Internet based secure virtual exchange and distributed relational database for cross border trading of securities

• US 20020032642A1
• Filed: 07/24/2001
• Published: 03/14/2002
• Est. Priority Date: 10/13/1999
• Status: Abandoned Application

• Current Assignee: Integrated Trade Processing Corp.
• Original Assignee: Integrated Trade Processing Corp.
• Inventors: Chichilnisky, Graciela
• Application Number:
  US09/915,230
• Publication Number:
  US 20020032642A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A method and system provides an Internet based secure virtual exchange and distributed relational database for cross border security transactions. The method and system reduce the number of times a cross border security transaction is ‘touched’, reduce the number of failed cross border security transactions, reduce the fees paid by global custodians for cross border security transactions, provide a generic network of subcustodians organized around an Internet based secure virtual exchange with a distributed relational database, provide online matching, clearing, execution and settlement of online trades, provide global trading support platforms and information sources to support cross border security transactions, coordinating and recording all SWIFT messages associated with a single cross border trade. The distributed relational database can be utilized for execution, trade settlements, and corporate action events processing and is accessed through common browsers by asset managers, broker dealers, global custodians, and subcustodians.

Claims

1. A method for automating trade settlements, comprising:

providing a host system or systems with a distributed relational database accessible and updateable by more than one party to a cross border transaction;

caching a client'"'"'s standing settlement instructions in a client profile in the distributed relational database;

monitoring messages of a selected trade settlement client; and

assigning a unique transaction identifier of a trade settlement for messages that include an execution file or a settlement of a trade.

2. The method of claim 1, further comprising:

receiving at the host system (or systems) an execution file that includes trade settlement parameters; and

matching messages of the selected trade settlement process using the information in the execution file and the standing instruction parameters and adding said messages to the logical transaction workflow

3. The method of claim 2, further comprising:

marking matched messages with the transaction identifier; and

storing the marked traffic in the distributed relational database as part of a logical transaction for a trade settlement.

4. The method of claim 1, wherein the monitoring is done by an electronic file transfer.

5. The method of claim 4, wherein the electronic file transfer is from a client'"'"'s computer network to the host network system.

6. The method of claim 4, wherein the monitoring is done with a standard web browser.

7. The method of claim 1, wherein the client standing instructions include instructions for executing a trade including, but not limited to clearing methods, name of correspondent banks, sub agent or sub custodian, name of sub agent, client tax identification number, and account type.

8. The method of claim 1, wherein the execution file includes information about a specific trade, including, but not limited to, payment currency, client name, trade date, settlement date, security name, security type, and security code.

9. A method for automating trade settlements, comprising:

providing a host system with a distributed relational database accessible and updateable by more than one party to a cross border transaction;

receiving a copy of an execution file from a broker dealer to a global custodian;

assigning a unique logical transaction number to a settlement detailed in the execution file;

examining a profile database of the global custodian for the standing instructions from asset managers originating the trade;

monitoring traffic at the global custodian;

matching messages to the logical transaction process based upon content, their implicit relationship to the settlement detailed in the execution file, and the global custodian'"'"'s standing instructions;

updating the settlement in the workflow database, indicating the state of the settlement;

firing any conditional workflow related triggers related to time/content, based upon the global custodian'"'"'s profile database entry;

allowing the global custodian to interrogate the workflow database to determine the current state of the settlement transaction.

10. A method for automating corporate action information process, comprising:

providing a host system with a distributed relational database accessible and updateable by more than one party to a cross border transaction;

receiving information from an issuers agent and prospective investors at the host system; and

distributing the received information to issue holders.

13. The method of claim 10, wherein the corporate action process is selected from reconciliation, billing, tender offers, splits, dividends, rights issues, cash or stock dividends and proxy.

11. A method for automating a corporate action process, comprising:

providing a host system with a distributed relational database accessible and updateable by more than one party to a cross border transaction;

receiving an issue holder'"'"'s position and entitlement information from an issuer'"'"'s agent and at least one stock exchange or a stock depository at the host system; and

simultaneously sending the issue holder'"'"'s position and entitlement information to all participants in a reconciliation process.

12. The method of claim 11, further comprising:

sending reconciliation information relating to the issue holder'"'"'s position and entitlement to the stock depository.

15. The system of claim 14, further comprising:

at least one FX band coupled to the global custodian network.

16. The system of claim 15, further comprising:

at least one asset manager bank network coupled to the FX bank network and the global custodian network.

17. The system of claim 14, wherein all data pertaining to one logical transaction is stored in the distributed relational database.

18. The system of claim 14, wherein all participants in a trade or settlement can track the progress of the trade or settlement with access to the distributed relational database.

19. The system of claim 14, wherein the distributed relational database includes firewalls that separate information specific to subcustodians.

20. The system of claim 14, wherein the distributed relational database includes details on the execution, audits, trade settlement, and standing instructions for trade processing.

21. The system of claim 14, wherein each participant retains specific information that pertains to knowledge it has at a selected time.

22. The system of claim 14, wherein subcustodians retain information about all global custodians'"'"' omnibus accounts that they serve.

23. The system of claim 14, wherein global custodians retain information about all the asset managers'"'"' accounts and broker dealers'"'"' accounts that they serve.

24. The system of claim 14, wherein broker dealers retain information about all the investors'"'"' accounts that they serve.

27. The method of claim 26, wherein the host system provides a secure virtual exchange that enables customized, integrated reporting of trading positions, announcements, instructions, matches, recaps, updates, reconciliation, and billing among other services.

14. A system for automating cross border transactions, comprising:

a host system with a distributed relational database accessible and updateable by more than one party to a cross border transaction;

at least one global custodian network coupled to the host system; and

at least one sub-custodian coupled to the host system and the global custodian network.

25. A method of improving bank to bank instructions between financial institutions, comprising:

providing a host system with a distributed relational database accessible and updateable by more than one financial institution; and

transmitting messages between financial institutions for payments, foreign exchange, executions, settlements, or corporate actions providing knowledge of the content and context of the messages as they are sent and received, and identifying their relationship to a single trade or corporate actions event.

26. A method for centralizing information required to settle a global cross border transaction, comprising:

providing a host system with a distributed relational database accessible and updateable by more than one party to a cross border transaction;

creating audit trails for cross border transactions utilizing the host system.