112-2 are synchronized databases such that each contains identical information. In this manner, the account information computer system 118 places �fills� into a customer account if in fact the customer's bid has been successfully accepted. An administrative terminal 128 and a Customer Service Representative Terminal, 130 may access the account information computer system 118. Alternatively, they may access the transaction server 100 interface via a direct network connection 132-1, 132-2 or via an internet connection 134 as illustrated. [0147] Administration of the Auction Process [0148] Referring to the illustrative drawing of FIG. 2, there is shown a pictorial illustration of the process of opening a brokerage account. Bids for the purchase of securities over a network such as a computer network like the Internet may be submitted through such a brokerage account. Accounts may be opened using any of numerous services. For instance, an underwriter customer service 200, a brokerage customer service 202 or an auction administrator service 204 each may be employed to open an account. It will be appreciated, that the account opening services described in connection with FIG. 2 are of the general type that would be employed by retail customers. Institutional customers, for example, might have accounts opened by telephone through a service agent. The information gleaned through these services, for example, is entered for use by the account information computer system 118. Moreover, it will be appreciated that the types of information that is gleaned from customers in connection with the opening of an account may be obtained through an on-line connection, such as an internet connection. However, often it will be a requirement that the customer print out a document setting forth the information required for the opening of the account. This document will have to be signed and mailed or otherwise delivered to an entity that may open the account by assigning a user ID and a PIN number to the customer. [0149] Moreover, it will be appreciated that for certain institutional customers, account limits may be set, for example, based upon the credit worthiness of the institutional investor. In general, retail customers must actually fund their account up to at least the amount of a bid submitted for a security in order for the bid to be accepted. In other words, institutional investors may be permitted to submit bids based upon credit policies, but retail customers will have to have actual funds in their account sufficient to cover a bid in order to submit a bid for an auction of securities. [0150] The illustrative drawings of FIG. 3 show in general the process for setting up a deal. A deal as the term is used in this section refers to a particular underwriting of securities. The auction administrator sets up the appropriate transaction information in the transaction server 100 and the auction server 126. This includes entering deal information which may include information such as the symbol to be used to designate the company. For instance, a NASDAQ style symbol may be employed. It also may include parameters such as the proposed price range for the deal, the number of shares expected to be sold, the time frame for the deal such as the expected opening date and closing date of the deal and special parameters associated with the deal such as a limit as to the number of shares in the offering that any given person or institution may purchase. For instance, there may be a limitation that no person or institution may purchase more than 10% of the offering. The deal information employed on the transaction server 100 must be the same as that used on the auction server 126. [0151] Administrators also set up the deal information on the account information computer systems. There should be a notification to account information systems sufficient to ensure that the account information systems correctly route messages that pertain to bids on an auction deal. For instance, a symbol selected to represent a new offering should be set in an account information computer system 118 so that the system routes any message containing a symbol corresponding to the offering issuer to the auction server 126, rather than to the NYSE or the NASDAQ. It will be appreciated that, after the deal closes, and an offering is completed, then the routing in the account information computer system 118 can be changed so that the symbol corresponding to the issuer will result in messages for orders relating to the issuer (after market orders) to be sent to the appropriate market center, such as the NYSE or the NASDAQ. [0152] The administrators also should ensure that the auction deal data is replicated on each of the auction databases 112-1, 112-2, , sometimes referred to as anti-pods (points of delivery). Generally, technical support personnel will ensure that the auction deal information is properly received, that routing for the auction symbol is properly set up and to send confirmation to the auction administrator that the overall system is ready. [0153] The illustrative drawing of FIG. 4 shows in general terms the process for closing a deal. It will be appreciated that, in accordance with a presently preferred embodiment of the invention, a prospectus pertaining to a transaction that is the subject of an auction may require approval by the SEC. If so, the transaction generally cannot become �effective� until the SEC approves the transaction. It is not uncommon for a transaction's prospectus to go through numerous changes between the time it is initially submitted to the SEC and the time that the SEC finally approves the prospectus and permits the transaction to become effective. In general, once the SEC approves a transaction, the transaction may become �effective�. Ordinarily, once the SEC approves the transaction, the underwriter and the issuer company execute an underwriter agreement in which the issuer company approves the sale of securities by the underwriter at an agreed upon price. In accordance with a present embodiment of the invention, the agreed upon price of securities to be sold by the issuer is established through an auction process of the general type described herein. [0154] It will be appreciated, however, that although a clearing price is arrived at through the process described herein, the auction process and underwriter agreement may specify an actual offering price that is different from, though based upon, the offering price. For instance the offering price could be set at the next highest bid below the clearing price. [0155] After the deal has become effective, and the underwriter and the issuer have agreed upon a price for the issuance of the shares, the underwriter takes steps to firm up the bids that have been received for the auction. Once the underwriter firms up the bids the underwriter sends �fills� to the, customer accounts and a settlement at the clearing price which has been arrived at through the auction process. [0156] In a present embodiment of the invention, before the transaction becomes effective, the underwriter does not form binding contracts with customers who submit bids for securities. Rather, bids are mere �indications of interest� in purchasing the security. Thus, in a present embodiment, the underwriter takes the risk that a bidder will back out of the bid and not actually follow through and purchase the securities at the clearance price. [0157] Alternatively, for example, the auction can be run with rules that call for firm bids. Under such rules the bids would in fact be binding contracts. Nevertheless, such modified rules may specify that bids are revocable and modifiable until the auction closes. [0158] Moreover, in a current embodiment of the invention; there is uncertainty as to, when an auction for a particular security issue will close. The closing date depends in part upon the timing of SEC comments on the transaction and approval of the transaction. At a point when an underwriter feels that the prospectus is in a close to final condition, then the underwriter may inform the SEC that it is �ready for acceleration�. At this point, the underwriter may inform customers and potential bidders that the auction will close soon, perhaps within twenty-four (24) hours. This gives bidders an opportunity to change their bids and even to rescind their bids. When the transaction becomes effective, the auction will close. Pricing and allocation of the transaction are then determined based upon the results of the auction as described elsewhere in this document. [0159] It will be appreciated that the auction process described herein achieves the result of �building a book�, a traditional role of a banker. In building a book, a banker identifies persons or institutions who are likely to purchase securities. The banker also ascertains a price that is likely to be acceptable to the purchasers. The auction process described herein replaces the traditional process of building a book with a process that involves accepting bids and establishing an allocation and a clearance price based upon the results of the auction. [0160] It will be appreciated that after an initial public offering has been completed, then bids for after market orders through the NYSE or the NASDAQ, for example, may be accepted in the normal manner through firm contracts. In other words, there is no requirement that the underwriter receive a bid and hold it as a nonbinding bid. Rather, the bid may be treated as an order which creates a contractual obligation by the customer to purchase the security which has been ordered. Referring to the illustrative drawings of FIG. 5 there is shown an illustrative diagram of the processes involved in post-execution clean-up after a deal has been completed. Basically there is a need to be certain that there are matches between bids and orders and that there have been no breaks in the system. In general, a bid submitted by a customer is valid until it has been cancelled. Bids, in a present embodiment, are handled as GTC (Good Till Cancelled) limit orders. Thus, after the deal has been completed, bids that have not been accepted, for example, because they have not equaled or exceeded the clearance price are cancelled as if they were unfilled orders. [0161] The illustrative drawing of FIG. 6 shows, the table in the databases 112-1, 112-2 that define an auction transaction database schema on the transaction server 100. In operation, a user logins to the transaction brokerage site. System checks the input information based on information contained in TOIPreferences Table, TOIUserPrefs Table, and TOIUsers Table. If PrefID and Password do not match stored information, System responds with LoginFail message. If PrefID and Password match, User session is initiated and tracked in TOISessions Table. Moreover, User's GroupID may have limits assigned to it based on parameters stored in TOILimits Table. Limits specified in TOILimits may depend on the specific deal, which is defined by parameters in TOIDeals Table. Moreover, specific deal information that appears on transaction web site is defined in TOIDeals Table. [0162] 1. List of Tables [0163] 2. TOIDeals [0164] 2. Column List [0165] 2.1. DealId [0166] Unique Internal number to identify a deal. [0167] 2.2. Symbol [0168] Temporary auction symbol assigned to the company for which the IPO is being offered. The symbol may not yet have been accepted by the SEC. [0169] 2.3. EqSymbol [0170] Final equity symbol assigned to the company for which the IPO is being offered. [0171] 2.4. CompanyName [0172] Name of the company for which the IPO is being offered. [0173] 2.5. OpenDt [0174] Date and time the deal will be open to TOI users to place their bids. [0175]2.6. CloseDt [0176] Date and time, after which no more bids will be accepted for the IPO. [0177] 2.7. PriceLow: [0178] Lowest price, that can be bid for a share of the Deal. [0179] 2.8. PriceHigh [0180] Highest price, that can be bid for a share of the Deal. [0181] 2.9. Status [0182] Status of the deal. Values: [0183] 0:CLOSED [0184] 1: OPEN [0185] 2: LOCKED [0186] 3: DELETED [0187] 4: INHIBITED [0188] 5: EXECUTED [0189] 2.10. TtlShares [0190] Total number of shares offered in the IPO for the company. [0191] 2.11. Desc1 [0192] Part 1 of a string used to verify with BSS auction, that the deal for which the order is being placed, is indeed the correct company. [0193] 2.12. Desc2 [0194] Part 2 of a string used to verify with BSS auction, that the deal for which the order is being placed, is indeed the correct company. [0195] 2.12. Language [0196] Special instructions (Language) associated with the IPO. [0197] 2.12. Index List [0198] 3. TOIGroups [0199] 3. Column List [0200] 3.1. GroupId [0201] Unique Internal number to identify a group. [0202] 3.2. Name [0203] The name of the group. [0204] 3.3. Description [0205] An arbitrary description assigned to the group. [0206] 3.3. Index List [0207] TOILimitInfo [0208] 3.3.1. Column List [0209] 3.4. LimitId [0210] Unique internal identifier for a type of limit. [0211] 3.5. Description [0212] A brief description of what the limit is. [0213] 3.5. Index List [0214] TOILimits [0215] 3.5.1. Column List [0216] 3.6. LimitId [0217] Foreign key to TOILimitInfo table. [0218] 3.7. UserId [0219] Foreign Key to the Users table, identifying which user the limit pertains to. A �0� in this field indicates the user is not pertinent for the Limit. [0220] 3.8. GroupId [0221] Foreign Key to the Groups table, identifying which group the limit pertains to. A �0� in this field indicates the group is not pertinent for the Limit. [0222] 3.9. DealId [0223] Foreign Key to the deals table, identifying which deal the limit pertains to. A �0� in this field indicates the deal is not pertinent for the Limit. [0224] 3.10. Precedence [0225] The precedence this limit rule will take. Precedence is used to identify the limit that will apply among the different limits that apply to a particular instance. [0226] 3.11. Value [0227] The value of the Limit. [0228] 3.11. Index List [0229] TOIPreferences [0230] 3.11.1. Column List [0231] 3.12. PrefId [0232] Unique internal identifier for a preference type. [0233] 3.13. Description [0234] A brief description of what the preference is and does. [0235] 3.14. DefaultValue [0236] The default value of the preference, if it is not specifically set by the user. [0237] Default data: [0238] 1, �Maximum inactivity time after which a user session is invalidated�
[0242] 3.14. Index List [0243] 4. TOISessions [0244] 4. Column List [0245] 4.1. SessionId [0246] Unique Internal number to identify a session. [0247] 4.2. UserId [0248] Foreign key to the Users table. Identifies the owner of the session. [0249] 4.3. Token [0250] A random number used to validate a session. With every connection the user is given a new token number in an http cookie. This user must return this number to validate his active session. [0251] 4.4. Timestamp [0252] Time and date the session was last accessed. It enables TOI to invalidate sessions that are inactive for long. A session access, that exceeds the timestamp value by the value specified in timeout, is no longer valid. [0253] 4.5. IsReadOnly [0254] A flag used to identify if the session has permissions to write, i.e. permissions to commit data/transactions. Customer representatives are required to a have user sessions with read only privileges. [0255] Values: [0256] 0: Read-Write privileges [0257] 1: Read Only privileges [0258] 4.6. TimeOut [0259] Maximum inactivity time of a session after which the session is rendered invalid. This field is de-normalized from TOIUserPrefs for ease of access and performance. [0260] 4.7. BHCAcctNo [0261] Customer's account number at BHC. This is the identifying number used to communicate with the tandem. This field is, de-normalized from TOIusers for ease of access and performance. [0262] Index List [0263] 5. TOIUserPrefs [0264] 5. Column List [0265] 5.1. UserId [0266] Foreign Key to the user table. [0267] 5.2. PrefId [0268] Foreign Key to the preference table. [0269] 5.3. PrefValue [0270] Value chosen by the user for the preference. [0271] Default data: Default number of seconds for session timeout for all users is 1800 seconds, or 30 minutes. The default value may be overridden by a user preference, ex: (10, 1, �900�) would set UserId 10's session timeout to 15 minutes. (0, 1, �1800�) [0272] 5.3. [0273]5.3. Index List [0274] 6. TOIUsers [0275] 6. Column List [0276] 6.1. UserId [0277] Unique Internal number to identify a user. [0278] 6.2. GroupId [0279] Foreign key to the TOIGroups table. Identifies the group, the user belongs to. [0280] 6.3. UserName [0281] The name, the user uses to login to the TOI application. It is the account number field in the user interface. [0282] 6.4. Password [0283] Encrypted string supplied by the user to authenticate his use of the TOI application. It is the PIN field in the user interface. [0284] 6.5. LoginFails [0285] Number of failed login attempts by a user with a valid username. Maximum of 5 unsuccessful attempts are permitted before the TOI system locks a user out, for possible security breach attempt. It is reset every time the user successfully logs in. [0286] 6.6. BHCAcctNo [0287] The Account number that identifies the user in the BHC Tandem database. [0288] 6.7. PwdExprDt [0289] Date the password expires or is no longer valid. Currently used to lock a user out. [0290] 6.8. UserType [0291] Type of the user. Based on this type access privileges to the application are determined. [0292] Values: [0293] 1: TOI Customer [0294] 2: TOI Customer Service Representative [0295] 3: Administrator [0296] 6.9. AccountDesc [0297] A description of the account, that the user holds at BHC. [0298] 6.9. Index List Appendix A [0299] 1.0 Database Sizing Estimates: [0300] Based on the current Business Model, the estimates below define the initial set up along with estimated growth: [0301] 1. Start 2 deals, add 2 per month with potential to 5 per month. [0302] 2. Start 1 group, no plan for additional groups. [0303] 3. Start 20 limits, likely to stay at that level. [0304] 4. Start 20 limitinfo per deal, likely to stay ,at that level. [0305] 5. Start 5 preferences, likely to stay at that level. [0306] 6. Start 25 users, add 5 per month plus potential bursts of as many as 25. [0307] 7. 10 limits per user. [0308] 8. 5 user preferences per user. [0309] 9. Start 0 sessions, 1 per login, potential multiple per user per day, and will use admin batch job to clean up expired sessions. High-end estimate would be a total of 3 per user at any one time with �inserts� and �deletes� at an average rate of 1 per user per day. [0310] Auction System Architecture [0311] In a present embodiment of the invention, the auction server system 126 is a multi-protocol (HTTP, Java/RMI) client-server architecture comprised of several components. A Client API (C-API) is provided for each of the components to interact with each other. The target system can be partitioned across processor boundaries using network protocols but will initially exist on a single Sun/Sparc running the Solaris operating system. Transport protocols are secured and encrypted by the use of SSL. [0312] An Order Management Server (OMS) 302 is the core of the system, providing, the functionality of the entire system as a set of exported interfaces via a secure, distributed messaging system. Authorization and authentication are required for users to access the OMS. [0313] The OMS 302 utilizes a commercial, off-the-shelf relational database 304 to provide transaction-oriented persistent storage. Access to the Relational Backing Store (RBS) 304 is achieved using open standard ODBC/JDBC protocols facilitating multiple vendor solutions. The initial system is implemented with Sybase System 11. [0314] The Administrative Module (AM) 306 provides a set of client protocols and services to interact with the OMS for administrative purposes. Creation and management of the principal objects in the system (auctions, users) is the primary responsibility of the AM 306. Additionally, edit functionality of bids and fills is provided. There is a Java applet that runs in a standard browser 308 which provides these functions to the administrator. A java web server 309 provides several ports to access the auction server 126, at least one of which is an http port. A command-line application is also provided which can be used with a scripting language such as Tcl for unattended autonomous operation. Each auction is uniquely identified by an auctionId, generated by the OMS. Attributes of an auction may include a description of the offering, a start date, an end date, the size of the offering, a URL to visit for further information and others as needed. A minimum price for bids and other attributes are available on a per-auction basis. Attributes of a user include a password and access control information. Ad-hoc report generation is supported. Audit trails for bid modifications are additionally available. [0315] A Broker Client Module (BCM) 310 provides a set of client protocols and services to interact with the OMS 302 for bid management-purposes. Creation, modification, and cancellation of bids along with acceptance of fills is the primary responsibility of the BCM 310. Each participating broker will utilize a BCM 310 to provide a bridge to whatever proprietary order management system is in place at the brokerage. Design guidance is provided for a subset of standard protocols such as SIAC/CMS. Each bid is uniquely identified by a bidId, generated by the OMS 302. Attributes of a bid include the auctionId, the userId, an account number and transaction id for use by the broker, the size of the bid and the price. Additional attributes can be added as needed. The price and the size of a bid as well as the broker transaction id can be modified after creation; additionally the bid can be cancelled. A recovery protocol exists to query a list of all bids that exist for a user, a <user,account> pair, a <user,auction> pair, or a <user,auction,account> triple. Access is limited to -bids that were placed by the user. Status of a particular bid can be queried. BCM gateway 312 can be provided to allow an underwriter administering the auction server 126 to service bids via a syndicate desk. Both a Java applet and a command-line interface will be provided for this module. [0316] An Auctioneer Client (AC) 314 implements an auction algorithm. Running the auction and generating fills to the OMS 302 is the primary responsibility of the AC. 314. The target AC 314 implements a Vickrey-type auction and provides a basis for other kinds of auctions as well. The AC begins by changing the state of an auction from CLOSED to RUNNING. It then queries the OMS 302 for a list of valid bids for the auction, calculates the auction price, allocations for each bid, and transmits a list of fills to the OMS 302. Finally, it changes the state of the Auction to FILLED. [0317] The Auctioneer Client 314 can be extensible to different auction types, based on the �modelID� auction parameter as stored in the RBS 304. The modelID can be used to index into a table of auction parameters, which can be used to drive the parameterized auction engine. [0318] For example, the �clearing-price� parameter will be �uniform� in the Vickrey auction (or �bid-price� in the case of a discriminatory or first-price auction). The �bidding� parameter will be �sealed� in the Vickery auction (�open-outcry� (unsealed bids) in other auctions). The �allocation� parameter determines the allocation among low-price bidders (�pro-rata� in the Vickrey case, but other choices would be �chronological�, �by-size�, etc,.). [0319] Auction Server Physical Network [0320] Referring to the illustrative drawing of FIG. 8, there is shown a generalized block diagram of a physical network used to implement an Auction Server in accordance with the presently preferred embodiment of the invention. A User may form a connection through a User terminal 104 through a communications network, such as the Internet 102, and either a first Internet Service Provider 102-1 or a second Internet Service Provider 102-2 to the transaction server 100. The first ISP 102-1 communicates with routing device 402, and the second ISP 102-2 communicates with routing device 404. Routing devices 402 and 404 provide access to a security firewall line DMZ1. Checkpoint firewalls 108-1, 108-2 provides security in connection with user access to Hydra Web-1 and Hydra Web2 110-1, 110-2 and to web servers 103-1, 103-2. Another routing device 406 can link the web servers 103-1, 103-2 and the Hydra Web servers 110-1, 110-2 with the mainframe computer 118 and the databases 112-1, 112-2. Routing devices 408, 410 provide a communications over a network, in this case, a frame relay, network, between the transaction server 100 and the auction server 126. [0321] Auction Server Database Schema [0322] Table Definitions: [0323] Table: Users [0324] The Users table defines static information about entities (users or programs) which are allowed access to parts of the system. Each bid -in the system must be associated with a user. The degree of access to various components will be determined by the UserRoles table. Each user is assigned a unique UserID which is used to refer to the user from other tables. [0325] Columns [0326] Table: Roles [0327] The Roles table provides a convenient repository for security roles defined by the auction system. Each role is assigned a unique RoleID which will be referred to by the UserRoles table. [0328] Columns [0329] Table: UserRoles [0330] The UserRoles table enumerates all of the roles that are associated with a particular user. [0331] Columns [0332] Table: Auctions [0333] The Auctions table defines static information about auctions. It provides each auction with a unique AuctionID which is used to refer to the auction from other tables. [0334] Columns [0335] Table: ModelTypes [0336] The ModelTypes table defines �classes� of auction models and assigns them unique ModelTypeIDs. Specific models are, described in the Models table which also supplies model specific operating parameters for the auction. [0337] Columns [0338] Table: Models [0339] The Models table provides �instances� of the various types of models described in the ModelTypes table. Each model is assigned a unique ModelID which is how it will be referred to from the Auctions table. [0340] parametric information for more complex model types then additional model type specific tables may be introduced. [0341] Table: Bids [0342] The Bids table represents the state of each bid known to the system. When a bid is first entered into the system it is assigned a unique BidID and a new row is inserted into this table. All other activities involving this bid (including cancellation, corrections, fills, etc.) will result in an update of the information for this bid's row in the table. [0343] Table: BidLog [0344] The BidLog table represents the complete transaction history of each bid known to the system. Each transaction is assigned a unique BidTxID. All transactions refer to the original bid created in the Bid table using the unique BidID. [0345] Columns [0346] SAMPLE QUERIES: [0347] In order to illustrate that the table descriptions above are effective and sufficiently flexible, we provide some sample queries below. These sample queries are not intended to represent what production SQL code will ultimately look like. Only one module will interact directly with the RBS. No other parts of the system will be exposed to the schema specifics or will need to use SQL directly. [0348] User Authentication: [0349] When a user or program needs to sign on it will provide a username which can be used to look up the user record like: [0350] select UserID, SecurityType, SecurityKey [0351] from Users [0352] where UserName �<some_user_name>�
[0385] insert BidLog(BidTxID, BidID, Action, Price, Size, Qualifiers) [0386] values(<new_tx_id>, <nth_bid_id>, <an_action>, [0387] <a_fill_price>, <a_fill_size>, <any,qualifiers>) [0388] commit transaction [0389] Producing an Auction Report: [0390] There are many possible reports that might be requested based on the data in the database. The following will produce, for a particular auction, a table displaying for each bid, how many shares were filled and the total cost to that bidder. In addition, summary rows are produced for each user which display the total number of shares and the total cost of those shares that were allocated to their accounts. [0391] The following query will display, for a particular auction, the complete history of transactions for each bid broken down by user and account. [0392] order by R.UserName, AccountID, BidID [0393] Auction Processes Using the Auction Server Database schema [0394] Referring to the illustrative drawing of FIG. 9, there is shown a flow diagram for the process of creating, modifying or cancelling an auction using the Auction Server schema. A user accesses the system via the internet (502). When a user enters UserID/Password (504): system uses the Users Table and Roles Table to identify users and determine what level of access they have. The UserID is retained by the program during the user session to verify roles as necessary. The. SecurityType and SecurityKey can be used to authenticate, the user or to offer additional challenges according to the security policy. [0395] Create Auction (506): system creates new entry into Auction Table with unique AuctionID and a UserId to identify creator of auction. [0396] Enter Auction Parameters (508): system enters parameters into Auction Table for previously created auction. [0397] Modify Auction (510): system modifies auction parameters stored in Auctions Table. [0398] Cancel Auction (512): system changes state of Auction controlled by status field in Auctions Table. [0399] Referring to the illustrative drawing of FIG. 10, there is shown a flow, diagram for the process of closing and executing an auction using the auction server schema. [0400] When ready to close auction, a Modify (514, 516, 518) of the Auction Table is executed to update any of the auction parameters as well as to change the Status of the auction. [0401] Filling or running the auction (520-528) involves determining the operating parameters from the Auction and Models tables. Next, the fill step involves determining the complete state of all uncancelled bids in the auction from the Bids Table. Once the auction has run to completion, the fill status of each bid is updated in the Bids Table and the transactions are logged in the BidLog table. Referring to the illustrative drawing of FIG. 11, there is shown a flow diagram of a process of creating, modifying oro closing bids using the Auction Server schema. [0402] Once an order has been routed to the auction server from the order management system of a participating broker, then the auction server database schema come into play. [0403] A New Order (530-536, 556) creates a new entry into the Bids Table, which is keyed by the BidID and AuctionID. Parameters specified in the New Order message are inserted into the parameter fields for this entry. In addition, the New Order is logged as an entry into the BidLog table, where it is keyed by a unique BidTxId and tied to a particular entry in the Bid Table through the BidID. A Modify or a Cancel Order (538-552, 556) results in an update to an existing entry in the Bid Table. The auction system associates such change orders with a particular entry. In the Bid Table based on identifying parameters in the order message. These changes are also entered as transactions into the BidLog Table, where the Action parameter specifies the particular action taken on a bid. [0404] Addendum A [0405] EXAMPLE PLAN OF DISTRIBUTION [0406] Subject to the terms and conditions of an underwriting agreement, Underwriter No. 1 and Underwriter No. 2, as underwriters, will purchase from Issuer the following respective number of shares of common stock at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus. [0407] The underwriting agreement provides that the obligations of the underwriters are subject to conditions, including the absence of any material adverse change in Issuer's business, and the receipt of certificates, opinions and letters from Issuer and its counsel and independent accountants. Subject to those conditions, the underwriters are committed to purchase all shares of common stock offered if any of the shares are purchased. [0408] The underwriters propose to offer the shares of common stock directly to the public at the offering price set forth on the cover page of this prospectus, as this price is determined by the process described below, and to certain dealers at this price less a concession not in excess of $______ per share. Any dealers or agents that participate in the distribution of the common stock may be deemed to be underwriters within the meaning of the Securities Act, and any discounts, commission or concessions received by them and any provided by the sale of the, shares by them might be deemed to be underwriting discounts and commissions under the Securities Act. After the completion of the initial public offering of the shares, the public offering price and other selling terms may be changed by the underwriters. [0409] The public offering price set forth on the cover page of this prospectus will be based on the results of an auction process, rather than solely through negotiations between Issuer and the underwriters. The plan of distribution of the offered shares differs somewhat from traditional underwritten public offerings of equity securities. [0410] The auction process will proceed as follows: [0411] Prior to effectiveness of the registration statement relating to this offering, the underwriters and participating dealers will solicit indications of interest from prospective investors through the Internet as well as by traditional means. The, indications of interest will specify the number of shares the potential investor proposes to purchase and the price the investor is willing to pay for the shares. After effectiveness, the underwriters will confirm whether pre-effective indications of interest are firm bids. All indications of interest that are not confirmed prior to the close of the auction will be deemed withdrawn. The public offering price will ultimately be determined by negotiation between the underwriters and Issuer. The principal factor in establishing the public offering price will be the price per share, or clearing price, that equals the highest price set forth in valid at which all of the shares may be sold to potential investors. The public offering price may be lower than the clearing price based on negotiations between the underwriters and Issuer. [0412] A simplified example of the auction process is as follows: Company X offers to sell 100 shares in its public offering through this auction process. Underwriter No. 1, on behalf of the Company X, receives five indications of interest, all of which are kept confidential until the auction process ends. The first indication of interest is to pay $10 per share for 10 shares, the second is for $9 per share for 30 shares, the third for $8 per share for 60 shares, the fourth for $8 per share for 40 shares and the last for $7 a share for 80 shares. After the registration statement becomes effective, all potential investors who have submitted indications of interest will be advised of that fact and asked to confirm that their indications of interest are now offers to purchase shares. No additional offers to purchase would be received. The clearing price used to determine the public offering price would be $8 because $8 equals the highest price at which all 100 shares may be sold, to the potential investors who have submitted valid bids. The two potential investors with the highest offers to purchase would receive all the shares they requested, totaling 40 shares. The next two potential investors would receive the remaining 60 shares in proportion to the amounts they asked for or 36 and 24 shares each. The potential investor with the lowest offer to purchase would receive no shares in this example. [0413] Valid indications of interest and offers to purchase are those that meet the requirements, including eligibility, account status and size, established by the underwriters or participating dealers. In determining the validity of offers to purchase, in addition to minimum account balances, a prospective investor submitting an indication of interest or offer to purchase through Underwriter No. 1, brokerage account may be required to have an account balance equal to or in excess of the aggregate dollar amount of the prospective investor's offer to purchase. Although funds may be required to be in an account as a condition to the offer to purchase being considered valid, the funds will not be transferred to the underwriters until the closing of the offering. Conditions for valid indications of interest and offers to purchase, including eligibility standards and account funding requirements, of other underwriters or participating dealers may vary. The offered shares will be purchased from Issuer by the underwriters and sold through the underwriters and participating dealers to investors who have submitted offers to purchase at or in excess of the clearing price. The number of shares sold to an investor submitting an offer to purchase precisely at the clearing price may be subject to a pro rata reduction. Each participating dealer has agreed with the underwriters to sell shares they purchase from the underwriters in this manner, unless otherwise consented to by the underwriters. Shares issued upon exercise of the underwriters' over-allotment option will be allocated in the same manner. The underwriters reserve the right to reject bids that they deem manipulative, disruptive or which they deem necessary or beneficial to facilitate the orderly completion of the offering, and reserve the right, in exceptional circumstances, to alter this method of allocation as they deem necessary to effect a fair and orderly distribution of the shares. For example, large orders may be reduced to insure a public distribution and indications of interest or offers to purchase may be rejected by the underwriters or participating dealers based on eligibility or creditworthiness criteria [0414] Price and volume volatility in the market for Issuer's common stock may result from the somewhat unique nature of the proposed plan of distribution. Price and volume volatility in the market for Issuers' common stock after the completion of this offering may adversely affect the market price of Issuer3 s common stock. Issuer has granted to the underwriters an option, exercisable no later than 30 days after the date of this prospectus, to purchase up to an aggregate of 375,000 additional shares of common stock at the offering price, less the underwriting discount, set forth on the cover page of this prospectus. To the extent that the underwriters exercise this option, the underwrites will have a firm commitment to purchase the additional shares, and Issuer will be obligated to sell the additional shares to the underwriters. The underwriters may exercise the option only to cover over-allotments made in connection with the sale of shares offered. The underwriting agreement provides that Issuer will indemnify the underwriters against specified liabilities, including liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make. Issuer has agreed not to offer, sell contract to sell, or otherwise dispose of any shares of common stock, or any options or warrants to purchase common stock other than the shares of common stock or options to acquire common stock issued under Issuers' 1995 stock option plan, employee stock purchase plan or upon the conversion of outstanding warrants, for a period of 90 days after the date of this prospectus, except with the prior written consent of Underwriter No. 1. Prior to the offering, there has been no public market for Issuers' common stock. The initial public offering price for the common stock will be determined by the process described above and does not. BRIEF DESCRIPTION OF THE DRAWINGS [0004]FIG. 1 is an illustrative system level diagram of a transaction server in accordance with a presently preferred embodiment of the invention. [0005]FIG. 2 is a pictorial of the process of opening a brokerage account in accordance with a presently preferred embodiment of the invention. [0006]FIG. 3 is a pictorial illustration of the process of setting up a �deal� for the underwriting of securities in accordance with a presently preferred embodiment of the invention. [0007]FIG. 4 is a pictorial illustration of the process of closing a �deal� for the underwriting of securities in accordance with a presently preferred embodiment of the invention. [0008]FIG. 5 is a pictorial illustration of the process of post-execution clean-up after a �deal� has been completed in accordance with a presently preferred embodiment of the invention. [0009]FIG. 6 is an illustrative drawing of tables that define the database schema on the transaction server of FIG. 1. [0010]FIG. 7 is an illustrative architecture level drawing of the Auction Server of FIG. 1. [0011]FIG. 8 is a generalized block diagram of a physical network that implements auction system FIG. 1. [0012]FIG. 9 is an illustrative flow diagram of the process of creating, modifying or cancelling an auction transaction using the auction server database schema. [0013]FIG. 10 is an illustrative flow diagram of the process of closing and executing an auction transaction using the Auction Server database schema. [0014]FIG. 11 is an illustrative flow diagram of the process of creating, modifying and cancelling bids in ,a bid table using the auction server database schema. [0015]FIG. 12 is an illustrative flow diagram of possible User interaction with a transaction server and auction server of a present embodiment. [0016]FIG. 13 is an illustrative flow diagram of an order settlement process in accordance with a present embodiment of the invention. [0017]FIG. 14 is an illustrative flow diagram of a pricing and allocation algorithm in accordance with a presently preferred embodiment of the invention.
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