Securities settlement system

• US 7,848,997 B2
• Filed: 03/15/2007
• Issued: 12/07/2010
• Est. Priority Date: 04/06/2006
• Status: Active Grant

• Current Assignee: Nasdaq Technology AB (Nasdaq, Inc.)
• Original Assignee: OMX Technology AB
• Inventors: Soderqvist, Johan, Lejdstrom, Bengt, Sander, Oskar
• Primary Examiner(s): Patel; Jagdish N
• Assistant Examiner(s): Chandler; Sara
• Application Number:
  US11/724,312
• Publication Number:
  US 20070288347A1
• Time in Patent Office: 1,363 Days
• Field of Search: 705/35, 705/37
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A securities settlement system for settling trades in central depository systems is disclosed. The securities settlement system includes a credit line structure forming a tree structure with a number of levels with credit nodes. The securities settlement system also includes a control system for minimizing the transfer of cash between accounts by propagating cash obligations for each node in the tree structure to a highest common node.

Claims

1. A securities settlement system for settling a trade between trading entities, comprising:

an interface configured to communicate cash balances with one or more payment systems;

a memory that stores cash and credit line information in a cash and credit line tree structure including multiple levels with (1) credit cash records or (2) liquidity cash records and credit cash records; and

a computer, coupled to the interface and the memory, configured to settle cash obligations to pay or receive cash which are associated with the trade by reducing or minimizing a transfer of cash between cash records in the cash and credit line tree structure for participants associated with the trade to produce a resulting cash balance,

wherein the computer is configured to reduce or minimize the transfer of cash by propagating cash obligations associated with the trade in the cash and credit line tree structure to a highest common cash record in the cash and credit line tree structure where the cash obligations associated with the trade cancel, and

wherein the computer is further configured to send via the interface to the one or more payment systems the resulting cash balance.

2. A securities settlement system according to claim 1, wherein the cash and credit line tree structure comprises a first level including liquidity cash records, each liquidity cash record representing a cash provider.

3. A securities settlement system according to claim 2, wherein the cash and credit line tree structure comprises a second level comprising a substructure of credit cash records for each liquidity cash record on the first level.

4. A securities settlement system according to claim 1, wherein the interface is configured to transfer cash to and/or from a cash provider'"'"'s payment system'"'"'s account.

5. A securities settlement system according to claim 4, wherein the cash and credit line tree structure comprises a zero-th level having a root cash record linking to all liquidity cash records, which root cash record acts as a balancing account with respect to the one or more payment systems.

6. A securities settlement system according to claim 5, wherein the computer is configured to forecast future transfers based on settlement instructions.

7. A securities settlement system according to claim 6, wherein the settlement instructions relate to matched unsettled trades.

8. A securities settlement system according to claim 6, wherein the settlement instructions relate to unmatched trades.

9. A securities settlement system according to claim 1, wherein the memory stores multiple cash and credit line tree structures, one for each currency that is handled by the system.

10. A securities settlement system according to claim 1, wherein the securities settlement system is in a central depository system.

11. A method for settling a trade between trading entities in a securities settlement system, comprising:

communicating cash balances via an interface with one or more payment systems;

storing in a memory cash and credit line information in a cash and credit line tree structure including multiple levels with (1) credit cash records or (2) liquidity cash records and credit cash records; and

settling by a computer linked to the memory and to the interface cash obligations to pay or receive cash which are associated with the trade by reducing or minimizing a transfer of cash between cash records in the cash and credit line tree structure for participants associated with the trade to produce a resulting cash balance,

reducing or minimizing by the computer the transfer of cash by propagating cash obligations associated with the trade in the cash and credit line tree structure to a highest common cash record in the cash and credit line tree structure where the cash obligations associated with the trade cancel, and

sending by the computer via the interface to the one or more payment systems the resulting cash balance.

12. A method according to claim 11, wherein the cash and credit line tree structure comprises a first level including liquidity cash records, each liquidity cash record representing a cash provider.

13. A method according to claim 12, wherein the cash and credit line tree structure comprises a second level including a substructure of credit cash records for each liquidity cash record on the first level.

14. A method according to claim 11, wherein the interface transfers cash to and/or from a cash provider'"'"'s payment system'"'"'s account.

15. A method according to claim 14, wherein the cash and credit line tree structure comprises a zero-th level having a root cash record linking to all liquidity cash records, which root cash record acts as a balancing account with respect to the one or more payment systems.

16. A method according to claim 15, wherein the computer forecasts future transfers based on settlement instructions.

17. A method according to claim 16, wherein the settlement instructions relate to matched unsettled trades.

18. A method according to claim 16, wherein the settlement instructions relate to unmatched trades.

19. A method according to claim 11, wherein the memory stores multiple cash and credit line tree structures, one for each currency that is handled by the system.

20. A securities settlement system for settling a trade between trading entities in a securities settlement system, comprising:

means for communicating cash balances with one or more payment systems;

means for storing in a memory a credit line structure forming a cash and credit line tree structure including multiple levels with (1) credit cash records or (2) liquidity cash records and credit cash records; and

means, coupled to the means for communicating and the means for storing, for settling cash obligations to pay or receive cash which are associated with the trade by reducing or minimizing a transfer of cash between cash records in the cash and credit line tree structure for participants associated with the trade to produce a resulting cash balance by propagating cash obligations associated with the trade in the cash and credit line tree structure to a highest common cash record in the cash and credit line tree structure where the cash obligations associated with the trade cancel, and

means for sending to the one or more payment systems the resulting cash balance.

21. A securities settlement system according to claim 20, wherein the cash and credit line tree structure comprises a first level including liquidity cash records, each liquidity cash record representing a cash provider, and wherein the cash and credit line tree structure comprises a second level including a substructure of credit cash records for each liquidity cash record on the first level.

22. A securities settlement system according to claim 20, wherein the cash and credit line tree structure comprises a zero-th level having a root cash record linking to all liquidity cash records, which root cash record acts as a balancing account with respect to the one or more payment systems.

23. A securities settlement system according to claim 20, wherein the securities settlement system is in a central depository system.