Methods and systems for netting of payments and collateral

• US 8,468,087 B2
• Filed: 01/12/2010
• Issued: 06/18/2013
• Est. Priority Date: 10/28/2004
• Status: Active Grant

• Current Assignee: The Depository Trust & Clearing Corporation
• Original Assignee: The Depository Trust & Clearing Corporation
• Inventors: Axilrod, Peter
• Primary Examiner(s): NGUYEN, TIEN C
• Application Number:
  US12/686,119
• Publication Number:
  US 20100205088A1
• Time in Patent Office: 1,253 Days
• Field of Search: 705 30- 45, 705/26.35, 707/790
• US Class Current: 705/38
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• 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 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 99/00 Subject matter not provided for in other groups of this subclass

Abstract

The present invention generally provides for systems and methods for netting payments and collateral. Generally, systems and methods of the present invention maximize market liquidity and minimize financial risk and collateral burdens of participants.

Claims

1. A computerized method comprising the steps of:

providing, by a computer system, a subscription requiring two or more subscribing participants to abide by settlements of payment or collateral obligations, the subscription including an automatic trigger to settle a collateral obligation being netted without requiring approval from the participants;

receiving, at the computer system, data reported regarding two or more obligations between participants;

creating, by the computer system, a round-robin payment or collateral obligation structure based on data associated with the two or more reported obligations;

reducing, by the computer system, an amount of the two or more obligations between the participants based on an amount of each of the obligations;

maintaining, by the clearing organization, an account associated with each of the participants; and

updating, by the computer system, the accounts of each of the participants in the round-robin payment or collateral obligation structure to reflect the reduced amount.

2. The method of claim 1 wherein updating comprises eliminating the amount from the accounts of the participants in the round-robin payment or collateral obligation structure such that the amount is no longer due.

3. The method of claim 1 wherein:

reducing comprises satisfying the amount; and

updating comprises updating the accounts of the participants in the round-robin payment or collateral obligation structure such that the accounts indicate payment of the reduced amount without transmitting a payment between the participants.

4. The method of claim 1 further comprising verifying, by the clearing organization, an accuracy of each of the two or more obligations.

5. The method of claim 1 wherein the two or more obligations are between a first and second participant, and reducing comprises bilaterally netting the two or more obligations to one net amount owed by one of the first and second participant to the other.

6. The method of claim 5 wherein updating comprises replacing the two or more obligations in the accounts of the first and second participants with one obligation equal to the netted amount.

7. The method of claim 5 wherein updating comprises marking the two or more obligations in the accounts as satisfied without transmitting a payment from the first participant to the second participant, such that an amount equal to the one net amount remains unsatisfied in the first or second account.

8. A computerized method comprising the steps of:

receiving, by a computer system, data associated with a first obligation and a second obligation, the first obligation being a payment or collateral obligation owed from a first participant to a second participant, the second obligation being a payment or collateral obligation from the second participant to the first participant;

creating, by the computer system, a round-robin payment or collateral obligation structure between the first participant and the second participant based on the first and second obligations;

reducing, by the computer system, an amount of the first obligation based on the second obligation; and

updating, by the computer system, an account of each of the first participant and the second participant to reflect the reduced amount, wherein the amount is eliminated from the accounts such that the reduced amount is no longer due.

9. The method of claim 8 further comprising:

determining whether one or more participants failed to satisfy a payment or collateral obligation; and

maintaining the round-robin payment or collateral obligation structure in response to determining one or more parties failed.

10. The method of claim 8 wherein the round-robin payment or collateral obligation structure does not disrupt an original credit obligation between the first and second participants.

11. The method of claim 8 wherein the round-robin payment or collateral obligation structure does not reverse an original credit obligation between the first and second participants if the second obligation is an amount greater than the first obligation.

12. A computerized method comprising the steps of:

receiving, by a computer system, data associated with a first obligation and a second obligation, the first obligation being a payment or collateral obligation owed from a first participant to a second participant, the second obligation being a payment or collateral obligation from the second participant to the first participant;

creating, by the computer system, a round-robin payment or collateral obligation structure between the first participant and the second participant based on the first and second obligations;

reducing, by the computer system, an amount of the first obligation based on a second obligation; and

updating, by the computer system, an account of each of the first participant and the second participant to reflect the reduced amount, wherein the account indicates a payment of the reduced amount without transmitting a payment from the first participant to the second participant.

13. The method of claim 12 further comprising:

determining whether one or more participants failed to satisfy a payment or collateral obligation; and

maintaining the round-robin payment or collateral obligation structure in response to determining one or more participants failed.

14. The method of claim 12 wherein the round-robin payment or collateral obligation structure does not disrupt an original credit obligation between the first and second participants.

15. The method of claim 12 wherein the round-robin payment or collateral obligation structure does not reverse an original credit obligation between the first and second participants if the second obligation is an amount greater than the first obligation.

16. An apparatus comprising a computer system with a processor and memory configured to:

receive data associated with a first obligation and a second obligation, the first obligation being a payment or collateral obligation owed from a first participant to a second participant, the second obligation being a payment or collateral obligation from the second participant to the first participant;

create a round-robin payment or collateral obligation structure between the first participant and the second participant based on the first and second obligations;

reduce an amount of the first obligation based on the second obligation; and

update an account of each of the first participant and the second participant to reflect the reduced amount, wherein the amount is eliminated from the accounts such that the reduced amount is no longer due.