An auction system is disclosed which allows users to participate using
their own, or the exchanges, or a brokers, computers, suitably connected
to the auction system. This connection may use the internet or a private
leased line or an alternative network. The invention involves a method
and system for providing auction mechanisms, including a wide variety of
types of auctions as described below, and a central counterparty for
assuming credit risk between borrowers and lenders, if the borrowers and
lenders chose not to transact with each other. This method and auction
system provides a means for borrowers and lenders of securities to meet
more efficiently, to trade at a better price, to trade in larger size, to
trade more rapidly, and, in some cases eliminate the role of the broker
as an intermediary between borrower and lender. This mechanism
facilitates not only a borrowing and subsequent short sale of securities
but also the financing of securities.