Securities brokerage-cash management system with short term investment proceeds allotted among multiple accounts4774663Abstract Data processing for an improved securities brokerage-cash management system supervises, implements and coordinates a margin securities brokerage account; participation in one or more short term investments; and subscriber unilaterally initiated use of charge, debit or checking instruments. Subscriber expenditures, effected as by charge card use, check and/or cash advance are applied on a hierarchal basis, seriatim, against the subscriber's free credit balance, short term investment and the lendable equity in his securities account. On a periodic basis, e.g., daily, received card charges, check, securities and deposit transactions for the ensemble of account participants are verified and employed to compute an updated credit limit for each subscriber. In accordance with one aspect of the present invention, the short term investments available to subscribers include an ordered ensemble of insured savings accounts. Claims What is claimed is: Description DISCLOSURE OF THE INVENTION
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Input Variables
SMA Special and miscellaneous value of
the customer's account, reflecting
the customer's borrowing power
based on the securities he holds
in his brokerage account. This is
measured as the then obtaining
percentage of the value of the
customer's brokerage assets as
established by Regulation T of the
Federal Reserve Board. The
presently obtaining value, for
example, is 50% for common stocks.
FME Firm maintenance excess of the
customer's account representing
the customer's borrowing power
based upon the brokerage house
definition of the loan value of
the customer's securities. A
typical presently obtaining value
might be 70% of the security
valuation.
MMKT The value of the customer's short
term investment fund account.
CKS, CRGS, CASHAV,
The value of the checks, charges,
CREDT cash advances, and credits
respectively, reported by the bank
for the interval since the
previous processing.
REGTCL Represents the amount of any
Regulation T call against the
account.
MNTCL The amounts of any maintenance
call against the account.
CASHBL This variable represents the cash
required for transactions in the
customer's securities cash account.
Output Variables
CRDLT As above discussed, this is the
credit limit remaining to the
customer following all processed
transactions.
NLOAN The new or additional loan
increment required for any
customer overdraft.
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With the above variable definitions in mind, attention will now be directed to the processing of FIG. 2. As a first matter, the value of "today's transactions" (a computational variable TTRAS), i.e., the value of all transactions for the customer for the subject processing day, is computed as the algebraic sum of the checks (CKS), charges (CRGS), cash advances (CASHAV) and credits (CREDTS). A didactic fortran-type statement is TTRAS=CKS+CRGS+CASHAV+CREDTS (1) Test 81 first determines whether either of the special and miscellaneous or firm maintenance excess values for the subscriber (SMA OR FME variables) is equal to zero which would indicate that no customer borrowing power remains in the subscriber's brokerage account, applying the more rigorous of the two standards. Assuming test 81 fails ("N.0." branch) thus signalling that the customer does have remaining borrowing power, test 83 determines whether the Federal Reserve (SMA) or brokerage firm internal (FME) standard is the more stringent and, depending upon the outcome, sets a computational intermediate credit variable CT equal to the lesser of the SMA or FME stored values (steps 88 and 90). A further computational credit limit variable CTR1 is then set equal to the sum of the CT variable (lesser of FME or SMA) plus the sum of the customer's short term investment amount (MMKT), CRT1=CT+MMKT (2) (functional block 92). The processing variable CRT1 is updated (block 96) to be decremented for amounts due in the account for Federal Reserve Regulation T calls (REGTCL), maintenance calls (MNTCL), the amounts expended in the day's transactions (TTRAS) and the cash balance (CASHBL) due for cash account processing. CRT1=CRT1-[REGTCL+MNTCL+TTRAS+CASHBL] (3) The variable CRT1 following processing 96 represents a provisional credit limit for the subscriber subject to further processing below discussed. The above described functioning followed when test 81 noted positive lendable proceeds remaining in the subscriber's brokerage account ("N.0." output of test 81). Assuming there to be no such lendable amount--i.e., where the subscriber has no marginable securities or where they are already fully margined ("YES" output of test 81), test 85 then determines whether customer money market (MMKT) value is greater than zero, i.e., that the customer has a long short term investment position although he has no marginable securities. Assuming this to be the case, test 98 determines whether funds are required of the account to satisfy Regulation T calls, expenditure transactions or the like. If so ("YES" output of test 98), the provisional computation variable for the customer CRT1 is set equal to his money market balance less the amount needed to satisfy fund requirements in a manner analogous to that given above with respect to statement (3), as by: CRT1=MMKT-[REGTCL+MNTCL+TTRAS+CASHBL] (4) (functional block 105). The provisional credit variable CRT1 as defined at the output of functional block 96 or 105 is supplied to test 110 to assure that the provisional variable CRT1 is positive. If it is ("YES" output of test 110), the customer credit limit variable CRDLT is set equal to CRT1 (114) thus completing execution of the FIG. 2 processing. If the provisional credit variable CRT1 is not greater than zero ("N.0." output of test 110)--as by debit transactions exceeding the money market and borrowing power of the customer's securities the credit limit variable for the customer is set equal to zero (block 112). Functional block 116 next determines whether or not the customer's transactions TTRAS exceed the absolute value of the provisional credit limit CRT1 and functional blocks 118 and 121 generate a new loan amount NLOAN as the lesser in absolute value of the transactions (118) or provisional credit limit (121). This, again, completes processing for the customer with zero value in CRDLT, an appropriate new loan amount NLOAN being generated. Continuing with respect to FIG. 2 processing, if the customer has no borrowing power in his securities account ("YES" output of test 81) and has no short term investment value ("N.0." output of test 85), and if he has generated transactions (TTRAS) by using his charge card or checks notwithstanding the absence of anything to support such transactions ("YES" output of test 87), a new loan is established equal to his transactions (step 100), his credit limit is set equal to zero (102), and an exit is made from FIG. 2 processing. As a final mode of FIG. 2 processing, if the customer has a positive money market balance ("YES" exit from test 85), and has no current cash requirements ("N.0." output of test 98), his credit limit is set equal to his money market balance (functional block 103) and exit is made from FIG. 2 processing. Thus, the above described operation of the FIG. 2 credit limit and overdraft processing (functional blocks 26, 31 and 33 in FIG. 1) computes the credit limit CRDLT(I) for each of the system's customers, i.e., the amount remaining to that customer for use by his charge card, checks and cash advances. Also computed by such processing is the incremented loan value NLOAN(I) to be added to the customer's overdraft. Referring now to FIG. 3 there is shown a detailed flow chart which executes the updated short term investment position functioning operation 45 of FIG. 1, i.e., determines whether or not short term investments should be increased or decreased and, if so, by what total amount. Such processing involves as variables:
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Input Variables
ACBAL The available free cash balance of
the customer's brokerage account
for such as dividends, interest,
deposits and so forth.
TOMSET The amount of securities trades
settling the next business day.
DEPYT The customer's deposits during the
period, assumed to be one day,
being processed.
IMSTL Immediate securities settlement
items (for example, security
redemptions).
CKS, CRGS, CASHAV,
The value of the checks, charges,
CRDTS cash advances, and credits
respectively, reported by the bank
for the interval since the
previous processing.
MANBY The amount of manually entered
short term investment buys.
SHTSLM Short sales in the customer's
margin account.
SHTSLC Short sales in the cash account
against securities held by a
customer and overdue.
Output Variables
BUY/SL Decision to buy or to sell short
term investments.
AMT Amount of short term position to
be bought or sold.
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Again, it will be appreciated that each of the above variables is actually indexed to reflect each such quantity for each customer. The indexing variable (I) has been deleted for convenience. Referring now to the flow chart of FIG. 3, as a first matter, a processing net present account balance variable ACBAL1 is computed to be the cash balance ACBAL, less funds required to pay for the customer's use of his charge card, checks and the like (TTRA), or to pay amounts due in his brokerage account which are either overdue or which will be settling during the next day (TOMSET), as by ACBAL1=ACBAL-(TTRAS+SHTSLM+SHTSLC+TOMSET) (5) (block 130). In FIG. 3, it is assumed that short term investment purchases will occur only once per week, as on a Friday--and functional block 132 determines whether or not the particular iteration of FIG. 3 processing is taking place at the predetermined, e.g., Friday time. If it is ("YES" output of test 132) and if test 136 confirms that the provisional variable ACBAL1 is positive ("YES" output), processing enters a BUY subroutine. Accordingly, the buy/sell distinguishing output variable BUY/SELL is set to a buy condition (e.g., by loading the variable BUY/SELL with a positive integer--functional block 155), and the amount of short term investment AMT variable is loaded with the provisional sum ACBAL1 (step 157). Correspondingly, if test 136 provides a "N.0." output signalling that the subscriber charges exceed the surplus funds in his securities account, the data processing enters a SELL subroutine to sell sufficient short term investment assets to obviate the difference or cash requirement (assuming such shares to exist). Test 138 determines whether or not the customer has a short term investment position (i.e., whether MMKT exceeds zero). If he does not, his margin loan is increased (139) and FIG. 3 processing exits. Assuming the subscriber does have a positive short term investment (MMKT) balance, step 140 sets the buy/sell BUY/SELL variable to the sell condition (e.g., a stored negative integer). Test 141 then determines whether the account balance provisional variable ACBAL1 exceeds the short term (MMKT) position and, depending upon the results of the test, the amount (AMT) variable of short term funds to be liquidated is set to the lesser of the money market MMKT (step 145) or ACBAL1 variable (step 143) as appropriate. If all his short term position is sold (145), the difference between what the customer needs and his MMKT amount opens a margin loan transaction (144). Turning now to the alternate or "N.0." branch of test 132 (which presumes that the current iteration of processing is not the money market buy/sell assumed Friday date), test 133 first determines whether the net account balance ACBAL1 which reflects subscriber expenditures is positive. If it is not, the "N.0." exit of test 133 enters the SELL subroutine above discussed to sell either all the short term position or a lesser amount if that will suffice to cover the subscriber's expenditures and securities requirements. Assuming ACBAL1 is positive, indicating an excess of cash over requirements in a customer account ("YES" exit of test 133), functional block 135 computes a computational variable ITEMS which is the sum of variables representing yesterday's deposits (DEPYT), securities sales settling tomorrow (TOMSET), and immediate settlement items such as redemptions (IMSET) as by ITEMS=DEPYT+TOMSET+IMSET (6) It is desired that the subject proceeds reflected in ITEMS be invested in a short term account immediately and not await the next investment (assumed Friday) date. If such items ITEMS exceed ACBAL1 (test 149) provides a "YES" output; a processing variable INAT is set equal to zero (step 153) and processing enters the BUY subroutine to purchase the requisite savings account balance or money market shares by setting the BUY/SELL variable to the buy condition (155) and loading the AMT variable with the ACBAL1 value. If the immediately investable ITEMS amounts are less than ACBAL1, ACBAL1 is set equal to ITEMS (step 150), the computational variable INAT is set equal to the difference between the processing variables ACBAL1 and ITEMS by INAT=ACBAL1-ITEMS (7) and the BUY subroutine is entered as above discussed. The foregoing processing is required since two ITEMS constituents DEPYT and IMSET are inherently reflected in ACBAL and therefore in ACBAL1 and must not be twice counted. Finally, functional blocks 158, 159, 160 and 162 accommodate manually entered buy commands. If there is an unprocessed manual buy command as sensed by test 158, test 159 sets the purchase variable ACBAL1 equal to the lesser of INAT (162) or the manual buy (MANBY) (160) and the BUY loop is entered to purchase the appropriate amount (AMT). Once this is done, the next iteration through test 158 will reflect that the manual buy has been processed, at which point the composite processing of FIG. 3 is completed and the "YES" exit of test 158 passes to the exit of FIG. 3. Turning now to FIG. 4, there is shown in more specific detail system functioning for an illustrative one of the bank processing blocks 68(j) discussed in overview above with respect to FIG. 1. To briefly reiterate, it is a principal object of this invention to provide a system arrangement which permits each subscriber to the instant securities brokerage-cash management system to invest his uncommitted monetary assets at his option in money market deposit (MMDA) accounts, i.e., savings accounts at commercial or savings banks, or the like where those short term investments are protected by insurance from federal agencies. As part of the overall processing it is recognized that the F.D.I.C./F.S.L.I.C. will protect a subscriber at any individual bank for deposits up to a maximum amount set from time to time by governmental edict, e.g., $100,000 at present. Moreover, that amount covers the aggregate of all deposits by the specific customer at the particular financial institution, to include certificates of deposit as well as MMDA amounts. Accordingly, processing for the instant invention allots a maximum of $97,500 to any specific institution for all of the customer's deposits, permitting an incremental amount ($2,500 for the assumed strategy) for account growth by way of interest. Moreover, financial institutions are allotted to customers on a hierarchal, ordered basis such that customer deposits fill a first (highest priority) institution up to the allotted $97,500 before opening an account with a second, next highest priority institution and so forth. Alternatively, input apparatus 161, e.g., a manually operated keyboard, can enter a specific desired bank identification. Absent overriding manual instructions, subscribers are allotted to banking institutions in accordance with any useful strategy, e.g., by matching a subscriber with banks in a geographically distant location to reduce the probability of customer certificate of deposit relationships with that institution (thus preserving all or substantially all of the $97,500 for MMDA purposes). Banks in the distant area may be pre-assigned to customers in a fixed, predetermined hierarchy; or may be assigned on a probablistic basis. It will also be appreciated that additional monetary restrictions may be accommodated where possible. Thus, MMDA accounts may be characterized by a $2,500 minimum threshold to earn interest at a money market equivalent rate. It is thus desirable to maintain at least that $2,500 sum in all insured savings accounts for each customer even where one or more of the accounts will have less than the system predetermined upper bound, i.e., less than $97,500 while a second, lower priority institution has $2,500 or so on deposit. Finally, it must be recognized that each bank may have a maximum overall participation for all customers (i.e., can usefully accommodate only a certain amount of short term deposits) subject to the constraint that once accepting a deposit from a customer the institution will permit the customer to fill up his $97,500 allotted amount. Other financial strategies and adaptations will be readily apparent without departing from the scope of the present invention. With the foregoing in mind, data processing variables for FIG. 4 processing include:
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Variables
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BAL(I,J) A doubly indexed variable
representing the balance for the
insured money market deposit
(MMDA) account for the i-th
customer in the j-th bank or
financial institution.
CD(I,J) The amount, if any, for
certificates of deposit of the
i-th customer at the j-th bank.
AVAIL An intermediate processing
variable representing the amount
of deposits available to a
customer at a bank within the
constraints of not exceeding the
$97,500 amount.
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Referring specifically now to the flow chart of FIG. 4, there is shown an operational flow chart for an illustrative bank processing block 68(J) of FIG. 1 operative in an account opening/increasing mode as when functional block 45 (FIGS. 1 and 3) furnishes an amount AMT to be deposited on behalf of the i-th customer in an insured savings account. Further, a specific (j-th) bank of highest priority for the customer is identified--either by manual input from entry apparatus 161 or automatically on the above-described geographically remote basis. Functional block 162 first determines whether or not the illustrative j-th bank is at or exceeds its maximum, i.e., has all the short term deposits which it desires to receive. If the upper bound is attained or exceeded ("YES" output of test 162), a test 165 determines whether the present balance for the i-th customer (BAL(I,J)) is greater than zero, i.e., determines whether the i-th customer already has an opened account with a non-zero balance at the institution. If not ("N.0." output of test 165), processing flows to the bank next in order (block 68 (j+1) for the j+1st bank) to accommodate the deposit requirements for the i-th customer. However, for the usual case where the subject j-th bank is not at maximum ("N.0." output of test 162), or where the customer already has a balance at the bank ("YES" output of test 165), processing continues within the context of block 68(J). The next sequence of processing operations 168, 170, 173 and 176 are utilized to assure that a deposit is not made in an institution below the minimum (assumed $2,500) threshold. Test 168 determines directly whether or not the sum of the customer's existing balance (BAL(I,J)) together with the amount to be deposited (AMT) is less than $2,500. If it is not ("N.0." output of test 168) there is no difficulty with the minimum MMDA threshold and processing skips to test 180 below discussed. However, if there is a threshold problem ("YES" output of test 168), $2,500 is borrowed from the customer's next most senior MMDA account institution (the J-1 bank), as by BAL(I,J-1)=BAL(I,J-1)-2500 (8) The result of this transaction is communicated to the subject J-1 bank (block 173) and the amount to be deposited (AMT) is increased by $2,500, AMT=AMT+2500 (9) (functional block 176). Test 180 next determines whether the sum of the amount to be deposited (AMT), the customer's existing MMDA balance (BAL (I,J)) and the certificates of deposit by the customer at that institution (CD(I,J)) exceeds the allotted upper bound, as by program branching depending upon the inequality AMT+BAL(I,J)+CD(I,J) 97,500 (10) (block 184). If they do not ("N,.0." output of test 180), the entire amount to be deposited (AMT) may be deposited in the j-th bank for the i-th customer and this may be effected by BAL(I,J)=BAL(I,J)+AMT (11) An appropriate report is issued to the j-th bank to implement the deposit (block 186) at which point processing returns to block 60 of FIG. 1 above discussed. If test 180 determines that the full amount to be deposited (AMT) would overflow the insured predetermined limit for the j-th bank ("YES" output of test 180), processing passes to block 181 to determine that partial amount (AVAIL), if any, of the total amount (AMT) which may be deposited in the j-th institution, i.e., the amount by which the total of the customer's balance (BAL(I,J)) and certificates of deposit (CD(I,J)) do not exceed the limit as by AVAIL=97500-BAL(I,J)-CD(I,J) (12) If the available amount (AVAIL) is zero or negative ("N.0." output of test 190), none of the amount to be deposited (AMT) will be accommodated at the j-th bank and processing passes to the j+1 bank to seek investment there. Assuming, however, that AVAIL is positive ("YES" output of test 190), functional block 192 increases the balance at the j-th bank up to the $97,500 limit, as by BAL(I,J)=BAL(I,J)+AVAIL (13) and block 194 decreases the amount (AMT) to be deposited by the funds (AVAIL) taken by the j-th bank, AMT=AMT-AVAIL (14) A report is rendered of the funds (AVAIL) deposited in the j-th bank (block 196) and processing passes to the sequence of operations 68 (J+1) to process the modified amount AMT resulting from step 194. Thus, the bank processing 68 illustrated for the j-th bank in FIG. 4 may identically recur on a bank by bank basis until the entire amount has been invested or the sequence of banks exhausted (at which point other contingent money market trusts may absorb the remainder). Alternatively, the last bank in the hierarchy being the least most probable for the i-th customer, may simply agree to accept all deposits. While the processing above described has focused on the acceptance of deposits, withdrawals occur in a directly analogous manner, liquidating funds seriatim from the bank having the lowest order priority for the customer up through the highest order until all funds required to satisfy charges have been liquidated. If desired, functioning paralleling blocks 168, 170, 173 and 176 may be utilized to maintain a minimum deposit (e.g., $2,500) at each institution. The above described composite arrangement has thus been shown to provide an improved securities brokerage/cash management system which supervises and integrates a brokerage account, a charge card, checking, and one or more short term investments which include insured savings accounts, providing great flexibility for the account subscriber, while providing insured earned income for funds not invested or required to satisfy expenditures. The above described arrangement is merely illustrative of the principles of the present invention. Numerous modifications and adaptations thereof will be readily apparent to those skilled in the art without departing from the spirit and scope of the present invention.
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