NZ574208A - Improved method and system for transacting commodities - Google Patents

Abstract

A method of conducting an electronic transaction for commodities in return for consideration and an electronic transaction system are disclosed. The system comprises transactor accounts for holding one or more of considerations, transaction funds, and commodities; communication access for transactors to participate in a transaction process and manage their accounts; a funds verifier configured to verify that a prospective purchaser in a transaction has sufficient consideration in one of the transactor accounts to match a purchase offer or to complete the transaction the consideration being held within an account of said prospective purchaser; and a locking device configured to lock against further use of the consideration so that the consideration remains available to complete the transaction while a valid transaction is in place

Description

WO 2007/148995 PCT/NZ2007/000162 IMPROVED METHOD & SYSTEM FOR TRANSACTING COMMODITIES FIELD OF INVENTION The present invention is directed to an improved method for electronic transaction of commodities, allowing for the more secure transaction of funds and commodities in 5 straight purchase and auction type scenarios.

BACKGROUND DESCRIPTION Electronic transactions are increasingly common for transacting purchases for various types of commodities. Shares and currencies have long been traded electronically, though typically between parties who meet a certain level of trading reputation - i.e. 10 often the transactors are known to each other and have a certain level of trust.

In situations where the transactors may be new, or have minimal trading history, security measures will often be imposed. Various limits may be imposed on initial transactions, or comprehensive data collected about the transactor. The extent of this control or background check will tend to reflect the value and nature of the transactions. 15 However, such methods do not directly affect the security of performing a transaction with a new transactor. Despite such checks, attempts at dishonesty or fraud may occur, particularly by purchases made without sufficient funds to cover the agreed purchase price. Hence, current methods only indirectly, and partially, address problems associated with dishonesty or complications arising from inexperienced new transactors.

At a different level, on-line auctions are increasing popular - some common examples including E-bay (www.ebay.com) and NZ's TradeMe (www.trademe.co.nz). These types of systems tend to have a registration system, which may be tiered according to a system where additional privileges or recommendations (to other traders) may be made on the basis of the tier you are in. Tiering may be based on trading history, other trader 25 feedback, the amount of details supplied, or address confirmation (e.g. mailing back a confirmation letter posted by mail to the physical address provided by the registrant). Details about the tier which the registered transactor has achieved may be posted on the auction site, along with details of feedback from other transactors. The onus is very much on other transactors to review this information before deciding to do business.

A common problem which can still occur is failed transactions. This is commonly from dishonoured bids, which can be frustrating to both the seller, and other prospective purchasers. There is also a possibility that some dishonoured bids may be from other traders acquainted with the seller, trying to raise the total price on the seller's behalf. 5 Either way, dishonoured bids tend to affect the integrity of the system.

Some high profile auctions can attract genuine high value bids. However a significant number of bogus bids can also be placed. Such bogus bids require manual identification and deletion by staff at the auction site, which is quite time consuming and only able to deal with obvious bogus bids. Hence, bids which are not intended to be honoured, can 10 impact on the efficiency and reputation of sites conducting electronic transactions.

Many transactions are for tangible commodities, or for less tangible assets based on physical assets (e.g. shares in companies, currency, etc.). For this reason, transactions of intangibles are focused almost exclusively within the world of commerce, while the average person's only experience of electronic trading are through auction sites for 15 tangible articles and products.

It would be helpful to address the need for the trading of different types of intangibles through auction and trading sites. Examples are interests in other areas such as sporting, in events, quite possibly also in conjunction with electronic betting, with which it is likely to be complementary.

It is therefore one object of the present invention to provide an improved electronic transaction method which addresses the problem of dishonoured bids or offers.

It is another object of the present invention to introduce the effective trading of commodities, including intangible commodities, in relation to sports or events.

At the very least it is an object of the present invention to provide the public with a 25 useful choice.

Aspects of the present invention will be described by way of example only and with reference to the ensuing description.

SUMMARY OF THE INVENTION PCT/NZ2007/00016; Received 18 July 200? According to one aspect of the present invention there is provided a method for conducting an electronic transaction for commodities in return for consideration, the method comprising: verifying that the prospective purchaser in the transaction has sufficient consideration to match a purchase offer or to complete the transaction, the consideration being held within an account of said prospective purchaser, and locking against further use of the consideration so that the consideration remains available to complete the transaction while a valid transaction process is in place.

The term "comprising" as used in this specification means "consisting at least in part of'. When interpreting each statement in this specification that includes the term "comprising" features other than that or those prefaced by the term may also be present. Related terms such as "comprise" and "comprises" are to be interpreted in the same manner.

According to a further aspect of the present invention there is provided an electronic transaction system comprising: transactor accounts for holding one or more of considerations, transaction funds, and commodities; communication access for transactors to participate in a transaction process and manage their accounts; a funds verifier configured to verify that a prospective purchaser in a transaction has sufficient consideration in one of the transactor accounts to match a purchase offer or to complete the transaction, the consideration being held within an account of said prospective purchaser; and a locking device configured to lock against further use of the consideration so that the consideration remains available to complete the transaction while a valid transaction is in place.

According to a further aspect there is provided a method of trading commodities comprising: creating tradable shares and entitlements in a tradable interest; allowing the purchase of said shares and entitlements in return for a consideration; creating owner accounts in which traders may hold purchased shares and entitlements; 101504.14 Amended Sheet IPEA/AU PCT/NZ2007/000162 Received 18 July 2008 managing owner accounts to hold funds for the sale and purchase of said shares; verifying the prospective purchaser in a transaction has sufficient consideration to match a purchase offer or to complete the transaction, the consideration being held within an account of said prospective purchaser; and locking against further use of the consideration so that the consideration remains available to complete the transaction while a valid transaction process is in place.

For the purpose of this specification, several terms will be defined as follows: An 'Account' such as used for holding consideration shall typically be owned or accessible by a transactor and shall hold funds or entitlement to consideration (as herein defined). Typically the term account shall be construed in the normal context of banking accounts though may hold considerations other than just monetary funds.

'Auction' shall refer to a transaction process where a commodity is offered to more than one possible purchaser, and the purchaser chosen based on one or more criteria. Criteria may be based the highest price offered, but need not be so based.

'Commodity' shall refer to anything for whom title of possession may be transferred. It includes both tangibles and intangibles. It may, for example, include items such as: real property, shares, stocks, bonds, information, bearer entitlements, bets, precious metals, memorabilia, etc.

'Computer system' shall refer to one or more computers, which may be networked, which network may comprise a wide area network, and which may include access to different communication technologies, particularly for involvement of transactors.

'Consideration' shall include any tradable item or currency of value. Typical types of consideration, within the present invention, can include: funds and currencies, shares, and tradable commodities, 'Electronic trading' shall mean a form of trading conducted primarily over an electronic or telecommunications interface, system, or network. This may include, but not be 1015CWU4 Amended Sheet IPEA/AU restricted to, the internet, WANs and LANs, dedicated communications links, telephone and telecommunication networks (including land line, mobile, or satellite links), telecommunications message services, and such like. It also encompasses manually conducted requests or applications entered into an electronic system or network.

'Intangible' will refer to anything which does not exist in a physical form, except perhaps as a certificate of title, ownership, or right. Shares are one such example.

'Real Monetary Currency' shall mean a recognised currency of a nation or region of the world.

'Share' can be construed broadly to denote a part entitlement to a commodity, and can 10 include 'stocks' and 'shares' in the traditional sense.

'Tangible' will refer to anything which exists in a physical form.

'Transaction Agent' shall refer to a party or entity overseeing or conducting a transaction process on behalf of others.

'Transaction Commission' shall refer to a commission taken by the transaction agent for 15 services in relation to a transaction process or related services.

'Transaction Funds' shall refer to currency or funds of a monetary value for use in paying services relating to a transaction process.

'Transaction Process' shall refer to the process of conducting a transaction. The transaction process shall not be completed until a transaction is legally finalised. In the 20 case of an auction, for instance, the transaction process shall continue throughout the bidding process and shall not end until at least the auction has been won and confirmed. The transaction process may be deemed in most cases to begin when a first offer for purchase has been made on a commodity, though in some instances the transaction process may be considered to begin earlier - such as when a commodity is first offered 25 for sale.

'Transaction' shall refer to anything where ownership is to be traded for some form of consideration.

WO 2007/148995 PCT/NZ2007/000162 ' Transactor' shall refer to someone involved in a transaction process, and will typically include parties such as 'bidder', 'seller', 'purchaser'.

BRIEF DESCRIPTION OF DRAWINGS Different aspects of the invention will be described with reference to the accompanying 5 drawings in which: Figure 1 is a schematic chart of a preferred embodiment showing initial public offering of shares; Figure 2 is a flowchart of a preferred embodiment of a share request process; Figure 3 shows a preferred form flowchart for trading in shares; Figure 4 shows a preferred form flowchart for trading in shares with funds lockdown; Figure 5 shows a preferred form user interface by which account holders interact with trading facility accounts; Figures 6 & 7 show a preferred form user interface enabling share request; Figure 8 & 9 show a preferred form user interface enabling funds payment; Figure 10 shows a preferred form user interface displaying a share request; Figure 11 shows additional share requests by the user; Figures 12, 13 and 14 show a preferred form user interface for sale by auction; Figure 15 shows a preferred form share sale method; Figure 16 shows a preferred form method including share lockdown; and Figures 17, 18 and 19 shows further flowcharts of preferred form methods of the invention.

Detailed Description of Preferred Forms In one aspect of the invention, focus is made on people's interests and hobbies. In particular, this will be sports, though need not be restricted to this possibility. However, for simplicity of description in describing this portion of the invention, the sporting arena is used as an example.

Most people have an interest in one or more sports, in some cases the interest being a consuming passion. However, most involvement tends to be restricted to attending or watching events, purchasing merchandising material, betting, buying books and media on the subject, and perhaps buying collectibles. However, very few have an opportunity to actual be part of, participate, or have an interest in their sport or team of passion.

In this aspect, commodities comprising interests in sports heroes, teams, or sports or interest are created and able to be bought or traded. These commodities may be created by legal means, perhaps be creating a company or corporation around an entity such as a team, sportsperson, racing animal, racing vehicle, an event, and so forth. Rather than traditional sponsorship, associated with naming rights, this enables individuals and entities to acquire and trade interests, with or without any benefits such as naming rights (some rights or benefits may be acquired depending on the degree or value of interest you have acquired). For many individuals, acquiring an investment which will increase in value is of less importance than contributing to their favourite team (etc.), and the present system intends to cater for this need.

Figure 1 shows a preferred form initial public offering of shares. After incorporation, the system uses an on-line request process to offer shares to the public. Funds are raised on a best efforts basis and in the event that a share offer is not fully subscribed, all funds in the IPO trust account are returned to registered users of the site.

Trading system 100 includes a trading facility processor 110. Processor 110 includes 25 suitable processing software implemented on a computing device. Individual traders hold a trading facility account 120 and make a request for shares using a requesting device 130. Requesting device includes a credit card payment gateway, a user bank account payment gateway, cheque or telephone. The system further includes an IPO trustee account 140 a share offering 150, and a share registry 160.

It is envisaged that trading facility account holders are informed of share offerings prior to members of the public. Account holders then request a parcel of shares.. It is expected that there is a minimum number of shares or block size that can be requested by such account holders. Account holders must view an investment statement prior to 5 making a request and must further have access to a prospectus. It is expected that there be a fixed number of shares made available to trading facility account holders.

In one embodiment account holders are not charged a commission for shares requested. The commissions are instead paid by share offering 150.

Shares are typically distributed first to account holders then members of the public on a 10 first come first served basis. The processor 110 tallies the number of shares requested at any given point in time. A share offer is considered over subscribed if at the time the offer is closed, the total number of shares requested is greater than the number of shares on offer. In this event all share requests that fall outside of the number of shares available are flagged as unsuccessful by the system.

Trading facility account holders are able to change or cancel their share request prior to the share offer close date. After the offer close date requests cannot be withdrawn. Additional shares requested by trading facility account holders are treated as a new request by the system and are placed in the system request queue accordingly. Decreases in the number of shares requested or share requests cancelled by trading 20 facility account holders move outstanding requests immediately below the decreased or cancelled request up the system queue.

Trading facility account holders are informed by electronic means such as email as to the status of their share request at the share offer close date. System 100 is funded by taking a percentage of the funds raised.

Figure 2 shows a preferred form flow chart of the share request process. As indicated at 200 the account holder first places an initial request. The request is queued 210. Most items in the queue will be requests placed by other account holders. The system may include a security portion to deal with dishonoured purchase offers. The security portion is further described below.

Once the offer is closed 220 and payment cleared 230, shares are transferred to the account holder 240. If payment has not been cleared the account holder is notified that share request is unsuccessful 250.

Before the offer closes the processor accepts change requests 255.

If the change request decreases the number of shares 260 then the decreased share request retains its place in the queue 265 and a refund is made of the cash balance 270.

Alternatively if an increase is request 275 then additional shares are requested and treated as a new request 280.

The change request can also be cancelled by the account holder 285.

One scenario is, that by creating a legal entity, shares may be created for sale to traders in the system. Such shares may be used to gather revenue, as well as creating a tradable commodity for traders. This can be used also to reduce the reliance on sponsorship funding for many sportspeople, and teams, providing another source of revenue generation.

Following the initial share offering it is intended that shares are bought and sold amongst trading facility account holders. There are preferably two different methods of trading in such shares. The first method is an auction facility. The second method is a traditional exchange facility.

By way of example, a Formula One racing driving may have just signed to that the 20 Formula One from GP2. This is good news for the driver. If a person had brought shares in that driver at the initial offering price of say US$1 there will now be buyers that are prepared to pay US$2 for those shares. The share holder may decide to use this opportunity to sell the shares and make a capital gain. Another trading facility account holder may want to buy these shares because they believe the driver will have a big 25 future in motor sport, perhaps with the potential to eventually sign with the top F1 team. As the career of the driver further develops, so will the share price of the related shares.

Figure 3 shows a preferred form process for trading in the above shares with an option process. As shown in Figure 3, a seller 300 lists the seller's shares for sale on-line, thereby creating an auction listing 305. Sellers attract bids through other users. Sellers can list the shares at auction either with or without a reserve. If a reserve or minimum sale price is reached by the close of the auction, the shares are transferred to the highest bidder.

Once the auction listing is created, the system first checks to make sure there are sufficient shares in the seller's account 310. This checking forms part of a security portion that is further described below. If there are sufficient shares, the shares are locked 315 so that they are not available for other trades. The locking process is further described below.

If the listing has a buy now facility and this facility is triggered by a purchaser 320, then a sale is concluded 325 in which shares are transferred to the buyer for the sale price less the fees deposited with the seller.

If the buy now is not triggered and the reserve is met at the close of the auction 330 then a sale 325 is also concluded. On the other hand if the reserve is not met then there is no 15 sale 335. This means that the seller's shares are unlocked and made available for other trades.

A further method of trading shares is by using a traditional exchange facility. This is similar to a regular stock exchange. Users bid for shares that have been offered for sale by other account holders in a manner similar to trading on a stock exchange like the 20 NZX, NYSE or Nasdaq using an online broker.

In most cases it will be a method of user preference whether to use an auction or a trading facility option. Some people may prefer the Auction process to trade existing shares while others may prefer to use the traditional exchange facility.

For many people, the auction process generates excitement and is perhaps simpler to 25 understand. On the other hand, there are slightly lower fees associated with using the Trading Facility. In addition, they may wish to buy shares that are not currently available for sale by auction. In this situation, by placing a bid for the shares on the Trading Facility, even if no sellers currently exist, they may tempt a potential seller to make a sale.

Another advantage to using the Auction process, is that, in some cases, there may be quite a large difference between the price that people are prepared to pay for a block of shares and the price that the seller wants. This may mean the shares are unable to be sold quickly on the Trading Facility, the market is "thin" and the shares just sit there 5 with little chance of a sale being made. Once again, in this situation, a seller may prefer to list their shares for sale by Auction.

The system is quite flexible. For instance, a sports entity may create shares based around a person, a team, an event, a vehicle to be raced, or for a particular purpose. For instance, in Formula One Racing, shares may be issued to generate revenue for a 10 particular driver to buy a drive in a particular race - allowing that driver to be able to compete. For amateur sports entities, revenue may be generated to cover travel costs to an event. There are a wide range of possibilities, the appeal to a prospective trader being that they are assisting their chosen sports entity.

Tradable commodities need not be restricted to shares, and may include other 15 commodities such as merchandised goods, rights and benefits, and so forth. Rights and benefits may also be provided to owners of certain commodities such as shares (though there may be a minimum ownership level, or levels of benefits). These may include benefits otherwise unattainable. Some possible benefits may include: commentaries by coaches or trainers (particularly of use in sports for which betting is allowed (e.g. the 20 horse racing industry), commentaries by the sportspersons, vouchers and reduced rates for attending events, reduced rates of merchandised products, products exclusive to share holders, etc.

One embodiment includes a security portion, particularly as it may often relate in the context of addressing dishonoured bids or purchase offers. This portion of the invention 25 is relevant to all types of electronic, and semi-electronic trading. It is envisaged that it will be particularly useful for the trading of intangible or readily disposed commodities, such as will often be the case in many embodiments of the present invention.

The security portion primarily comprises analysing a buyer's request for a particular purchase to determine whether they have sufficient funds to make the purchase offer 30 and complete the transaction if accepted. Preferably the buyer will have at least one account in the system, in which trading 'consideration' is or can be held.

Consideration in an account may be converted to a common denominator or currency, particularly for comparative purposes. For instance, say the US$ is the default currency, then accounts loaded with other currencies may have their held commodities converted to US$ for the purpose of trading and performing of the invention - though such 5 conversions may be transparent to the actual user. Where other types of consideration are held, e.g. shares or tradable items, it may be desirable to assign a nominal value (which may, for instance, be the current market value on a predetermined stock exchange or relevant market) in the common default currency so as to enable comparisons between different purchase offers to be more readily made. More than one 10 default currency (or denominator) may be provided. Other denominators may comprise particular types of shares, goods, or be linked against particular commodities (e.g. gold or precious metals, etc.).

The nominal value may determined a number of ways. Where the consideration in question is a commodity which is traded in the system, then the nominal value may be 15 determined based on past trading values of the commodity. Corrections may be made for anomalous transactions (e.g. uncharacteristically high values), which might be artificially created by a trader. For currencies, current exchange rates may be applied. Options exist for service providers conducting currency transactions to be part of the system, or interfaced thereto. Traders could then shop for the best currency exchange 20 deal for converting to other currencies. This may be extended to service providers ; I ' willing to convert certain other tradable commodities into a currency, or to provide a valuation for the purpose of trading. Again a commission may be charged for such services.

Returning to the security portion of the invention, a determination will be made as to 25 whether a prospective buyer has sufficient consideration (which may be based on the value of considerations in the account converted to a common currency) to make the purchase. A limitation may also be placed (either by the system, or the seller) as to the types of consideration to be used for making a particular purchase. If the prospective buyer has insufficient consideration of the right type to make the purchase, the 30 application to buy is declined and the prospective buyer typically informed of the reason - often being invited to introduce more funds or consideration into their account.

In some cases, the seller may be informed, particularly if the prospective buyer is offering consideration of the wrong type, to check whether they might be interested. However, the system may also allow a prospective buyer to make offers outside the normal criteria (which may be listed by the seller) for consideration by the seller. If 5 accepted, then the offer will be converted into a possible transaction, the result being dependent upon whether this is an outright sale, or auction scenario.

An optional additional step is to verify that the seller also possesses the goods they have offered for sale. Where these are types of commodities which can be readily held in an account (particularly shares, currency, rights, and many intangibles), then the system 10 can verify that the actual commodities are available for sale. If they do not exist in the account of the seller (this may also be a different type of account purely or predominantly for the selling of commodities) then the ability to list the sale in the system may be refused.

For commodities which are tangible and unable to be easily held in an account, then 15 additional steps may need to be performed by the seller. The system may interrogate them about the items, or even require them to communicate with a third party which can verify at least one of: the existence of the goods, the quality or order of the goods, the true ownership of the goods and/or a valuation. Such verification, which may be in the form of a certificate or title, may be required by the system before such commodities are 20 listed in the system. In the absence of such evidence (which may be required for all commodities or perhaps just those meeting certain criteria - e.g. to be listed above a certain price, or being of a particular type) any request for listing a sale may be refused by the system.

After preliminary checks are made then further steps will be taken. If the system 25 determines that the prospective purchaser has sufficient consideration in their account to make the purchase, and that it is a viable offer, then it will lock down the consideration (used to make the transaction) so that it cannot be withdrawn or used for other purchases or trades. This ensures that the funds are available to complete a transaction, and solves the problem of dishonoured bids and offers through non-payment.

One embodiment provides the ability to lock down shares while the trade is in place. This locked down process ensures that buyers are confident that the shares listed for sale are in the seller's account and that the auction can be completed successfully. If the auction closes without reserve being met the shares are unlocked and made available for 5 other trades. Listing and bidding for shares at auction is deemed to be a legally binding contract.

Commodities being sold may be locked down to ensure that they are not sold elsewhere, transferred, or made unavailable for a purchaser. This does not preclude the seller following a set of procedures to unlock commodities by requesting withdrawal of the 10 sale, offer, etc. The system ideally then checks whether such withdrawal is legitimate (particularly if an offer has been made), and informs appropriate parties, etc.

The term 'locked down' in this context merely means that the consideration required for the transaction is not available for use by the prospective buyer or anyone else. This also applies to commodities to be sold, when they are 'locked down'. The consideration 15 and/or commodities may be removed to a separate holding account, or merely electronically ear-marked by the system as not being available.

Typically, the consideration will remain locked down until one or more events occur. These events may differ in different embodiments, or scenarios (e.g. auction vs. fixed price offers, criteria listed by the seller, criteria imposed by the system, etc.). However, i'r" •' the common events may be as follows: the prospective buyer withdraws their application to purchase. In some trading scenarios, this may not be permitted; The seller releases or rejects the buyer's offer. In some trading scenarios, this may not be permitted; - The prospective buyer no longer has the highest bid or offer in an auction scenario. The consideration offered by the highest bidder will then be locked down; - It is found that the transaction will not comply with certain rules or criteria, in which case the offer for purchase will generally be withdrawn. Such rules may be legally based (e.g. currency movement or trading restrictions from, into, or between certain countries; non compliance with licensing restrictions etc.); The transaction is successfully completed, in which case the consideration in generally released for transfer; - The commodities transacted are successfully received by the purchaser, in which case funds may be released.

By this method, it can be ensured that the funds will remain available for any successful transaction to be completed. At that time an exchange of consideration for commodities can occur, or be arranged. The system may include provisions to ensure that tangible 10 commodities are safely received before consideration is released. There is an option for service providers to provide this service, such providers perhaps also taking care of delivery.

As an extension to the invention, additional consideration may be locked down to cover certain charges and fees. This may be on the part of the seller and/or the prospective 15 purchaser, and may cover things such as: transaction agent commissions, taxes, duties, freight and transport. Where the commodities being transacted make it difficult to extract these types of costs, or in the case of the seller, then the transactor(s) may be required to lock down transaction funds. These funds can then be drawn upon to pay the necessary additional costs related to the transaction. These transaction funds may 20 comprise a real monetary currency, or could comprise purchased artificial credits, points, artificial currency etc. These may also be held in another account of the transactors (other than that holding the commodities or consideration involved in a transaction).

In a further embodiment, funds are locked by the system when trades are in progress in 25 addition to the share lockdown outlined above. This alternative embodiment is particularly suitable when integrating the system with third party exchanges or betting facilities. It is also useful where the preferred embodiment of the system is for users to maintain an account with the system itself.

In this configuration of the system, users maintain cash positions in the system that mirror that of that betting facility or system account.

Users hold funds either in third party accounts or in the system. The system maintains and displays a real time record of respective cash balances. The system ensures that 5 sufficient funds are available in third party or system accounts prior to placing a trade or making a request for shares. The system locks funds inclusive of any commissions or fees while a share request is in progress or the user is the current high bidder at auction. Locked down funds are not available for other trades. If a request is cancelled or decreased, the funds are unlocked by the system and made available for other trades. If 10 outbid at auction the funds are unlocked by the system.

Figure 4 shows a preferred form process with funds locked down. As shown in Figure 4, a buyer 400 views an auction description at a website home page for example at 405. At the auction homepage the user views an auction listing 410. The user places a bid 415. The amount of value in the bid is checked against sufficient funds available from 15 the buyer 420. If there are insufficient funds then a check is made to see if the buyer has made a new bid 425. If the buyer has made a new bid then that bid is placed 415 otherwise the buyer returns to the auction listing 410.

If the buyer has sufficient funds then the amount of the bid is checked against a minimum bid 425. If the amount is greater than or equal to a minimum bid then bid 20 confirmation 430 is sought. If the bid is not confirmed then the user is returned to the auction listing 410.

If the bid is confirmed then funds are locked down 435.

If the bid is not the current highest bid 440 then the funds are released 445. Alternatively if the bid is the current highest bid, the reserve is met 445, and auction is 25 closed 450 then that buyer is the winner of the auction 455 and shares are transferred to the buyer and the buyer commission is deducted 460.

If the reserve has not been met then the system checks 425 for a new bid.

If the auction has not yet closed then the bids are rechecked 440 to find the highest bid.

If a user is the current bidder in an auction, the funds required to complete the trade, inclusive of commissions and fees, are locked down by the system and not available for other trades.

Figure 5 shows a preferred form user interface by which account holders interact with 5 trading facility accounts. As shown in the figure, no shares are currently owned and no funds are currently assigned to initial offers.

As shown in Figure 6, a user selects an initial share offering by selecting a share symbol for that offering. One method of selecting a share symbol is to click on that symbol using a pointing and selecting device for example a mouse. The initial offering shows 10 an offer close date, an offer price, the amount of shares offered and the offer of a prospectus.

As shown in Figure 7 the account holder requests shares for example 1,000 shares in the selected offering. The user is then provided with the option of submitting a request.

As shown in Figure 8, the account holder initiates a payment to the trustee account for 15 that particular share offer. The user is emailed a receipt for the transaction. Funds can be transferred as needed to buy shares.

Figure 9 shows a confirmation provided to the user that funds for the share request have been received and that the request has been queued in the system.

Once the request has been queued, the request is displayed on the open orders page 20 shown in Figure 10.

As described above, account holders are able to change or cancel their request at any time prior to the offer close date. Additional shares requested are treated as an entirely new request and queued accordingly by the system. Figure 11 shows the user requesting an additional 1,200 shares. If additional shares are requested then additional 25 funds are transferred to the trustee account for that particular share offer. If the request is successful, the shares are transferred to the account holder.

Account holders are able to list share holdings for sale by auction. Figure 12 shows a typical listing an account holder prepares. The user selects a symbol and name. The user specifies a block size, a reserve price, a buy now price, a minimum bid increment, an auction close date and optionally a bank account. Once the user has prepared the listing the user submits the listing details.

Once shares are listed for sale they are locked down by the system. Only shares owned 5 that are not flagged as locked down by the system can be sold. Figure 13 shows a pending trade in which shares are listed as locked down.

As shown Figure 14, once the option closes the buyer submits payment for the shares and the net proceeds are transferred to the seller's bank account.

For successful transactions, the appropriate exchanges are made - where possible by 10 transfers between accounts in the system. Where tangible commodities exist, there may be some reliance on third party providers.

Commissions can be taken as appropriate. This may be at the time of transaction completion. There may be a listing fee for listing a sales offer. Additional fees may be charged or collected on behalf of third party providers. Currency exchange may be 15 recalculated at the time of transaction completion and appropriate commissions deducted where appropriate. As can be appreciated, various fees and commissions may be extracted at various stages of the process.

... At the completion of a successful transaction the consideration can be transferred as appropriate. Where appropriate it may be a simple transfer from the purchaser's 20 account to the seller's account. It may also be, for example, transfer to an escrow account, an account of an agent of the seller, a nominated different account of the seller, and/or a temporary holding pending transfer to the seller or a nominated agent thereof.

The security portion of the present invention may be simply stated (for most cases) as providing for either or both of the securing of consideration used in a transaction offer, 25 and commodities offered for sale in a transaction offer, wherein they cannot be released until the transaction is completed or otherwise fails (e.g. withdrawn, rejected, etc.). While relatively simple in explanation, these steps and options have the potential to address a significant issue - dishonoured bids and transactions - affecting many types of transactions conducted through trading and auction sites.

Mention has been made about certain restrictions which may affect a transaction. These may be trading rules applying to users of the system, through to legal restrictions. For instance, trading rules may prevent certain types of commodities to be exchanged - e.g. offensive, or dangerous goods. These rules may also cover conduct, and attempts at 5 dishonesty. These can also affect a registrant's right to continue to participate and be registered.

At a legal level, certain criteria may prevent certain transactions not permitted across international boundaries. For instance, some countries have restrictions on funds and currencies which may be taken across their borders (physically or electronically), or on 10 what can be sold or exported. Others may have restrictions preventing certain types of technologies from being sold into particular jurisdictions.

Licensing restrictions can be another area. Hence the system may also for licensors to enter licensing restrictions to ensure that certain types of commodities cannot be sold into, or exchanged between, certain jurisdictions. Such a service may be dependent on 15 authorised licensors entering their restrictions, most likely in a particular format. In the extended version of the invention, a significant amount of the commodities likely to be traded may be subjected to licensing, or character merchandising.

As can be appreciated, the security portion can be quite flexible and expandable, and can potentially include (Or may be implemented as a separate module) a variety of 20 checking criteria to govern transactions.

An extended portion of the invention introduces new types of trading and commodities, potentially to a larger interested audience than already participate in on-line or electronic trading. The security portion previously mentioned is an integral part in preferred embodiments, where it can increase the degree of security, trust, and 25 confidence, though lesser preferred embodiments may be absent this feature.

As can be appreciated, the invention as thus far described may take many forms and is quite flexible in how in can be implemented. It is envisaged that such commodities will be best traded and offered electronically. It is open to sports related activities and entities, and may be incorporated with electronic betting systems to afford seamless 30 interaction. Some benefits may be offered to share-holders or members of the trading system, such as being able to use consideration in their account for placing bets. The system may also be extended to allow members to buy relevant information (e.g. racing form, track condition, profiles, etc.) though may be restricted to shareholders. Again such knowledge and information can be another tradable or purchasable commodity.

To further describe the various aspects of the present invention, some specific examples will be given by way of example and explanation.

Example 1 With reference to the drawings and by way of example only, figure 15 illustrates a 10 preferred example of a security enhancing method according to the present invention. Here the purchaser will generally make an offer 1500, be it in a fixed price, minimum price or auction scenario etc. The system will optionally but preferably check that there is no reason or restriction preventing a transaction to be made. If the transaction is potentially viable 1505, it will be checked that the prospective buyer has sufficient 15 funds or consideration to complete the transaction 1510. This step may be performed prior to a transaction viability step, or both before and prior (possibly considering different criteria or restrictions).

If the consideration is available they are secured against further use or removal by lockdown while a viable transaction situation remains in place 1515. Typically release 20 is only accomplished when the transaction is completed (and funds removed) or the transaction is cancelled (failure to meet criteria, withdrawal by seller or purchaser, rejection of offer, being outbid in an auction, etc.) In an auction scenario, assuming the purchase offer remains viable, the consideration will remained secured unless outbid or the transaction cancelled (1520, 1525). If the bid 25 remains highest at the completion of the auction 1520, then the transaction will be completed, possibly being dependent on further checks by the system. If it is a successful transaction 1530 then the consideration and commodities are transferred 1535 as may be appropriate.

WO 2007/148995 PCT/NZ2007/000162 The exact steps and sequence may vary in different embodiments, though will still retain steps to ensure that the correct consideration is available and remains available until the transaction is either completed or cancelled. The system will typically also take a commission when a successful transaction is made, though may still extract a 5 commission in some other circumstances.

Figure 16 illustrates a typical scenario for when commodities are locked down. Where tangible commodities are provided 1600, the seller may be required 1605 to obtain a certificate 1610 detailing characteristics such as value, condition, true ownership and title, etc. This will typically be by a third party accredited or authorised by the system.

Goods for sale are then locked down 1615 while a transaction or sale offer is in place 1620. For intangibles the commodities may be locked down by the system, similar to funds or considerations for a prospective purchaser. For tangibles, the goods may be held by a third party authorised or accredited to the system. If the transaction can be completed 1625 then consideration is transferred 1630 otherwise the commodities are 15 released 1635.

To further illustrate the present invention, some flow charts of decisions which may be made by the system are given in figures 17, 18 and 19. A typical buying sequence may be as follows: When trading shares using an online brokerage both the number of shares and the 20 consideration required to cover the trade are verified and locked down whilst a particular trade is in progress.

This scheme applies a similar process flow to online auctions, particularly those involving any type of security, ticket, or tradable blocks of rewards points (e.g. Airline miles).

In this scheme individuals set up accounts with an auction provider. These accounts are then managed by the auction provider to ensure that all buyers have sufficient funds in their account to complete a particular trade and, similarly, that all sellers have a sufficient number of shares or consideration available in their account to initiate a trade.

In this way, the integrity of the market is maintained and buyers and sellers can trade with confidence in that marketplace.

The process flows and some sample webpage mock-ups follow. 1. Seller accesses their Account 5 2. Seller specifies and confirms the Auction Listing Details 3. Seller verifies the Auction Listing in the Open Orders screen 4. Seller verifies that the Shares listed at Auction are locked . Buyer Bids for the Share Block 6. Buyer is notified that Insufficient Funds are in their Account.

(Note that a similar notification would also be applied to a seller with insufficient shares in their account) 7. Buyer transfers Additional Funds, resubmits and confirms their Bid. 8. Buyer verifies that their Bid is shown in the Open Orders screen 9. Buyer verifies that the Funds for the Bid, Inclusive of Commissions, are Locked 15 Down.

It should be appreciated that the method of the present invention may be implemented by existing transaction agents, including existing on-line auction systems, share and stock market trading, and virtually any other transaction based system for the transaction of commodities.

Some specific example with respect to different industries will now be given.

Example 2 - Motor sport This example relates to a particular application of the present invention as it may be applied to commodities. For the purpose of illustration, non-standard commodities have been used as examples.

Introduction To provide an alternative to traditional sponsorship, initially focusing on motorsport.

The aim is to capitalise on marrying fans' passion for motorsport to the sport's need for funding. This need is huge given that Formula One alone has an annual spend of $3 5 billion USD. The result is an opportunity which not only allows fans to "buy a piece of the action" but for talented drivers and teams to be funded, thereby enabling them to realise their ultimate potential in the sport.

To accomplish this, drivers and teams incorporate, issue shares in these companies and then make those shares available to the public via an online request process such as 10 according to the invention as described in example 1.

Furthermore, all shares can be tied to rewards schemes providing fans with exclusive access to the driver or team, events, merchandise and telemetry data for use with computer games.

In addition, the system is implemented as a web based platform for fans worldwide to 15 trade existing shares based on the performance of drivers and teams. This adds a big "'down at the pub factor" and a new dimension to the motorsports fan's experience as they monitor the performance of their share portfolio.

The desire to see a more level playing field where talent is the key determinant of success in motorsport is a a useful reason for introducing this concept. There is a 20 perception, not only amongst fans but also from motorsport insiders, that marketability, and not ability, determine who gets the best drives.

For strong empirical evidence of this, it could be argued that we need look no further than New Zealand, where, during the 60s and early 70s, NZ had three drivers racing in Formula One. Denny Hulme, a world champion, Bruce McLaren, who founded a racing 25 dynasty and Chris Amon, who drove for Ferrari.

After big sponsorship money entered the sport, no New Zealanders have realized their ultimate potential at the pinnacle of motor racing. While unfortunate, it is also entirely understandable that big sponsors want to crack bigger markets than those provided by New Zealand and other smaller economies. The present system has the potential to alter the balance in favour of talent, as well as providing the public with a useful means of participating in certain processes by purchasing shares and commodities related to racing.

Potentially realisable benefits Potentially realisable Benefits for Fans • "Owning a piece of the action" • Non monetary rewards (exclusive access to the driver and team, events, merchandise and data) • The excitement of trading shares based on the performance of the drivers and • A potential share of future earnings for a driver or team in the form of dividends. Potentially realisable Benefits for Drivers and Teams • Provides a cost-efficient and simple way for deserving Drivers and Teams to teams raise funds • Provides a direct link to their most passionate fans through merchandising opportunities.

• Favours ability over marketability: Helps talented Drivers and Teams realize their ultimate potential • Provides market determined valuations of Drivers and Teams • Decreases reliance on traditional sponsorship funding: Fosters independent Drivers and Teams Potentially realisable Benefits for the Sport Biases towards a merit based environment where talent is a more important determinant of success than marketability • Engages the existing fan base in a new and exciting way • Decreases potential reliance on Tobacco sponsorship, which is a problem in 5 some jurisdictions • Has the potential to greatly increase the global fan base • Creates opportunities for outspoken charismatic drivers with a broader Fan appeal • Promotes Driver and Team independence What we do - a closer look It's best to think of this concept as having three ways to buy and trade shares in Drivers and Teams; via Initial Offering, Auction or the Traditional Exchange Facility. The term Traditional Exchange Facility refers, in this instance, to the method typically used, by exchanges around the world, to match Bids and Offer Prices for commodities Initial Offering This is the first time that shares have been offered to the public. Drivers or Teams will do this to raise funds and the money you invest goes to them. In return you receive stocks issued by that driver or team and are also entitled to a share of their future earnings and non monetary rewards as per the Information Memorandum or prospectus 20 for that particular Driver or Team.

We help drivers or teams form companies and then issues stock in these companies to users on a first come first served basis, selling as many of these shares as possible to raise money for the driver or team.

Once these shares are bought by our users, they can be traded either by Auction or 25 through the Traditional Exchange facility.

Investing in a Driver or Team who has completed an Initial Share Offering After the initial share offering, shares can be bought and sold amongst account holders by using either the Auction or the Traditional Exchange facility. For example, say a Driver has just signed to GP2 from V8 Supercars. This is good news for the Driver.

If you bought shares in that driver at the Initial Offering price of, say, $1.00 NZD there 5 may now be buyers who are prepared to pay $2.00 NZD for those shares. You may decide to use this opportunity to sell the shares and make a capital gain.

Another person, on the other hand, wants to buy these shares because they believe the driver will have a big future in motorsport, perhaps with the potential to eventually sign with a top F1 team.

How the Initial Share Offering can work Buyers ideally first have an account within the system. They can then simply log on to their account to register their interest or, alternatively, they may call a customer service representative using an 0800 number. As long as there are sufficient funds in their account to cover the shares they are interested in buying they will be allocated shares on 15 a first come first serve basis.

Buyers can change the details of their share request or cancel their request at any time prior to the close of the initial offering. Buyers will be informed by email as to the success of their request the day the initial offering closes. Funds required to cover any outstanding requests will not be available for other trades. After the offer close date 20 requests cannot be withdrawn.

Auction The auction process is similar to buying a block of tickets on auction sites like eBay. However, in this case, you are buying a block of shares in a Driver or Team. Sellers list their shares for sale online and attract bids from other users. Sellers can list shares at 25 Auction either with or without a reserve. All users who bid on a seller's shares must have sufficient funds in their account in order to place a bid. This means sellers can be assured of payment.

Providing the reserve (minimum sale price) is reached by the close of the auction, the shares will be transferred to the highest bidder. Details of the process can be seen in example 1.

A crucial difference between this and other auction sites is that it monitors all 5 transactions. It ensures that sellers have the shares they have listed for sale in their account. Similarly, it ensures that all bidders for shares have sufficient funds in their account to cover their auction bid. Funds allocated for outstanding bids are locked down and are not available for other trades until the user is outbid by another user. Similarly shares for sale are also locked down and are not available for other trades.

Bidding at auction is set up to be deemed to be a legally binding contract.

What is an Information Memorandum? An Information Memorandum is a document providing a description of the Driver or Team and the terms of the deal being offered to future shareholders, and is ideally accessible to prospective transactors.

Just like Team bosses, Driver Managers and Sponsors, users are trying to estimate the Driver's future in the sport. Users will carefully read the Information Memorandum for each Driver to try and determine both the non monetary and monetary benefits of share ownership. Typically, an Information Memorandum will tell users: What percentage of income they are entitled to as shareholders and over what time frame; What type of 20 income streams that may be used to pay them a return on their investment. Potential sources of income that may generate returns for shareholders may include; Driver salary, Driver or Team endorsements, merchandising, book rights, or even income from all sources for a period of time.

In addition, the non monetary rewards associated with share ownership, such as 25 exclusive access to the driver and team, events, merchandise and team data will also be outlined in the Information Memorandum.

What the extended system can provide (Summary) • Market platforms (Initial Offering, Auction and Traditional Exchange Facility) which are used exclusively for trading shares of this type. This is all we trade, we don't trade in teaspoons.

• Management of the rewards schemes associated with share ownership.

• User account management. Sellers can be confident that all buyers have sufficient funds to complete the trade. Buyers can be confident that all sellers have the shares that they have listed for sale in their account.

• Maintenance of the share registry, • Brokerage and legal services related to share issuance and trading, • Marketing and cross licensing services for Drivers and Teams.

Other Market Niches Other market niches beyond motorsport where the concept can be applied include; horse 15 racing, yachting, funding bands (music) and theatre productions.

In fact, the concept can be applied to any endeavour where a lack of funding prevents talented people from realizing their ultimate potential, provided such an endeavour has the real potential to provide a monetary return as well as a guaranteed non monetary return to shareholders. Some potential applications for which the present invention 20 may be adapted or implemented are shown in table 1 as a list of potential tradable interests.

Each of these additional market niches will employ a broadly similar scheme to that used and described above for motorsports. Some expected differences are noted below.

WO 2007/148995 PCT/NZ2007/000162 Table 1 - Possible Tradable Interests Entities to be Incorporated Assets Finished Product Example Future Cash Flows to be Securitized Academies Training Techniques Enhanced Talent with greater earning potential Salary, Prizes, Sponsorship, Endorsements Appearances, Advertising, TV, Book, Magazine, Film Rights Merchandizing Actors Skill Talent Technique Notoriety Actor Salary, Prizes, Sponsorship, Endorsements Appearances, etc Advertising Rights Advertising Rights N/A Advertising Fees, Commissions, Payments Agencies (Including Talent and Modeling) Training Techniques, Industry Connections Enhanced Talent with greater earning potential Salary, Prizes, Sponsorship, Endorsements Appearances, Advertising, TV, Book, Magazine, Film Rights Merchandizing Artists Artistic Skill Talent Technique Notoriety Art Art Sales, Commissions, Fees, Sponsorship, Endorsement etc Art Work (All Types) Art Work (All Types) Art Work (All Types) Commercial Rights, Media Rights, Sponsorship, Endorsement, Exhibitions, Tours Athletes Athletes Athletes Salary, Prizes, Sponsorship, Endorsements Appearances, Advertising, TV, Book, Magazine, Film Rights Merchandizing Authors Author Books Scripts Articles Papers Books Scripts Articles Sales, Commissions, Fees Sponsorship, Endorsement Salary, Prizes, Appearances, Advertising, TV, Book, Magazine, Film Rights Merchandizing WO 2007/148995 PCT/NZ2007/000162 Board Games, Toys Board Games, Toys Board Games, Toys Game and Toy Sales, Media and Commercial Rights, Merchandizing Board Game Designers Game Development Skill Finished Game Game Sales Book Rights Book Rights N/A Sale of Rights, Book sales Books (Electronic and Paper versions) Books Books Book Sales, TV Film rights, Sponsorship, Merchandize Rights Brands and Logos (Trademarked) Brands and Logos (Trademarked) Brands and Logos (Trademarked) Brands and Logos (Trademarked) Sales Business Concepts Business Concepts Business Concepts Business Concept Sales Business Development Companies including Incubators, Venture Capitalists R and D Companies Business Development Skill, Financing Enhanced Businesses with greater earning potential Business Sales, Product Sales, Licensing Chef Skill Talent Technique Notoriety Chef Restaurant Development, Books, Salary Prizes, Endorsements, Appearances etc Circus Companies Skill Talent Technique Notoriety Circus Company Ticket Sales, Prizes, Sponsorship, Endorsements Appearances, TV Film Rights Computer and Video Games (Electronic Games) Games Games Game Sales Company Receivables Company Receivables N/A Company Receivables Designs (All Types including (Fashion, Industrial, Product) Design Design Design Sales Designers (All Types including (Architectural, Artistic, Fashion, Industrial, Product) Design Skill Talent Technique Enhanced Designs with greater earning potential Design Sales, Books, Salary Prizes, Endorsements, Appearances etc Domain Names Domain Names Domain Names Domain Name Sales Endorsement Rights Endorsement Rights N/A Sale of Endorsement Rights Exhibitions and Trade Shows Exhibitions and Trade Show Rights Exhibitions and Trade Shows Ticket Sales, Sponsorship, Endorsements ,TV, Film and Book Rights Festivals (All Types including Music) Festival Rights Festivals Ticket Sales, Sponsorship, Endorsements ,TV, Film and Book Rights Field days Rights Field days Ticket Sales, Sponsorship, Endorsements ,TV, Film and Book Rights Film Rights Film Rights N/A Sale of Rights, Film Ticket Sales, TV, Book Rights, Merchandizing Film Directors Producers, Production Companies (Film and TV) Skill Talent Technique Notoriety Films with greater earning potential Sale of Rights, Film Ticket Sales, TV, Book Rights, Merchandizing Films, Film Scripts, Film Concepts Films, Film Scripts, Film Concepts Films, Film Scripts, Film Concepts Sale of Rights, Film Ticket Sales, TV, Book Rights, Merchandizing Franchise Concepts Franchise Concepts Franchise Concepts Franchise Sales, Licensing Horse Breeders And Trainers (Racing and Sport Horse) Horse Training Skill Technique Notoriety Trained Competitive Horses Race Winnings, Stud Fees, Sale of Progeny, Prizes Book, TV, Film, Advertising Rights Horses (Racing and Sport) Horses (Racing and Sport) Horses (Racing and Sport) Race Winnings, Stud Fees, Sale of Progeny, Prizes Book, TV, Film, Advertising Rights Inventions Inventions Inventions Sales, Licensing, Merchandizing, Franchise Rights Intellectual Property (All Types Including Copyright, Patents, Royalties) Intellectual Property (All Types Including Copyright, Patents, Royalties) Intellectual Property (All Types Including Copyright, Patents, Royalties) IP Sales, Licensing, Merchandizing, Franchise Rights Licenses and Commercial Rights (All Types Including All media, Sports and Commercial) Licenses and Commercial Rights (All Types Including All media, Sports and Commercial) Licenses and Commercial Rights (All Types Including All media, Sports and Commercial) Licenses and Commercial Rights Sales, Licensing, Merchandizing, Franchise Rights Models Models Models Salary, Prizes, Sponsorship, Endorsements Appearances, Advertising, TV, Book, Magazine, Film Rights Merchandizing Music (Including Scores and Lyrics across all media) Music (Including Scores and Lyrics across all media) Music (Including Scores and Lyrics across all media) Song Rights, Music Sales, Advertising Rights Musicians (All Types Including Bands and Orchestras) Musicians (All Types Including Bands and Orchestras) Musicians (All Types Including Bands and Orchestras) Song Rights, Music Sales, Advertising Rights, Prizes, Sponsorship, Endorsements Appearances, Advertising, TV, Book, Magazine, Film Rights Merchandizing Production Companies (Radio, Film, Musicals,Theatre, TV)Websites) Production Skill Talent Technique Notoriety Enhanced Films, TV programs, Theatre, Musical, websites with greater earning potential Sale of Rights, Film Ticket Sales, TV, Book Rights, Merchandizing Property Development Companies Property Development Skill Notoriety " Developed Properties Property Sales Rental Publishers (All Types including Electronic, Book, Magazine, Web, Bloggers) Publishing Skill Talent Notoriety. Author Development Completed Stories, Articles, Novels, Scripts.

Radio, TV, Book, Magazine, Film Web Sales, Advertising (All Media) Rights, Prizes, Sponsorship, Endorsements Appearances, Advertising, Radio, TV, Book, Magazine, Web, Film, Song Rights Merchandizing Radio, TV, Web Programs, Theatre Productions Radio, TV, Web Programs, Theatre Productions Radio, TV, Web Programs, Theatre Productions Radio, TV, Book, Magazine, Film Web Sales, Advertising (All Media) Rights, Prizes, Sponsorship, Endorsements Appearances, Advertising, Radio, TV, Book, Magazine, Web, Film, Song Rights Merchandizing Research Grants Research and Development techniques Developed Concepts and educated,individuals with greater earning potential Product Sales, Business Sales, Licensing Songwriters Skill Talent Technique Notoriety More fully Developed Songs Radio, TV, Book, Magazine, Film Web Sales, Advertising (All Media) Rights, Prizes, Sponsorship, Endorsements Appearances, Advertising, Radio, TV, Book, Magazine, Web, Film, Song Rights Merchandizing Sports Players, Drivers, Jockeys and Teams (All Types of Sport Including Motorsport, All Ball Sports, Team Sports, Water Sports, Virtual Sports, All Games (Including Electronic, Card, Board Games), Athletics, Equestrian, Yachting, Boating, Surfing, Olympic, Martial Arts, Boxing, Wrestling, Weightlifting, Archery, Winter, Horse Racing) Sports Players, Drivers, Jockeys and Teams (All Types of Sport Including Motorsport, All Ball Sports, Team Sports, Water Sports, Virtual Sports, All Games (Including Electronic, Cajd, Board Games), Athletics, Equestrian, Yachting, Boating, Surfing, Olympic, Martial Arts, Boxing, Wrestling, Weightlifting, Archery, Winter, Horse Racing Sports Players, Drivers, Jockeys and Teams (All Types of Sport Including Motorsport, All Ball Sports, Team Sports, Water Sports, Virtual Sports, All Games (Including Electronic, Card, Board Games), Athletics, Equestrian, Yachting, Boating, Surfing, Olympic, Martial Arts, Boxing, Wrestling, Weightlifting, Archery, Winter, Horse Racing Salaries, Prizes, Endorsements, All rights including all Commercial and all media (book, film, radio, TV and Web), sponsorships, appearance money, merchandizing, Fees, Commissions, Qualifying Sporting Rights (All Types of Sport Including Motorsport, All Ball Sports, Team Sports, Water Sports, Virtual Sports, All Games (Including Sporting Rights (All Types of Sport Including Motorsport, All Ball Sports, Team Sports, Water Sports, Virtual Sports, All Games (Including N/A Sporting Rights (All Types of Sport Including Motorsport, All Ball Sports, Team Sports, Water Sports, Virtual Sports, All Games (Including Electronic, Card, Board Games), Electronic, Card, Electronic, Card, Athletics, Equestrian, Board Games), Board Games), Yachting, Boating, Athletics, Athletics, Surfing, Olympic, Equestrian, Equestrian, Martial Arts, Boxing, Yachting, Yachting, Wrestling, Boating, Surfing, Boating, Surfing, Weightlifting, Archery, Olympic, Martial Olympic, Martial Winter, Horse Racing) Arts, Boxing, Arts, Boxing, Wrestling, Wrestling, Weightlifting, Weightlifting, Archery, Winter, Archery, Winter, Horse Racing) Horse Racing) Sporting Events, Sporting Events, Sporting Events, Ticket Sales, Series and Series and Series and Endorsements, All Tournaments (All Tournaments (All Tournaments (All rights including all Types of Sport Types of Sport Types of Sport Commercial and all Including Including Including media (book, film, Motorsport, All Motorsport, All Motorsport, All Ball radio, TV and Web), Ball Sports, Team Ball Sports, Team Sports, Team sponsorships, Sports, Water Sports, Water Sports, Water merchandizing, Fees, Sports, Sports, Sports, Commissions, Virtual Sports, All Virtual Sports, All Virtual Sports, All Games (Including Games (Including Games (Including Electronic, Card, Electronic, Card, Electronic, Card, Board Games), Board Games), Board Games), Athletics, Athletics, Athletics, Equestrian, Equestrian, Equestrian, Yachting, Yachting, Yachting, Boating, Boating, Surfing, Boating, Surfing, Surfing, Olympic, Olympic, Martial Olympic, Martial Martial Arts, Boxing, Arts, Boxing, Arts, Boxing, Wrestling, Wrestling, Wrestling, Weightlifting, Weightlifting, Weightlifting, Archery, Winter, Archery, Winter, Archery, Winter, Horse Racing) Horse Racing) Horse Racing) Stage Shows, Stage Shows, Stage Shows, Ticket Sales, Tours, Events Tours, Events Tours, Events Endorsements, All rights including all Commercial and all media (book, film, radio, TV and Web), sponsorships, merchandizing, Fees, Commissions, Animal Stud Animal Stud N/A Stud Fees Rights Rights Commissions Example 3 - Horse Racing Aim The aim with this market niche is to enable racing fans to experience the thrill of horse ownership and at the same time help deserving breeders and trainers go racing. Here the 5 system hope to partner with the Totalisator Agency Board (or similar organisation) in order to provide greater exposure to a ready market of potential horse owners and at the same time provide deserving trainers with a cost-efficient and simple way to raise funds for the buying and training of horses.

As was the case for motorsport, an objective can be to help breeders and trainers form 10 companies for the purpose ~of owning, training and competing several race horses. Again, the method will issue shares in these companies to racing fans via an online request process. Shares will include an up front payment to cover 2 years of agistement, training and racing costs.

The portion of the share price assigned to cover these costs is held in an escrow account 15 and paid to trainers on a monthly basis. If a horse is retired from racing prior to the end of 2 years, any outstanding training fees will be repaid to shareholders on a pro rata basis.

In addition, any monies received for the sale of the horse will be reimbursed to shareholders. It is hoped that partnering with the TAB will provide a mechanism for 20 share account management via racing fans' existing TAB accounts. Existing shares will once again be able to be traded via Auction or a Trading facility similar to using an online brokerage.

Potentially Realisable Benefits Racing Fans • Fans experience the thrill of owning a race horse • Provides an exciting opportunity for fans to profit from their knowledge and passion for horse racing beyond betting • " The ability to trade shares (via Auction or Trading Facility) based on the performance of the syndicate adds another dimension for racing fans • Tiered rewards structure • Silver, Gold and Platinum membership provides differing event access and access to special offers and merchandise dependent on number of shares owned • A personal share of stud fees and prize money won • Naming rights (Initial Share Offering only) Trainers • Potential for partnership with the TAB provides large exposure to a ready 10 market of potential horse owners Provides a cost-efficient and simple way to raise funds for selling and training of horses Provides a direct link to owners and helps manage and maintain the relationship between owners and trainers • Provides established, high profile breeders and trainers with potential funding for premium quality horses with international potential Potential patronage of established breeders and trainers enables them to put something back into the sport The Sport • Possibility of direct participation in the sport and increased accessibility via the web helps to attract younger people to the sport • Provides a point of differentiation with other forms of gaming increasing the relative competitiveness of racing compared to the other forms of gaming • Provides exposure up and coming breeders and trainers • Enables the ownership and training of premium horses to remain in the country promoting wider interest in the sport domestically • Raises the profile of local trainers internationally • Promotes local thoroughbred industries as being more than the "ultimate 5 thoroughbred nursery" • Broader ownership has the potential to improves race day attendance • Potential to increase TAB turnover Example 3 - Yachting America's cup funding is an obvious choice. Potential monetary returns to shareholders 10 would likely include a percentage of income from merchandise, film and book rights for the team as a whole and also for individual team members. Shareholders would also likely receive a percentage of future contracts negotiated by individual team members. Non monetary rewards for shareholders would again include exclusive access to the team, events, merchandise and data.

Even after the event, shares would potentially retain their value depending on the success or notoriety of the individual team members and the participation of shareholders in those team members future earnings from all sources including book rights and future contracts. Careful drafting of the shareholders agreement and understanding of this agreement by shareholders is important.

Example 4 - Music and Theatre Productions In addition to viewing a band profile, users of the web site would be able to download or listen to songs and video clips of new bands that are seeking funding for tours, recording of demos and marketing and distribution of their music. Theatre productions could be funded in a similar fashion. Non monetary rewards would again include 25 exclusive access to the band, shows, merchandise and new releases. Shares would be traded based on up and coming releases, hits, tours and band notoriety.

Again, careful drafting of the shareholders agreement and understanding of this agreement by shareholders would be key, however non monetary rewards for shareholders may be a bigger driver of investment. One interesting potential driver of web site traffic would be a daily Top 40 based on Band Market Capitalization or value 5 of shares issued.

Aspects of the present invention have been described by way of example only and it should be appreciated that modifications and additions may be made thereto without departing from the spirit or scope of the present invention as described herein.

It should also be understood that the term "comprise" where used herein is not to be 10 considered to be used in a limiting sense. Accordingly, 'comprise' does not represent nor define an exclusive set of items, but includes the possibility of other components and items being added to the list.

This specification is also based on the understanding of the inventor regarding the prior art. The prior art description should not be regarded as being authoritative disclosure on 15 the true state of the prior art but rather as referencing considerations brought to the mind and attention of the inventor when developing this invention.

Claims (39)

PCT/NZ2007/000162 Received 18 July 2008 39 THE CLAIMS DEFINING THE INVENTION ARE:

1. A method of conducting an electronic transaction for commodities in return for consideration, the method comprising: verifying that the prospective purchaser in the transaction has sufficient consideration to match a purchase offer or to complete the transaction, the consideration being held within an account of said prospective purchaser, and locking against further use of the consideration so that the consideration remains available to complete the transaction while a valid transaction process is in place.

2. A method as claimed in either claim 1 in which, in addition to said consideration, transaction funds of a prospective purchaser are also locked down.

3. A method as claimed in claim 2 in which a prospective purchaser's transaction funds are held within an account of said prospective purchaser.

4. A method as claimed in either claim 1 in which release of locked consideration cannot be authorised by said prospective purchaser.

5. A method as claimed in either claim 2 or claim 3 in which release of locked transaction funds cannot be authorised by said prospective purchaser.

6. A method as claimed in any one of the preceding claims in which release of locked consideration is automatic according to at least one of the following conditions: completion of the transaction process, withdrawal of the commodities by the seller, a higher bid in an auction process, receipt of the transacted commodity by the purchaser.

7. A method as claimed in any one of the preceding claims in which upon the successful completion of a valid transaction process, said locked consideration is released and transferred to at least one of: an escrow account, an account of the Amended Sheet IPEA/AU PCT/NZ2007/000162 Received 18 July 200S -40- seller, an account of an agent of the seller, a nominated account of the seller, a temporary holding pending transfer to the seller or a nominated agent thereof.

8. A method as claimed in claim 2 or 3 in which consideration for one or more of the following are deducted and transferred from said purchaser's transaction funds at or after the completion of a valid transaction process: transaction agent commissions, taxes, duties, freight and transport.

9. A method as claimed in any one of the preceding claims in which, in transaction funds of the seller are locked down.

10. A method as claimed in claim 9 in which the seller's transaction funds are held within an account of said seller.

11. A method as claimed in claim 9 or claim 10 in which the seller's transaction funds are released upon one or more of the following conditions: completion of the transaction process, withdrawal of the commodities by the seller, and receipt of the transacted commodity by the purchaser

12. A method as claimed in claim 11 in which consideration for one or more of the following are deducted and transferred from said seller's transaction funds at or after the completion of a valid transaction process: transaction agent commissions, taxes, duties, freight and transport.

13. A method as claimed in claim 1 in which the prospective purchaser is invited to introduce additional consideration into the purchaser's account should there be insufficient consideration to match a purchase offer or to complete the transaction.

14. A method as claimed in any one of the preceding claims in which the transaction process comprises an auction process.

15. A method as claimed in any one of the preceding claims in which locking the use of consideration includes transfer of said consideration or entitlement thereto into a temporary account. Amended Sheet IPEA/AU 41 Received at IPONZ on 29 Feb 2012

16. A method as claimed in any one of the preceding claims, further including commodity verification for said commodities in the transaction.

17. A method as claimed in claim. 16 in which the commodity verification involves verification of at least one of: title of ownership, description of commodity, condition of commodity, or an estimated value.

18. A method as claimed in claim 16 or claim 17 in which commodity verification is conducted by a third or independent party.

19. A method as claimed in any one of the preceding claims which includes locking or securing the commodities against removal or further sale, while a valid transaction process is in place.

20. A method as claimed in claim 19 in which tangible commodities are physically held by a third or independent party while at least a valid transaction process is in place.

21. A method as claimed in claim 20 wherein the third party is notified by the transaction agent to whom any locked or held commodities are to be released to.

22. A method as claimed in claim 19 in which a temporary title of the commodities into the name of a third party is executed for the period when a valid transaction process is in place.

23. A method as claimed in claim 22 in which the third party to whom title is temporarily transferred is the transaction agent.

24. A method as claimed in any one of the preceding claims in which certain commodities in a transaction process are converted to a common value denominator for comparisons of value and/or trading. 42 Received at IPONZ on 29 Feb 2012

25. A method as claimed in claim 24 in which the common denominator is an established currency unit.

26. A method as claimed in any one of the preceding claims in which an artificial credit, points system or artificial currency, is used for the purpose of conducting transactions.

27. A method as claimed in claim 26 which includes provision for exchanging said artificial credits, points, or artificial currency into a real monetary currency.

28. A method as claimed in any one of the preceding claims which includes provision for exchanging real monetary currencies.

29. A method as claimed in any one of the preceding claims which includes provision for transferring transferable value commodities into real monetary currency.

30. A method as claimed in claim 26 which includes provision for transferring transferable value commodities into artificial credits, points, or artificial currency.

31. A method as claimed in claim 29 or claim 30 in which transferable value commodities comprise: currency, shares, stocks, bonds, and titles in precious metals.

32. A method as claimed in any one of the preceding claims including a check system limiting the transaction of commodities in which at least one of the transactors is registered or accessing the system from within a predetermined jurisdiction.

33. A method as claimed in claim 32 in which the system also limits the transaction of some types of commodities in which at least one of the transactors is registered or accessing the system from within a predetermined jurisdiction. 43 Received at IPONZ on 29 Feb 2012

34. An electronic transaction system comprising: transactor accounts for holding one or more of considerations, transaction funds, and commodities; communication access for transactors to participate in a transaction process and manage their accounts; a funds verifier configured to verify that a prospective purchaser in a transaction has sufficient consideration in one of the transactor accounts to match a purchase offer or to complete the transaction the consideration being held within an account of said prospective purchaser; and a locking device configured to lock against further use of the consideration so that the consideration remains available to complete the transaction while a valid transaction is in place.

35. The system as claimcd in claim 34 in which the system is accessible to at least transactors via at least one of: the internet, a WAN, a LAN, a telecommunications network.

36. The system as claimed in claim 34 or claim 35 which includes an electronic betting system.

37. The system as claimed in any one of claims 34 to 36 which lists transactable shares for sporting entities or events.

38. The system as claimed in claim 37 in which transactable shares for sporting entities or events include special offers or benefits for share holders.

39. The system as claimed in any one of claims 34 to 38 which interacts with a secure hardware device through which a transactor communicates with the system. David William George TOMLINSON by his Attorneys IPRIMA