Method and system for tracking derivatives positions and monitoring credit limits

• US 20060129472A1
• Filed: 12/12/2005
• Published: 06/15/2006
• Est. Priority Date: 12/10/2004
• Status: Abandoned Application

• Current Assignee: Tradeweb Markets LLC (Tradeweb Markets, Inc.)
• Original Assignee: Thomson TradeWeb LLC (Tradeweb Markets, Inc.)
• Inventors: Harrington, George
• Application Number:
  US11/302,026
• Publication Number:
  US 20060129472A1
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A derivatives position tracking system that consists of a centralized trading engine with a trade history database capable of communication with a plurality of counterpart computers via a network to enable the execution of a derivatives transaction. The trading engine and counterpart computers enable the counterpart computers to initiate, unwind and assign requests. Upon execution of a tear-up or assignment, a record of such transaction is stored in the trade history database. Whether or not the tear-up or assignment is executed with the original counterpart, the original counterpart receives a notification of the tear-up/assignment and a new position with the counterpart is reflected in the position-tracking database. Additionally, a credit monitoring module can be used in connection with the derivatives position tracking system to enable the trading engine to alert counterparts when a derivatives transaction exceeds a pre-defined credit limit.

Claims

1. An automated method for monitoring a set of existing derivatives transactions executed between counterparts, comprising the steps of:

receiving a first signal indicative of a trade request from a customer concerning an existing derivatives transaction between the customer and a first dealer;

receiving a second signal indicative of an offer to execute a new derivatives transaction from the one or more dealers that corresponds to the existing derivatives transaction;

receiving a third signal indicative of an acceptance of the offer; and

storing a record of the new derivatives transaction upon receiving the third signal.

2. The method of claim 1 further comprising the step of:

communicating information indicative of the trade request from the customer to one or more dealers, upon receipt of the first signal.

3. The method of claim 2, wherein one of the one or more dealers is the first dealer.

4. The method of claim 2, wherein one of the one or more dealers is a dealer other than the first dealer.

5. The method of claim 1 further comprising the step of:

communicating information indicative of an offer to execute the new derivatives transaction to the customer, upon receipt of the second signal.

6. The method of claim 1 further comprising the step of:

communicating information indicative of the acceptance of the new derivatives transaction upon receipt of the third signal.

7. The method of claim 1, wherein the new derivatives transaction creates a tear-up.

8. The method of claim 1, wherein the new derivatives transaction is with a second dealer and creates an assignment upon acceptance by the first dealer.

9. The method of claim 1, further comprising the step of:

storing at least one of the first, second, and third signals in a database run on a computer environment.

10. The method of claim 1, further comprising the step of:

sending a fourth signal indicative that the existing derivatives transaction has been unwound.

11. The method of claim 1, wherein the existing derivatives transaction that was executed with an original dealer is being assigned based on the acceptance of the offer to execute the new derivatives transaction received from a new dealer, and further comprising the step of:

notifying the original dealer of the execution of the new derivatives transaction with the new dealer.

12. The method of claim 11, further comprising the steps of:

receiving from the original dealer an acceptance of the assignment of the existing derivatives transaction; and

updating the record of the existing derivatives transaction to indicate assignment of the existing derivatives transaction.

13. The method of claim 11, further comprising the steps of:

receiving from the original dealer a rejection of the assignment of the existing derivatives transaction; and

wherein both the new derivatives transaction and the original derivatives transaction are stored.

14. The method of claim 1, wherein the existing derivatives transaction that was executed with an original dealer is being torn-up based on the acceptance of the offer to execute the new derivatives transaction received from the original dealer, and further comprising the step of:

updating the record of the existing derivatives transaction to indicate the tearing-up of the existing derivatives transaction.

15. A system for monitoring derivatives transactions, comprising:

a trading engine capable of communication with a plurality of counterpart computers and enabling the execution of the derivatives transactions;

a trade history database communicatively connected to the trading engine and capable of communication with the plurality of counterpart computers, the trade history database configured to store a set of records of at least a portion of the derivatives transactions executed on the trading engine; and

wherein the trading engine is configured to enable an unwinding of the derivatives transactions, initiate a record of the unwinding to be stored in the trade history database, and send a notification of the unwinding of the derivatives transaction.

16. The system of claim 15, wherein the unwinding of the derivatives transaction is a tear-up.

17. The system of claim 15, wherein the unwinding of the derivatives transaction is an assignment.

18. The system of claim 15, wherein the trade history database is also configured to store a record of at least a portion of a derivatives transaction executed on a second trading engine.

19. The system of claim 15, the trade history database is also configured to store a record of derivatives transactions executed over the telephone.

20. The system of claim 15, wherein the trading engine comprises one or more computers operative with programming and adapted to communicate with the plurality of counterpart computers via a network.

21. The system of claim 20, wherein the one or more computers are servers.

22. The system of claim 15, wherein at least one of the counterpart computers is a personal digital assistant.

23. The system of claim 15, wherein the trade history database resides on a data storage device.

24. The system of claim 23, wherein the data storage device is a hard disk drive system.

25. The system of claim 15, wherein the trading engine and counterpart computers communicate through the exchange of data messages.

26. The system of claim 25, wherein the data messages use an extensible markup language format.

27. The system of claim 15, wherein the counterpart computers are configured to provide a set of graphical user interfaces that enable control of a plurality of trading-related functions.

28. The system of claim 27, wherein information entered into the counterpart computers through the set of graphical user interfaces is transmitted to the trading engine for processing.

29. The system of claim 27, wherein the graphical user interfaces include a position-tracking interface comprising at least a set of derivatives positions for one of the counterparts.

30. The system of claim 29, wherein the position tracking interface includes a field for a description of a derivatives position from the set of derivatives positions.

31. The system of claim 27, wherein the graphical user interfaces include a trade ticket interface for use in unwinding the derivatives transaction.

32. A computer implemented method for monitoring a derivatives transaction executed by a first party and a counterpart, the method comprising:

storing a record for the derivatives transaction;

receiving a request to unwind the derivatives transaction from the first party to the derivatives transaction;

receiving price information from at least one of a plurality of additional counterparts;

automatically transmitting the price information to the first party;

receiving an acceptance of the price information;

unwinding the derivatives transaction; and

notifying the counterpart that the derivatives transaction has been unwound.

33. The method of claim 32 further comprising the step of transmitting a set of trade details for the derivatives transaction that has been unwound to an electronic confirmation interface.

34. A system for monitoring derivatives transactions executed between counterparts, comprising:

a first receiving means for receiving a first signal indicative of a request to unwind a derivatives transaction;

a second receiving means for receiving a second signal indicative of an offer for unwinding the derivatives transaction;

a third receiving means for receiving a third signal indicative of an acceptance of the offer; and

a means for unwinding the derivatives transaction upon receipt of the third signal.

35. The system of claim 34, wherein the second signal is indicative of a tear-up.

36. The system of claim 34, wherein the second signal is indicative of an assignment.

37. The system of claim 34, further comprising:

a storing means for storing one or more of the signals in a database run on a computer environment.

38. The system of claim 34, further comprising a fourth receiving means:

for sending a fourth signal indicating that the derivatives transaction has been unwound.

39. A system for tracking derivatives transactions executed between counterparts, comprising one or more servers configured to:

initiate a request on a trading engine to unwind a selected derivatives transaction;

select one or more counterparts to which the request will be transmitted;

populate a position tracking interface with information about the selected derivatives transaction;

receive price information from each of the responding counterparties that were submitted via a plurality of counterpart computers;

make a selection to execute the unwind transaction;

store a record of the unwind transaction in a trade history database;

update the trading engine to reflect the executed unwind transaction; and

populate a confirmation template on the trading engine system.

40. The system of claim 39, wherein the unwind transaction is a tear-up.

41. The system of claim 39, wherein the unwind transaction is an assignment.

42. An automated method for monitoring a set of derivatives transactions executed between counterparts, comprising the steps of:

receiving a first signal indicative of a trade request concerning an existing derivatives transaction from the set of derivatives transactions;

receiving a second signal indicative of an offer to execute a new derivatives transaction;

receiving a third signal indicative of an acceptance of the offer; and

executing the new derivatives transaction upon receipt of the third signal.