Margin release system for an electronic-based market

• US 20020178102A1
• Filed: 03/15/2001
• Published: 11/28/2002
• Est. Priority Date: 03/15/2001
• Status: Abandoned Application

• Current Assignee: The Clearing (Intercontinental Exchange, Inc.)
• Original Assignee: The Clearing (Intercontinental Exchange, Inc.)
• Inventors: Scheinberg, David, Scheinberg, Larry
• Application Number:
  US09/809,765
• Publication Number:
  US 20020178102A1
• 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
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A system for an electronic-based market is disclosed. The system operates with a model where a trader is designated to enter orders for contracts on behalf of a subscriber. The model uses assets of the subscriber that are placed into an account that is accessible by the electronic market to cover risks associated with trades initiated by the trader. The system includes a plurality of client stations for entering orders into the electronic market by traders and a server to receive the orders and match the orders in accordance with matching criteria. The server maintains for the subscriber and the subscriber'"'"'s associated traders a trading account that is accessible by the electronic market. The server also includes offsetting, clearing, default, and margin protocols functions to administer the market. The market uses species contracts that are derived from a contract genus. Also described is a margin release process triggered upon settlement.

Claims

1. A method for managing delivery commitments associated with a contract for goods traded on an electronically based exchange comprises:

determining a short position in the contract is indicated for delivery;

matching a long position to the short position for the contract;

determining delivery commitments for each party to the contract;

constraining assets against the delivery commitments undertaken by each party;

determining a percentage of the delivery commitments associated with the contract that has been performed by one of the parties; and

releasing the asset constraints held against the performing party at about the determined percentage.

2. The method of claim 1 wherein determining a short position in the contract indicated for delivery determines that a short position indicates a delivery notice or settlement date reached.

3. The method of claim 1 wherein matching a long position to the short position for the contract matches a long position in an order book with the same specificity as the short position.

4. The method of claim 1 wherein determining delivery commitments for each party to the contract further comprises:

determining the buyer and seller for the contract;

determining the terms of payment for the buyer; and

determining the terms of delivery for the seller.

5. The method of claim 1 wherein constraining assets against the delivery commitments undertaken by each party further comprises:

determining an initial margin amount for each party to the contract;

determining assets held in each party'"'"'s trading account are sufficient to cover the initial margin amount; and

indicating which assets in each party'"'"'s trading account are designated as margin assets for the contract.

6. The method of claim 1 wherein determining a percentage of the delivery commitments associated with the contract that has been performed by one of the parties further comprises:

receiving a delivery amount message from one of said parties to the contract;

receiving a confirmation of the delivery amount message from the other party to the contract which confirms a partial completion of the delivery commitments by one of said parties; and

determining the percentage of commitments completed by comparing the delivery amount to the delivery commitments.

7. The method of claim 1 wherein releasing the asset constraints held against the performing party at about the determined percentage further comprises:

reducing a margin amount designated for the performing party at about the determined percentage; and

indicating the assets in the performing party'"'"'s trading account that are no longer designated as margin assets for the contract.

8. The method of claim 1 wherein the contracts traded are futures contracts traded in a futures exchange.

9. A computer program product residing on a computer readable medium for managing an electronic exchange having delivery commitments associated with a contract for goods traded on the exchange comprises instructions to cause a computer to:

determine a short position in the contract is indicated for delivery;

match a long position to the short position for the contract;

determine delivery commitments for each party to the contract;

constrain assets against the delivery commitments undertaken by the parties;

determine a percentage of commitments associated with the contract that has been performed by one of the parties; and

release the asset constraints held against the performing party at about the determined percentage.

10. The computer program product of claim 9 wherein instructions to determine a short position in a contract is indicated for delivery further comprises instructions to cause the computer to:

determine that a short position indicates a delivery notice or settlement date reached.

11. The computer program product of claim 9 wherein instructions to match a long position to the short position for the contract further comprises instructions to cause the computer to:

match a long position in an order book with the same specificity of the position indicated for execution.

12. The computer program product of claim 9 wherein instructions to determine delivery commitments for each party to the contract further comprises instructions to cause the computer to:

determine the buyer and seller for the contract;

determine the terms of payment for the buyer; and

determine the terms of delivery for the seller.

13. The computer program product of claim 9 wherein instructions to constrain assets against the delivery commitments undertaken by each party further comprises instructions to cause the computer to:

determine an initial margin amount for each party to the contract;

determine assets held in each party'"'"'s trading account are sufficient to cover the initial margin amount; and

indicate which assets in each party'"'"'s trading account are designated as margin assets for the contract.

14. The computer program product of claim 9 wherein instructions to determine a percentage of commitments associated with the contract that has been completed by parties further comprises instructions to cause the computer to:

receive a delivery amount message from one of said parties to the contract;

receive confirmation of the delivery amount message from the other party to the contract; and

determine the percentage of commitments completed by comparing the confirmation amount to the delivery commitments.

15. The computer program product of claim 9 wherein instructions to release the asset constraints further comprises instructions to cause the computer to:

reduce a margin amount designated for the performing party at about the determined percentage; and

indicate the assets in the performing party'"'"'s trading account that are no longer designated as margin assets for the contract.