INTEROFFICE BANK OFFERED RATE FINANCIAL PRODUCT AND IMPLEMENTATION

• US 20140149272A1
• Filed: 08/19/2013
• Published: 05/29/2014
• Est. Priority Date: 08/17/2012
• Status: Abandoned Application

• Current Assignee: TrueEX Group LLC
• Original Assignee: TrueEX Group LLC
• Inventors: Hirani, Sunil, Francisci, Alex
• Application Number:
  US13/970,489
• Publication Number:
  US 20140149272A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 90/00 Systems or methods specially adapted for administrative, commercial, financial, managerial or supervisory purposes, not involving significant data processing

Abstract

The present invention is a system, method, and resultant financial for enabling a transparent estimation of an inter-bank offered interest rate which is dependent on market participant'"'"'s estimations of current lending and borrowing rates. The improved functionality arises through inclusion of both estimated borrowing rates and estimated lending rates to determine a mean inter-bank offered rate. The process implements panel observers, and exception criteria, to preclude determinations biased by skewed estimates provided by panel members and or panel participants. The improved process and system of the present invention further allows implementation of creditworthiness adjustments to inter-bank offered rates based on the creditworthiness of the panel participants, as well as implementation of obligated transactions as a means for dissuading panel members and/or panel participants from submitting biased estimates. The improved mean inter-bank offered rate forms the foundation for financial products whose value is derived from the mean inter-bank offered rate.

Claims

1. A method for decreasing potential bias of an estimated inter-bank offered interest rate, the method comprising:

Identifying a plurality of panel members willing to timely provide estimated interest rates for borrowing a certain sum of money and for lending a certain sum of money;

Identifying a panel observer, said panel observer serving as a disinterested party regarding analysis of submitted borrowing rate and lending rate estimates;

Providing an interest rate analysis platform for receiving estimated borrowing and lending rates from said plurality of panel members;

Providing panel members access to a computer application to allow said panel members to report estimated lending rates and borrowing rates;

Receiving at the interest rate analysis platform estimated lending rates and borrowing rates via a computer network;

Determining on said interest rate analysis platform an average lending rate based on estimated lending rates provided by said plurality of panel members;

Determining on said interest rate analysis platform an average borrowing rate based on estimated borrowing rates provided by said plurality of members;

Determining from said average lending rate and said average borrowing rate a mean inter-bank offered interest rate;

Disseminating via an electronic network said determined average borrowing rate, said determined average lending rate, and said determined mean inter-bank offered rate to at least one recipient.

2. A method according to claim 1, further comprising:

Identifying from said plurality of panel members at least one potential panel participant, said at least one panel participant willing to timely provide information associated with an estimated lending rate for lending a certain sum of money.

3. A method according to claim 2, further comprising:

Requiring panel members to vette the creditworthiness of panel participants associated with said panel member.

4. A method according to claim 2, further comprising;

Determining an interest rate adjustment for each panel participant, said interest rate adjustment useable for adjusting borrowing or lending rates associated with said panel participant based on the creditworthiness of said panel participant.

5. A method according to claim 1, further comprising;

Applying exception criteria to said reported estimated lending rates and said estimated borrowing rates to identify estimates which may reflect a bias before determining the average lending rate and the average borrowing rate.

6. A method according to claim 5, wherein the exception criteria are determined by polling the panel observers.

7. A method according to claim 1, further comprising:

Imposing a financial transaction on one or more panel participants as a result of an estimated lending rate provided by said panel participant exceeding exception criteria.

8. A method according to claim 1, further comprising:

Offering to enter into a financial contract to pay an amount of interest based on a variable rate determined on a notional amount for a predefined duration in exchange for receiving a an amount of interest based on a fixed rate on a notional amount for a predefined duration.

9. A method according to claim 1, further comprising:

Offering to enter into a financial contract to pay an amount of interest based on a fixed rate on a notional amount for a predefined duration in exchange for receiving an amount of interest based on a variable amount of interest on a notional amount for a predefined duration.

10. An interest rate swap financial instrument, said financial instrument characterized by an obligation to pay to a counter-party a sum of money based on a variable interest rate on a notional amount of said financial instrument and a tenure of said financial instrument, wherein said variable interest rate is determined by a method comprising:

Identifying a plurality of panel members willing to timely provide estimated interest rates for borrowing a certain sum of money and for lending a certain sum of money;

Identifying a panel observer, said panel observer serving as a disinterested party regarding analysis of submitted borrowing rate and lending rate estimates;

Providing an interest rate analysis platform for receiving estimated borrowing and lending rates from said plurality of panel members;

Providing panel members access to a computer application to allow said panel members to report estimated lending rates and borrowing rates;

Receiving at the interest rate analysis platform estimated lending rates and borrowing rates from said panel members via a computer network;

Determining on said interest rate analysis platform an average lending rate based on estimated lending rates provided by said plurality of panel members;

Determining on said interest rate analysis platform an average borrowing rate based on estimated borrowing rates provided by said plurality of members; and

Determining from said average lending rate and said average borrowing rate a mean inter-bank offered interest rate.

11. A method according to claim 10, wherein the variable interest rate is determined by a method further comprising:

Identifying from said plurality of panel members at least one potential panel participant, said at least one panel participant willing to timely provide information associated with an estimated lending rate for lending a certain sum of money.

12. A method according to claim 11, wherein the variable interest rate is determined by a method further comprising:

Requiring panel members to vette the creditworthiness of panel participants associated with said panel member.

13. A method according to claim 11, wherein the variable interest rate is determined by a method further comprising:

Determining an interest rate adjustment for each panel participant, said interest rate adjustment useable for adjusting borrowing or lending rates associated with said panel participant based on the creditworthiness of said panel participant.

14. A method according to claim 10, wherein the variable interest rate is determined by a method further comprising:

Applying exception criteria to said reported estimated lending rates and said estimated borrowing rates to identify estimates which may reflect a bias before determining the average lending rate and the average borrowing rate.

15. A method according to claim 14, the exception criteria are determined by polling the panel observers.

16. A system for determining a mean inter-bank offered rate, the system comprising:

An interest rate platform, said platform being communicably connected to at least one computer network;

A plurality of panel members, said panel members for reporting estimated lending rates and estimated borrowing rates to said interest rate platform through said computer network;

At least one panel observer, said panel observer for observing determinations of average lending rates, average borrowing rates, and a mean inter-bank offered rate, and identifying potentially biased estimated borrowing rates and lending rates reported by said panel members;

Wherein said interest rate platform receives estimated lending rates and estimated borrowing rates from said panel members, applies exception criteria to said reported estimated lending rates and said estimated borrowing rates, and determines an average lending rate, and average borrowing rate, and a mean inter-bank offered rate from said estimated lending rates and estimated borrowing rates.

17. A system in accordance with claim 16, further comprising:

At least one panel participant, said panel participant for reporting estimated lending rates to said interest rate platform via an affiliated panel member through said computer network.

18. A system in accordance with claim 17, wherein said interest rate platform further comprises a reporting module which publishes to one or more users the determined average lending rate, average borrowing rate, and mean inter-bank offered rate via said computer network to one or more users who have subscribed to receive said average lending rate, average borrowing rate, and mean inter-bank offered rate.

19. A system in accordance with claim 17, wherein said interest rate platform further comprises a panel participant credit adjustment module, wherein said credit adjustment module calculates client rate adjustments for each panel participant dependent on the creditworthiness of the panel participant.

20. A system in accordance with claim 16, wherein said exception criteria comprises a maximum spread between an estimated lending rate and an estimated borrowing rate reported by a panel member for said estimated lending rate and said estimated borrowing rate to be considered when calculating said average borrowing rate and said average lending rate.