COMPUTER-IMPLEMENTED SYSTEM AND METHOD FOR CLEARING A DERIVATIVE TRADE INVOLVING MULTIPLE TRADING EXCHANGES
First Claim
1. A computer-implemented method performed by a data processing node associated with a first trading exchange, comprising the steps of:
- determining, by the data processing node, that a trade order for a derivative contract from a first trading participant associated with the first trading exchange is routed to and matched at a second, different trading exchange with a counter order from a second trading participant at the second trading exchange;
generating, by the data processing node, a balance derivative trade, separate from but with obligations corresponding to the matched trade, between the first trading participant and a balancing clearing entity affiliated with a clearing house associated with the first trading exchange; and
sending, by the data processing node, an electronic message to a clearing house computer of the clearing house associated with the first trading exchange that includes the balance derivative trade for clearing.
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Accused Products
Abstract
A derivative trade order at a home marketplace is routed to an away market place having a better price for a counter position to the order where it is executed. The executed order triggers creation of a “balance derivative trade” at the home marketplace to balance at a home clearing house the away trade. The home clearing house uses the balance derivative trade to create derivative positions of the balance derivative trade and informs a balancing clearing entity which manages the balance derivative trade obligations. The balance derivative trade order account permits netting and reduced margin benefits for the trading participant. A dual derivative exercise operation allows balance derivative positions to be performed in one day to reduce overnight risk for the clearing entity.
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Citations
30 Claims
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1. A computer-implemented method performed by a data processing node associated with a first trading exchange, comprising the steps of:
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determining, by the data processing node, that a trade order for a derivative contract from a first trading participant associated with the first trading exchange is routed to and matched at a second, different trading exchange with a counter order from a second trading participant at the second trading exchange; generating, by the data processing node, a balance derivative trade, separate from but with obligations corresponding to the matched trade, between the first trading participant and a balancing clearing entity affiliated with a clearing house associated with the first trading exchange; and sending, by the data processing node, an electronic message to a clearing house computer of the clearing house associated with the first trading exchange that includes the balance derivative trade for clearing. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8)
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9. A data processing node associated with a first trading exchange, comprising:
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memory configured to store instructions and data for performing exchange operations; one or more data processors, coupled to the memory, configured to; determine that a trade order for a derivative contract from a first trading participant to the first trading exchange is routed to and matched at a second, different trading exchange with a counter order from a second trading participant at the second, different trading exchange; generate a balance derivative trade, separate from but with obligations corresponding to the matched trade, between the first trading participant and a balancing clearing entity affiliated with a clearing house associated with the first trading exchange; and send an electronic message to a clearing house computer of the clearing house associated with the first trading exchange that includes the balance derivative trade for clearing. - View Dependent Claims (10, 11, 12, 13, 14, 15, 16)
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17. A computer-implemented method performed by a clearing house that is associated with a first trading exchange, the clearing house including at least a clearing computer server comprising at least one processor for receiving and transmitting data messages, the method comprising the steps of:
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receiving, by the clearing computer server, a data message comprising information relating to a balance derivative trade between a first trading participant and a balancing clearing entity associated with the clearing house and including at least one computer, the data message having been generated in response to detecting trade confirmation data related to an order submitted by the first trading participant to the first trading exchange and routed by an order router to a second trading exchange where the order was executed; clearing, by the at least one processor, the balance derivative trade; updating, by the at least one processor, an account associated with the first trading participant with a balance derivative contract position and a balance clearing account managed by the balancing clearing entity with a counter balance derivative contract position, in accordance with the cleared balance derivative trade; and transmitting a confirmation data message, by the clearing computer server, to the balancing clearing entity computer, the confirmation data message comprising information relating to updated positions in the balance clearing account managed by the balancing clearing entity. - View Dependent Claims (18, 19, 20, 21, 22)
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23. A computer-implemented clearing house associated with a first trading exchange, the clearing house comprising:
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memory configured to store instructions and data for performing trade clearing operations, and one or more data processors, coupled to the memory, configured to; receive a data message comprising information relating to a balance derivative trade between a first trading participant and a balancing clearing entity associated with the clearing house and including at least one computer, the data message having been generated in response to detecting trade confirmation data related to an order submitted by the first trading participant to the first trading exchange and routed by an order router to a second trading exchange where the order was executed; clear the balance derivative trade; update an account associated with the first trading participant with a balance derivative contract position corresponding to the balance derivative trade and a balance clearing account managed by the balancing clearing entity with a counter balance derivative contract position; and transmit a confirmation data message to the balancing clearing entity computer, the confirmation data message comprising information relating to updated positions in the balance clearing account managed by the balancing clearing entity. - View Dependent Claims (24, 25, 26, 27, 28)
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29. An exchange system comprising:
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an order router configured to; receive a data message including a trade order for a derivative contract from a first trading participant at the exchange system; route the trade order to a different second exchange system if the second exchange system offers a better counter order price to the trade order to be matched with the better counter order to generate a trade at the second exchange system; detect a trade confirmation data message with information for the trade executed at the second exchange system; generate a balance derivative trade separate from, but associated with, the trade executed at the second exchange system; and send an electronic data message to a clearing house computer associated with the exchange that includes the balance derivative trade, the clearing house computer configured to; detect the electronic data message; clear the balance derivative trade to create cleared balance derivative positions corresponding to the balance derivative trade; update an account associated with the first trading participant and a balance clearing account managed by a balancing clearing entity with the cleared balance derivative positions; and send clearing information relating to the updated balance derivative positions to the balancing clearing entity, the balancing clearing entity including a computer configured to; receive the clearing information; and transmit to the clearing house computer an exercise request related to balance derivative positions in the balance clearing account. - View Dependent Claims (30)
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Specification