Patent Awarded for "Ticker Tape" Identifying Risks in Bond Markets

A Connecticut intellectual property development firm said it had received a patent for a data processing system that measures risks in bond markets and acts as a "ticker tape" for prices and values of loans, lines of credit, insurance and reinsurance.

Marketcore said it received patent 7,742,966 from the United States Patent and Trademark Office on June 22 for its creation of an "Efficient Market for Financial Products."

In its system, the Westport, CT, company maps out a process whereby details on lending standards, loan performance and subsequent transactions between parties in loans are pulled in from lenders, loan seekers, application processors, loan processors, loan pool traders and statistics subscribers by telephone and data networks.

Participants are incented to include their statistics in the pool of data via Transaction Credits, which they earn for the amount of business they enter into the system. Those credits can be applied against fees they pay for closing or selling loans or insurance contracts.

Participants also get discounts on the statistics they use from the data that is aggregated about all loans or other products tracked in the system. The discounts increase as the amount of transactions they put into the system increases.

Marketcore is run by a husband and wife team, Michael and Constance Erlanger of Westport, CT. The previously were partners in an institutional whole loan brokerage known as IPEX, LLC. IPEX handled orders as large as $10 billion across 60 different types of securities, according to the Erlangers.

The 2010 patent is the second of two patents received by Marketcore, for creating efficient online exchanges of financial products.

In 2003, the company was awarded a patent for a "Data Processing System for Providing and Efficient Market for Insurance and Reinsurance."

In January, LexisNexis Risk Solutions said it would license Marketcore's intellectual property for use in the creation of an insurance exchange that it was forming in conjunction with the Council of Insurance Agents & Brokers.

Tuesday, FTEN, a New York-based financial technology firm, was awarded a patent for a marketwide risk management system centered on equities transactions.

Erlanger said Marketcore's system would provide regulators with the details on lending standards, loan performance and emerging "toxic" market conditions that would allow them to see risks in bond markets build up in close to real time.

The system also could be used by lenders to structure new products and evaluate risks, before launching them, and monitor them, once launched. The system also would be used to provide an ongoing "ticker tape" that identified prices, values and risks associated with individual loans or pools of loans, as they were bought and sold.

The company first applied for its patents in 1998 and 1999, Erlanger said. The networks and storage capacity that would allow the system to work efficiently and at reasonable cost did not exist at that time, he said.

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