AU2005313866A1 - Money transfer and delivery of a currency's agreed foreign currency equivalent value - Google Patents

Description

WO 2006/060880 PCT/AU2005/001880 1 MONEY TRANSFER AND DELIVERY OF A CURRENCY'S AGREED FOREIGN CURRENCY EQUIVALENT VALUE This application claims priority to Australian Provisional Patent Application 2004907066 filed Dec. 10, 2004, being herein incorporated by reference. 5 FIELD OF THE INVENTION The present invention relates to methods and systems for completing money transfer from one currency to another, and more particularly to completing such transfers without performing conventional foreign exchange transactions. BACKGROUND 10 Automated computer systems for matching buy and sell orders for trading, futures and other properties are well known in the art. For example: Patent US2003014351 relates to systems and methods for facilitating the trading of items or securities and more particularly to systems and methods for facilitating the electronic bartering of items or securities by means of a computer-based system for bartering, exchanging or selling. 15 Patent WO2004077255 relates generally to a network-based marketplace, and more particularly to a network-based marketplace for exchanging products. In an exemplary embodiment of the invention, a match-and-swap marketplace is provided for the efficient undertaking of barter-type exchanges between a multiple parties. There have been a number of patent applications in recent years relating to computer-based 20 systems for bartering, exchanging or selling, and matching and swapping. These systems refer to users or operators of the systems exchanging items and have generally been developed in relation to automation of broking and trading systems. The present invention relates to a method and system for international money transfers, involving currency conversion and transaction settlement; said system being used to match a plurality of 25 opposite money transfer requirements for each of a plurality of currency pairs. The matched money in a particular currency provides the funding for transaction settlements of money transfers from other currencies into that currency. So although matching occurs, exchange between the matching participants does not occur because matching participants are matching two different currencies of a currency pair. The matching process is used as a basis for agreement to 30 release matched currency amounts for funding of transaction settlements in the same currency. No method and system currently exists for performing international money transfers without the requirement for funding the entire amount of the transfers by performing conventional foreign exchange transactions. It is an object of this invention to define such a method and system. 35 WO 2006/060880 PCT/AU2005/001880 2 EXISTING FORMS OF MONEY TRANSFER FROM ONE CURRENCY TO ANOTHER At the present time the known method of international money transfer generally involves the following activities: Purchase of the foreign currency, by means of a foreign exchange transaction, from a bank or 5 agent, at an exchange rate quoted by that bank or agency; and The bank or agent is instructed to prepare either a bank draft for the foreign currency amount made out to the specified recipient, or transfer the money electronically to the specified recipient. Hence the sender must complete a foreign exchange transaction before the foreign currency can be transferred to the recipient. 10 The buying rate for a foreign currency will normally be more expensive than the typical interbank mid-market exchange rate for that currency pair at the time of the transaction. This difference is the cost of the market-making spread charged by the banks or agents that provide such foreign exchange and money transfer services. Although more competitive rates can be found from web-based businesses such as OzForex, the 15 method, as described above, is also used by such web-based businesses. The present invention overcomes the above-mentioned and other shortcomings of international money transfer with a novel method and system for international money transfer. Businesses currently lack efficient off-market means for transferring large sums from one currency to another, to satisfy funding requirements in the other currency, as an alternative to individual 20 transaction settlements in that other currency. Traders wishing to execute foreign exchange in conjunction with money transfer also lack a means to meet and directly manage their trading directly with other traders in off-market matched transactions. Brokers offering commission-free trading fail to mention that the bid/offer spread paid by the client 25 in buying or selling a given financial instrument through a market-based transaction is often where most of the money is made. Brokers offering commission-free trading are brokers that work in conjunction with market-makers. The integration of broking and market-making services has occurred concurrently with the development of electronic trading. Virtually all trading of currencies is currently arranged through banks or financial services 30 businesses that provide access to market-making services. Such market-making services typically allow large numbers of customers to have their buy and sell orders pooled on a financial exchange that provides continuous liquidity to customers during the exchange's trading hours. Hence the currencies are traded between customers through intermediaries, including brokers and market makers. 35 Global financial markets enable customers to access the huge liquidity that these markets can provide. Many global markets, such as the FX market, are often described as extremely efficient WO 2006/060880 PCT/AU2005/001880 3 markets. They can enable transactions of any size to be performed up to 24 hours a day during the global trading week. However, because all these markets are just that; markets; they cannot be perfectly efficient in terms of transaction costs because the intermediaries that create the markets rely on bid/offer 5 spreads in order to manage their risks and create profits from provision of their services. In other words, an objective of every market-maker is to sell or buy any financial instrument for a greater or lesser price respectively than it pays to buy or sell that financial instrument. Historically all market-makers have matched trades internally as this improves the profit margin on the market-maker's declared bid/offer spread. 10 Just as integrated businesses that combine broking and market-making advertise "zero commission" without reference to the cost of the bid/offer spread, conventional market-makers have, in the past, not advertised the extent of their internal matching. As alluded to above, execution costs for market-based transactions have historically comprised a combination of a fixed transaction commission and a bid/offer spread. 15 For large value transactions the bid/offer spread can be costly and is normally the largest component of the total transaction cost because it is directly proportional to the size of the transaction. However this true cost is often less evident to a customer than an attractively low, nominal transaction commission. The facilitation of electronic trading has enabled market-makers to lower the overheads associated 20 with operating a market, but the bid/offer spreads related to market-based transactions can never be totally eliminated. Global markets are, by their very nature, random and potentially volatile, and cannot operate without intermediaries that must cover their own market-making risks by using bid/offer spreads that may widen significantly and unpredictably at any time during a particular trading day. 25 Such spreads in the FX market may be particularly sensitive to sudden large orders for physical cash. Even when electronic financial data reporters such as WM/Reuters or Telerate display relatively narrow Interbank spreads, the reality may be quite different for a bank being asked to deliver even a moderately large quantity of physical cash to a specific customer at a specific time. The key advantages that market-based liquidity can provide; albeit at the considerable cost of the 30 bid/offer spread, is the ability to place unscheduled orders of unpredictable size. However, there will always be many market participants that do not require the ability to execute such randomly timed trades. Many market participants could benefit from the ability to plan at least part of their currency tranfer requirements by agreeing to match their future trading requirements in advance, and directly with 35 each other, using self-directed matching of off-market trades. Such market participants may include individuals with requirements to make single or regular money transfers to a foreign currency account, businesses with export income in a foreign currency WO 2006/060880 PCT/AU2005/001880 4 or a need to purchase assets, goods or services in a foreign currency using either spot or forward FX contracts, and institutional fund managers with requirements to make regular purchases or sales of foreign equities using either spot or forward FX contracts. As already mentioned, there are two key cost elements that relate to any foreign exchange. These 5 are the risk and profit assumed by market-makers by means of bid/offer spreads and The broker's fixed transaction cost It is the first of these two cost elements that the can be eliminated by eliminating the cost of market-based bid/offer spreads. Purchase and sale of currencies has historically been performed through banks, financial services 10 businesses, or financial services businesses operating in conjunction, or partnership, with banks. Off-market transfers are common practice for transferring the ownership of shares. Internal off-market matching of opposite FX requirements within a business is also common practice. After such internal matches are completed, a business will normally use an FX market to trade any FX that cannot be matched within the business. 15 Internal matching of opposite transactions is, of course, a means by which financial services businesses, including banks, can increase their own profit margins. Their business models for transactions generally rely on quoting bid/offer spreads to all customers. These spreads ensure that the value of any financial instrument transferred to a customer will always be less than the value of the financial instrument received from the customer at the time the deal is struck. The 20 existence of the market creates the need for a spread in order for the so-called market-makers to manage their own risks and profit. Market-makers also have a vested interest in wide spreads to increase their profit margins for provision of their market-making services. Market liquidity and volatility can vary continually during the trading week. Even spreads quoted by recognised sources such as Dow Jones Telerate or Reuters may not be available in local markets 25 for immediately physical delivery of cash. A recent development involving matching of opposite FX orders is Instinet FX Cross. Instinet claims to be a market leader in neutral anonymous execution in the equities markets. Citigroup claims to be a market leader in foreign exchange. Instinet's customers include institutional clients wishing to reduce FX transaction costs. Instinet 30 collaborates with CitiBank. Instinet internally matches opposite orders in a range of currency pairs. Trades are confirmed and settled in the Citigroup back office relative to an agreed future global benchmark mid-market rate. Instinet FX Cross claims to be able to significantly reduce bid/offer spreads using its matching techniques. Other businesses that specialise in the physical money transfer side of the FX business, include 35 OzForex and Tranzfers. Their customers include the general public requiring to transfer amounts ranging in size from very small to very large. Their bid/offer spreads can be narrow compared to those of banks. The spreads are relative to a global benchmark mid-market rate. These WO 2006/060880 PCT/AU2005/001880 5 businesses may benefit from internal matching of opposite orders. These companies, whilst offering relatively low spreads to the public, do not eliminate bid/offer spreads. Payment of foreign currency for purchases by credit card has historically involved companies such as Visa or Mastercard licensing banks or financial service providers to use their transaction 5 services. However some banks or financial service providers have various ways of imposing layered charges for FX transaction costs that have already been covered by the credit card company. These additional charges are arguably unjustified because the currency risk and currency conversion costs have already been assumed and charged for by the credit card companies. 10 So it is clear that foreign exchange transaction charges of various forms can be high. Accordingly, for the reasons set forth above, there is a need for a novel method and system to resolve these issues and provide a way for investors to execute currency conversion and money transfer without incurring the costs of the bid/offer spreads that result from existing transaction methods. 15 SUMMARY OF THE INVENTION In view of the above-described problems associated with known methods of money transfer and foreign exchange, it is an object of the present invention to provide a method and system for international money transfers that reduces or avoids the requirement for conventional foreign exchange transactions. 20 The method and system uses a novel form of matching which locks in a commitment by the users to make their deposited funds available not for exchange with other users, but rather for funding the commitments of other users to deliver money to specified recipients. The invention is illustrated in Figures 1 to 4. For the purposes of the present invention, the following definitions apply: 25 International Money Transfer: Any transfer from one currency to another; including transfers from a sender in one country to a recipient in another country. User or Sender: An entity sending an international money transfer using the method and system of the present invention. System: The business method and system defined by the invention. 30 Base Currency: The selected base currency of a currency pair used for matching defining unit sizes for matching Units: Blocks of base currency used for matching against non-base currency. Typical units sizes would be denominated in 1000s, 100s, 10Os, 1s and 0.01s of a base currency unit. Over-match and Under-match: Where a user matches more or less currency respectively, than is 35 required to secure the foreign currency equivalent value if its intended international money transfer amount.

WO 2006/060880 PCT/AU2005/001880 6 The present invention is a method and system for performing international money transfers without the requirement for the users or the system to perform foreign exchange transactions for the majority of the money transferred. An embodiment of the invention is as follows: 5 The invention comprises a website, linked to a matching and transaction settlement computer, where a plurality of users can meet and interactively match their opposite money transfer requirements with each other in units of their respective currencies. The units are broken into varying sizes; for example 1000s, suitable sizes and stacked in timing priority order or some other order for matching. 10 The users must first deposit money to the system and by a fixed cut-off time each trading day must select their matching strategy and submit their matching requests. At a later cut-off time each trading day all matches for that day must be completed. At a still later cut-off time each trading day an interbank mid-market rate is recorded for use in defining the equivalent foreign currency value of the matched currency pairs. 15 No swapping or bartering or exchanging between the users of the system takes place based on the matching. Completion of the matching process for senders can complete a transfer of ownership of senders' money in a currency zone. The money is then available for distribution to recipients in that currency zone. This concludes these international money transfers without conventional market-based 20 foreign exchange transactions. For the purposes of this example the assumed base currency of the currency pair in question is the currency of the sender of the money. The process comprises the following steps: The sender of the money enters into an agreement with the system operator to enter its website 25 and deposit funds in a base currency of the currency pair of this example. The sender gives up ownership or control of the money once the match has taken place. At this point in time all that is agreed between the website and the sender is that in return for a matched amount of the sender's base currency an equivalent value amount denominated in a specified foreign currency will be paid to a specified recipient. 30 No currency exchange takes place; only an agreement on the basis for calculating the future foreign currency equivalent value of the money to be paid to the recipient. LIMITATIONS RELATING TO TRANSFERS OF EXACT AMOUNTS Exchange rates can unpredictably vary from day to day by +/-1% or more. Users transferring money from a non-base currency to a base currency can break down orders into 35 base currency units and know that this amount, if matched, will result in the required foreign WO 2006/060880 PCT/AU2005/001880 7 currency transfer amount as long as the unit sizes available from the system allow definition of an exact amount. A refundable margin must be included in the user's non-base currency payment to fund matching if the exchange rate moves against the user between the time of payment and the time of fixing the match. Surplus funds may be returned to the users. 5 Users transferring money from a base currency to a non-base currency face a different problem. If they require to transfer an exact amount to the non-base currency they cannot specify this exact amount in non-base currency units. Therefore transfers cannot be matched exactly. For example if British Pounds are the base currency unit and a user wishes to transfer Pounds to Australian Dollars, the exchange rate movement may result in +/-1% or more difference between 10 the amount required to be transferred and the amount actually transferred on a given day. This means that if the user requires to send an exact amount a number of options exist. If overpayment must be avoided, under-matching can be used to ensure that a balance will have to be paid using a conventional foreign exchange transaction. Another option is for over-matching to be recorded by the System as a foreign currency credit for 15 the sender with only an exact specified amount of foreign currency being delivered to the specified recipient. If the amount matched is surplus to requirements an overpayment may also be delivered to the specified recipient and this may be resolved between the user and the recipient. The present invention is of particular value where the amounts of money to be transferred are 20 relatively large and the difference between the mid-market interbank rate and the rate available from conventional foreign exchange will result in a significant relative cost to the user. The present invention relates to a method using pairs of same-currency money transfers between customers and recipients that have been specified by other customers. This method artificially creates the end results of foreign exchange (FX) transactions, in conjunction with money transfers, 25 from customers to their specified recipients. More particularly, but not by way of limitation, the present invention is a method using pairs of same-currency money transfers between two or more customers, to artificially create the end results of foreign exchange (FX) transactions, in conjunction with money transfers, for each of those customers. 30 More particularly, but not by way of limitation, the present invention provides a means for cost effectively transferring large sums of money from one currency to another, to satisfy funding requirements in the other currency, as an alternative to performing individual FX transaction settlements in that other currency. More particularly, but not by way of limitation, the present invention is a business scheme that 35 enables customers to participate in making their own market, rather than a business scheme that is a market-maker.

WO 2006/060880 PCT/AU2005/001880 8 AN EMBODIMENT OF THE PRESENT INVENTION COMPRISES A method and system for performing international money transfers from one currency to another with limited, if any, requirement for conventional foreign exchange transactions. The system comprising a web-based matching and transaction settlement business linked to a matching and 5 transaction settlement computer system. Use of a matching system to enable the senders of money to match and lock their equal and opposite money transfer requirements after depositing money to the web-based business. The matching process establishes the basis for transfer of ownership of a plurality of senders' money to a plurality of recipients in the same currency. 10 Hence the money used to complete the international money transfers for each sender originates in the same country or currency zone as the recipient's bank account. There is no requirement for market-based foreign exchange transactions. There is no requirement bartering between the senders. There is no requirement matching and swapping between the senders. 15 The present invention is a computer-based matching and transaction settlement system for completing money transfer and delivery of a currency's agreed foreign currency equivalent value, in a specified foreign currency, from one or more users of the system to one or more specified recipients that are not users of the system. The system comprises an internet website linked to a matching and transaction settlement 20 computer system; a plurality of remote computers with internet access to the website corresponding to a plurality of users, said remote computers enabling said users to deposit money and submit matching and delivery instructions into the system to direct matching and delivery of matched money's agreed foreign currency equivalent value in that foreign currency to specified recipients. 25 The system is used to match equal and opposite money transfer requirements for each of a plurality of currency pairs. A key novelty of the invention is that matched money in a particular currency provides the funding for transaction settlements of money transfers from other currencies into that currency. An embodiment of the present invention enables matching of opposite foreign exchange and 30 money transfer requirements in order to direct the execution of same-currency money transfers to specified recipients as illustrated in Figures 1 and 4. This process artificially creates the end results of FX, or currency conversion, trades without such FX trades actually occurring. Using a web-based business platform to enable Currency Conversion and Money Transfer An embodiment of the present invention involves a novel method using a web-based business 35 platform as a meeting place for customers seeking to match equal and opposite money transfer requirements in order to deliver foreign currency to a specified recipient. Figure 1 provides a WO 2006/060880 PCT/AU2005/001880 9 schematic description of the means of effect comprising the interaction of a physical system and process. By meeting and matching at the website of a novel business entity (herein referred to as ForexMatch) customers instruct ForexMatch to perform same currency money transfers to 5 specified recipients. This artificially creates the end result of an FX money transfer, from customer to recipient, that does not actually take place. As illustrated in Figure 1, the objective of a customer in Australia is to transfer money to a recipient in the UK. By meeting other customers and matching the amounts to be transferred with those other customers at the ForexMatch website, ForexMatch is then instructed to transfer the matched 10 amount to the UK recipient. The result simulates a currency conversion (FX) and money transfer operation with no market-based bid/offer spread cost incurred. All matches are executed based on an agreed future mid-market benchmark rate. Each customer pays a fee for using the meeting and transaction execution service. Customers first transfer funds to ForexMatch to cover the cost of any orders placed. 15 Customers each receive a User ID and password to enable access to the web-based business platform. Assume in this embodiment that the GBP is the base currency for GBP/AUD customer trades and a customer wishes to transfer GBP100,000 equivalent to a recipient bank account in Australia. The customer specifies the recipient bank account details and submits an order. The customer 20 receives an order number from ForexMatch. This order number, when combined with User ID and password, allows the customer to gain access to the web page relevant to the order's currency pair. The customer can then direct the matching process by breaking down the amount to be transacted into units of base currency or may, as an option, direct ForexMatch to break the amount down into 25 units. The unique order ID will be visible to the customer when he/she enters the web page and will apply to every unit that makes up part of the total customer order. The units may be, for example, any combination of 50,100, 500, 1000, 5000, etc Pound units. The units of the order will appear in stacks on the web page. The customer will be able to see each of its units, and their chronologically sequenced positions in 30 the order stacks. The customer will also be able to see other orders to gain an understanding of the liquidity of each order stack. Schematic illustrations of embodiments of an order stack are provided in Figures 2 and 3. As illustrated in Figure 3, there may be any number of units in a particular stack. Figure 3 illustrates how, in this embodiment, the customer can see the number of orders in each 35 stack and the position of its order. Figure 3 also indicates the liquidity in each stack. All orders are WO 2006/060880 PCT/AU2005/001880 10 placed in chronological order and must be matched prior to a cut-off time before the next fixing against a recognised global FX mid-market rate. If, for example, the customer decides to place 100 x 1000 Pound units in a GBP to AUD transfer stack, as shown in Figure 3, the customer will see where those units are in the stack. 5 The matching protocols in this example are as follows, but may vary and are not limited to one set of protocols that cannot, from time to time, be revised: Anonymity of customers searching for matches through the website can be achieved by a variety of methods. For example, a customer only being able to see its own order number. All other customer orders are expressed in terms of quantity only and in terms of the position of those other 10 orders relative to the customer order (See Figure 3). All orders in each stack will be stacked in chronological order of receipt. All orders in a each stack will first be matched against orders in the opposite stack of the same denomination (for example 50,000s against 50,000s, 10,000s against 1 0,000s, etc.....); When all orders in one 10,000 Pound stack (for example) have been matched, the remaining 15 10,000 Pound orders in the opposite stack will be matched consecutively against any remaining orders in progressively lower denomination stacks. This downward matching sequence will continue from highest denomination to lowest denomination until all possible matches are completed. At the cut-off time no further orders will be accepted and all remaining unmatched orders will be 20 returned to customers together with the funds, unless the customer has specified to leave the orders in the stack for the next day's matching. If orders are placed for transfer of base currency to non-base currency, the customer must deposit exact amounts to cover the orders. If orders are placed for transfer of non-base currency to base currency equivalent, an additional 25 margin must be deposited to cover any adverse movement in the exchange rate during the day prior to the price fixing. If exchange rate movements exceed margins prior to the next price fix, the adverse movement that has taken place in the value of the non-base currency will result in removal of customer orders from the smallest denomination stack first, until sufficient margin is restored to the customer's 30 unmatched position. Generally customer's margin requirements will be strictly enforced to avoid the risk of margin calls. Up until the cut-off time the customer may cancel unmatched unit orders, cancel/replace orders with orders of different unit size, or direct ForexMatch to break the orders up into units based on ForexMatch proprietary matching algorithms. Order revision will result in the revised orders being 35 located at the ends of the relevant order stacks.

WO 2006/060880 PCT/AU2005/001880 11 No customer can gain access, through the website, to the identities of the owners of other orders in the order stacks. All margins are returned to customer on completion of matching and money transfer. For forward trades this will be on the date of completion of the forward trade. 5 ANOTHER EXAMPLE Both the buyer and the seller of GBP use the GBP as the base currency unit. Customer A decides, on a particular day, to place an order to transfer up to GBP100,000 to a recipient whose bank account details in the UK it submits to ForexMatch along with AUD denominated funds plus required margin to cover the transfer. 10 On the same day Customer B decides to place an order to transfer up to GBP100,000 equivalent to a recipient whose bank account details in Australia it submits to ForexMatch along with deposited funds denominated in GBP. Each customer can see its order, and order positions relative to other customer orders, in the order stacks on the website as illustrated in Figure 3, which shows Customer B's view. 15 At an agreed time or times on each trading day a recognised global mid-market benchmark rate such as Telerate or WM/Reuters is used to calculate the number of AUD required to match each GBP for either spot or forward trade dates. The website allows each trader to decide what parcel sizes and value date of base currency to trade. For example options may include GBP10, GBP50, GBP100, GBP500 and GBP1000. 20 There is a web page for the current day and for each future day to allow forward trades. All trades must be in terms of base currency units. The matching value of the non-base currency will be an odd amount based on the benchmark rate applicable on the day the match is agreed. For forward trades, the matching value of the non-base currency will be an odd amount based on the benchmark forward rate applicable on the day the match is agreed. For forward trades 25 customers will be required to deposit adequate margin cover the cost of future adverse exchange rate movements. These margins will be larger than those required for spot trades. So assume Customer A places orders to buy GBP1 00,000, in GBP1000 units, using AUD. Customer A is issued with an eight digit order ID. Each GBP1000 unit is tagged with the customer ID and stacked sequentially in the order stack. The position in the stack is based on the time the 30 order is placed and can be seen by Customer A. Customer B places orders to sell GBP1 00,000, in GBP1000 units, for AUD. Again these are stacked in chronological order. There will be at least one cut-off time for order submission and at least one cut-off time for order matching each trading day.

WO 2006/060880 PCT/AU2005/001880 12 The customer will decide whether to roll unmatched orders over to the next trading day or cancel those orders. The customer will be issued with access to the interactive website and will be able to enter the site where he/she wishes to trade currencies. 5 The customer will be able to see how many orders exist in the stack for each unit size. The customer may, at any time prior to the cut-off time, vary the size of its units. An embodiment of the present invention artificially creates the results of one or more pairs of equal and opposite FX currency pair transactions in a given currency pair. For example one FX transaction results in conversion of 500 British Pounds (GBP) to Australian Dollars (AUD). The 10 opposite transaction results in conversion of the relevant amount of Australian Dollars into British Pounds. These results are created by means of the matching process and one same currency money transfer in each of the two currencies that are involved in the simulated FX transaction. (See Figure 1). 15 The exchange rate used for the buyer of GBP is identical to the exchange rate used for the seller of GBP. Hence there is no bid/offer spread and all trades are matched at an agreed future mid market rate. Matching of off-market transfers in shares is a common practice. Frank can transfer ownership of 100 shares in IBM to his brother Fred in an off-market transfer in which Fred pays the mid-market 20 price for the shares at an agreed time on an agreed date. An embodiment of the present invention is a business scheme that artificially creates the end results of two otherwise unrelated equal and opposite FX transactions through the banking system, by execution of one same currency money transfer in each of the currencies of the subject currency pair. The method can also be applied to forward FX transactions. 25 A SECOND EMBODIMENT Introduction and Matching using a Novel Facilitation Business An embodiment of the present invention is a business (referred to herein as ForexMatch) that seeks customers that require currency conversion incorporating money transfer to meet funding requirements in a particular currency, instead of performing individual FX transaction settlements in 30 that currency. Figure 4 provides a schematic description of the means of effect comprising the interaction of a physical system and process. For example, ForexMatch would communicate with many potential customers to establish a range of currency conversion options that would be acceptable to each, and then identify which parties may be suitable for matching. When, for example, matching terms and conditions can be agreed 35 with each of two or more parties, the parties are introduced and enter a contractual agreement to transfer money to each other on a single occasion or more often as described in the agreement. A fee is paid by each of the parties to ForexMatch. The basis for the amounts of money transferred WO 2006/060880 PCT/AU2005/001880 13 would be the mid-market exchange rate from a recognised data source that is applicable at the agreed future time and date of each transfer. This allows the parties to achieve the outcomes of foreign exchange transactions without incurring the buy/sell spread costs and other costs associated with existing forms of foreign exchange 5 transaction. ForexMatch finds and meets prospective customers and determines their requirements. The business identifies prospective customers with potentially matching requirements and engages in further negotiation to establish a basis for agreement. At any time during this process ForexMatch business may decide to introduce prospective customers in order to finalise an agreement. The 10 customer terms of agreement with ForexMatch can involve paying a service fee for introduction and participation in the negotiation and structuring of a trading agreement. The business scheme artificially creates the end results of currency conversion incorporating money transfer for each customer by negotiating a basis for an agreement between the customers. The agreement involves each customer making a same currency money transfer to the other on an 15 agreed future date based on an agreed benchmark mid-market spot or forward exchange rate, as illustrated in Figure 4. More than two customers may be involved in such an agreement. These same currency money transfers artificially create the end results of two individual FX money transfers without a requirement for either customer to use conventional FX services provided in conjunction with the banking system. 20 An embodiment of the same-currency money transfer process is described below and in Figure 4: Customer A transfers money to its escrow account, which requires joint signature by Customer B to allow funds to be transferred to Customer B Customer B signs a release for the money to enable its transfer to Customer B's account and sends this document to Customer A for countersignature and submission to the bank 25 Customer B transfers money to its escrow account, which requires joint signature by Customer A to allow funds to be transferred to Customer A Customer A signs a release for the money to enable its transfer to Customer A's account and sends this document to Customer B for countersignature and submission to the bank Once both Customer A and Customer B have transferred the agreed amounts into their respective 30 escrow accounts, both Customers submit countersigned transfer authorities to their counterparty's bank to complete the money transfers. The result simulates a pair of opposite currency conversion (FX) and money transfer operations with no market-based bid/offer spread cost incurred. The business scheme comprises the following characteristics and benefits: WO 2006/060880 PCT/AU2005/001880 14 S Avoids use of intermediaries including the banking system or financial services businesses working in partnership, or conjunction, with the banking system to perform FX transactions on behalf of customers; Enables direct interactive matching between customers; 5 Provision of deal-making services for high value transactions This aspect is novel in that its methods and objectives include: Acting as an agent or intermediary that markets its currency exchange matchmaking services to persons or businesses as a means to avoid the requirement to use the banking system as a means for currency exchange and money transfer; 10 Performing research to identify persons or businesses with an interest in reducing the costs of their currency exchange requirements; In consultation with such persons or businesses, defining the basis of the clients' currency exchange requirements; Working to find other persons or businesses with complementary requirements; 15 Working to prepare contractual agreements, which may include term agreements involving regular transfers, for direct business to business currency exchange transactions performed at mid-market rates based on an agreed global spot forex market exchange rate that involves no bid/offer spread. ADDITIONAL INFORMATION An embodiment of the present invention uses pairs of off-market same currency transfers at an 20 agreed future time and date to simulate the outcomes of conventional banking-system-based spot or forward FX transactions. This is achieved without the need to process those transactions through the banking system or through financial services businesses working in partnership, or conjunction, with the banking system. Embodiments of the present invention all include a facilitation business, referred to herein as Forex 25 Match, that provides introduction services in the form of either personal introduction or an on-line meeting place. This enables customers to meet and match their equal and opposite money transfer and currency conversion requirements. Embodiments of the invention have an objective of enabling money transfer operations that involve both currency conversion and money transfer to be performed without the need for market-based 30 FX transactions. MORE INFORMATION ON OBJECTIVES OF THE INVENTION Development by ForexMatch, in conjunction with its customers, of contractually based terms and conditions for each customer's trading requirements. Development of mutally agreed matches between parties, based on same currency money transfer 35 contracts, that simulate the outcomes of foreign exchange contracts to achieve simulated currency WO 2006/060880 PCT/AU2005/001880 15 conversions by two or more parties by performing two or more same currency money transfer operations, comprising the steps of: Preparing contractual agreements for use by the two or more parties to define the terms and conditions under which each of the parties shall deliver or fail to deliver, at one or more future 5 times and dates, amounts of one currency in exchange for another at agreed mid-market exchange rates applicable for the relevant currency pairs. Setting up escrow accounts or other suitably secure banking arrangements to enable direct same currency transfers of money from one party to another to complete the simulated currency conversion transactions. 10 ForexMatch would define its own terms of business from the outset with each client. The role of ForexMatch may include any of the following activities: * Business development work aimed at identifying potential clients * Acting as an intermediary or agent to arrange and facilitate development of the contractual agreement for foreign exchange and transfer of money between the parties; 15 As intermediary ForexMatch would typically enter confidentiality agreements with each party and attend meetings to ascertain each party's requirements; * When a potentially suitable match is identified and established by ForexMatch, terms and conditions can be drafted by ForexMatch for acceptance by each of the parties; * Based on the results of the ForexMatch's work, the parties may enter into either a single 20 transaction agreement or a term agreement that may involve a series of transactions. The nature of the contract between any group of parties can vary depending on the unique agreement reached between the parties. Various additional advantages and features of novelty which characterize the invention are further pointed out in the claims that follow. However, for a better understanding of the invention and its 25 advantages, reference should be made to the accompanying drawings and descriptive matter which illustrate and describe preferred embodiments of the invention. While various embodiments of the present invention have been described above, it should be understood that they have been presented by way of example only, and not limitation. Thus, the breadth and scope of the present invention should not be limited by any of the above-descried 30 exemplary embodiments, but should instead be defined only in accordance with the following claims and their equivalents. 35

Claims (25)

1. A computer-based matching and transaction settlement system for completing money transfer and delivery of a currency's agreed foreign currency equivalent value, in a specified foreign currency, from a plurality of users of the system to a plurality of specified recipients who are not 5 users of the system, said system comprising: an internet website linked to a matching and transaction settlement computer system; a plurality of remote computers with internet access to the website corresponding to a plurality of users, said remote computers enabling said users to deposit money and submit matching and delivery instructions into the system to direct matching and delivery of matched money's agreed 10 foreign currency equivalent value in that foreign currency to specified recipients; said system being used to match a plurality of opposite money transfer requirements for each of a plurality of currency pairs; said matched money in a particular currency providing the funding for transaction settlements of money transfers from other currencies into that currency; 15 said matching and delivery instructions being submitted for execution at one or more future times and dates; delivery of said foreign currency to the said one or more specified recipients;

2. A computer-based matching and transaction settlement system for completing money transfer and delivery of a currency's agreed foreign currency equivalent value, in a specified foreign 20 currency, from a plurality of users of the system to a plurality of specified recipients who are not users of the system and a plurality of specified recipients who are users of the system, said system comprising: an internet website linked to a matching and transaction settlement computer system; a plurality of remote computers with internet access to the website corresponding to a plurality of 25 users, said remote computers enabling said users to deposit money and submit matching and delivery instructions into the system to direct matching and delivery of matched money's agreed foreign currency equivalent value in that foreign currency to specified recipients; said system being used to match a plurality of opposite money transfer requirements for each of a plurality of currency pairs; 30 said matched money in a particular currency providing the funding for transaction settlements of money transfers from other currencies into that currency; said matching and delivery instructions being submitted for execution at one or more future times and dates; delivery of said foreign currency to the said one or more specified recipients; WO 2006/060880 PCT/AU2005/001880 17

3. A computer-based matching and transaction settlement system for completing money transfer and delivery of a currency's agreed foreign currency equivalent value, in a specified foreign currency, from a plurality of users of the system to a plurality of specified recipients who are users of the system, said system comprising: 5 an internet website linked to a matching and transaction settlement computer system; a plurality of remote computers with internet access to the website corresponding to a plurality of users, said remote computers enabling said users to deposit money and submit matching and delivery instructions into the system to direct matching and delivery of matched money's agreed foreign currency equivalent value in that foreign currency to specified recipients; 10 said system being used to match a plurality of opposite money transfer requirements for each of a plurality of currency pairs; said matched money in a particular currency providing the funding for transaction settlements of money transfers from other currencies into that currency; said matching and delivery instructions being submitted for execution at one or more future times 15 and dates; delivery of said foreign currency to the said one or more specified recipients;

4. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said agreed foreign currency equivalent values for execution of matching and delivery instructions are submitted for execution based on independently determined future mid-market 20 interbank exchange rates;

5. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said agreed foreign currency equivalent values for execution of matching and delivery instructions are submitted for execution based on future exchange rates determined by the system operator; 25

6. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein the basis for determination of said future mid-market exchange rates is agreed between users and the system operator;

7. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said currency pairs comprise one currency defined as the base currency of that currency 30 pair;

8. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said money denominated in the non-base currency for matching must include margin to cover any adverse exchange rate movement between the time of deposit and the time of matching and transaction settlement; 35

9. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said money denominated in the base currency for matching is under-matched and the WO 2006/060880 PCT/AU2005/001880 18 balance due to the specified recipient is paid by use of a conventional foreign exchange transaction;

10. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said money denominated in the base currency for matching is over-matched, said over 5 matched amount being recorded by the System as a foreign currency credit for the user and the exact specified amount of foreign currency being delivered to the specified recipient;

11. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said money denominated in the base currency for matching is over-matched, an overpayment or credit will be recorded by the recipient and this will be resolved between the user 10 and the recipient;

12. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said money submitted for matching is broken down into base currency units of varying sizes by the user or by the system operator;

13. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, 15 wherein said odd amounts of non-base currency money submitted for matching is broken down into base currency units of varying sizes by the user or by the system operator;

14. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein each unit submitted by a particular user is identified by a coded ID known only to the user;

15. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, 20 wherein the system operator can provide users with access to areas of the website which allow viewing of the matching stacks to track progress of a submitted matching instruction, or to use the information in decision-making on what units sizes to submit for matching or which day to submit units for matching;

16. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, 25 wherein said users interactively submit units for matching into timing priority matching stacks or instruct the system operator to direct the matching process;

17. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein matching of units must be completed prior to a fixed cut-off time each trading day to qualify for matching at that day's independently determined mid-market interbank exchange rates, 30

18. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein said units submitted for matching can be withdrawn, if not already matched, up to the cut off time for completion of matching each trading day;

19. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein the independently determined mid-market interbank exchange rates are fixed for matching 35 each trading day at a specified time after the cut-off time for completion of matching on that trading day; WO 2006/060880 PCT/AU2005/001880 19

20. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein users can interactively define their matching requirements for money transfer

21. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, wherein users who have units that are not matched by the fixed cut-off time for matching on a 5 trading day, can either cancel that portion of their money transfer instruction or roll it over for matching and delivery on the next trading day;

22. A matching and transaction settlement system according to claim 1 or claim 2 or claim 3, for performing international money transfers without the requirement for the users or the system operator to perform conventional foreign exchange transactions as part of the international money 10 transfer process;

23. A system for registering and viewing expressions of interest wherein users granted access by the system operator can register expressions of interest using coded IDs and view other user's expressions of interest in matching and swapping currencies directly between users at future dates; 15

24. A system for registering and viewing expressions of interest according to claim 23, wherein users can contact the system operator to initiate negotiation with the operator with the objective of reaching agreement for future direct matching and swapping of currencies with any potential counterparties that can be identified from the message board;

25. A system for registering and viewing expressions of interest according to claim 23, wherein 20 upon reaching negotiated agreement with the system operator on compatible matching and swapping requirements, counterparties can be introduced to each other by the system operator to formalise a direct agreements for currency match and swap at independently determined future mid-market interbank exchange rates for spot or forward foreign exchange. 25 30 35