I've never understood the purpose of patents in the financial industry.

  1. What would be the pros and cons of applying for a patent on some financial model or trading system?
  2. What would be the motivating factors behind this?
  3. What sort of protection does this offer?
  • $\begingroup$ Where do you see a patent for a trading system? I'm genuinely curious. $\endgroup$ – chrisaycock Jul 30 '12 at 11:03
  • $\begingroup$ Not sure about a trading system, but Michaud's resampling technique has a patent on it. $\endgroup$ – John Jul 30 '12 at 20:09
  • $\begingroup$ Patents really need to be restricted to ideas that are original, non-obvious, and capable of being incarnated as a device with some degree of tangibility. It is absurd that regardless of any standards whatsoever, anyone can patent broad claims on anything from natural human genes that were not even invented to general or abstract mathematical ideas. $\endgroup$ – JL344 Jul 31 '12 at 3:34
  • $\begingroup$ @chrisaycock scholar.google.com/… $\endgroup$ – pyCthon Sep 1 '13 at 5:32
  • $\begingroup$ @chrisaycock From etf.com/sections/daily-etf-watch/… (mirror): " The firm has several patents in place related to its investment process.". Also: google.com/search?tbm=pts&hl=en&q=Trading $\endgroup$ – Franck Dernoncourt Oct 28 '17 at 20:46

Risk vendors need to provide a high-level of transparency and disclose their methods to their customers. BARRA's initial risk model was not accompanied by a patent. They claim, perhaps rightly so, that competing risk vendors lifted their ideas in their own products as a result. I know their most recent risk model using the "Eigenfactor methodology" does have patent protection from other risk shops. It's hard to say how this would protect BARRA from private in-house risk organizations incorporating those insights.

  • $\begingroup$ would you happen to have a link to their Eigenfactor patent? i've search and nothing comes up $\endgroup$ – pyCthon Aug 4 '12 at 23:39
  • $\begingroup$ don't have the link but the paper is available on the BARRA site. email me and I can also send it to you. $\endgroup$ – Ram Ahluwalia Aug 5 '12 at 4:28

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