System and method for trade settlement tracking and relative ranking

• US 7,401,048 B2
• Filed: 05/30/2002
• Issued: 07/15/2008
• Est. Priority Date: 06/01/2001
• Status: Expired due to Term

• Current Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Original Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Inventors: Master, Warren, Phinney, John, Campfield, Thomas, Rosedale, Matthew P.
• Primary Examiner(s): Abdi; Kambiz
• Assistant Examiner(s): LIVERSEDGE, JENNIFER L
• Application Number:
  US10/157,439
• Publication Number:
  US 20030046219A1
• Time in Patent Office: 2,238 Days
• Field of Search: 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 distributed computer system that enables end users to evaluate a broker'"'"'s trade settlement performance by market and across multiple markets in terms of how many of the broker'"'"'s trades failed. Trades are defined as having failed when the actual settle date exceeds the date on which the trade should have settled. The system analyzes trade settlement statistics about each broker within the context of a selected broker peer group, and ranks and compares a broker'"'"'s settlement performance relative to the peer group. The system also ranks the brokers based on a set of metrics relative to the selected peer group. A broker'"'"'s peer group is defined in terms of the broker'"'"'s relative size within the trade universe as determined by trade count.

Claims

1. A computer system for recording the actions and ranking the failed trade settlement performance of broker/dealer participants in financial trades comprising:

A) a database connected to a communications network, wherein the database stores;

i) participant identity data uniquely identifying two or more broker/dealer trading participants;

ii) trade data for recording details of trades in which the trading participants engaged; and

iii) settlement data describing an actual settlement date on which each of the trades engaged in by each of the trading participants actually settled;

B) a server connected to the communications network and to the database, wherein the server is programmed to;

i) retrieve said participant identity, trade and settlement data;

ii) for each participant, perform a first filter of the settlement data to identify which of the trades included in that participant'"'"'s trade data is a failed trade settlement, wherein a failed trade settlement is a trade that actually settles on a date beyond an established settlement date by which the trade should have been settled wherein the first filter is based on a period over which a user wished to view trade and settlement data;

iii) perform a second filter to determine performance of a plurality of trading participants in accordance with their failed trade settlements pursuant to one or more criteria selectable by the user, wherein the user selectable filtering criteria includes one or more criteria selected from the group comprised of;

a) a time period;

b) a transaction type;

c) a payment type;

d) a security type;

e) a geographic region; and

f) a country;

iv) select a plurality of trading participants to evaluate;

v) display second filtered data for the selected plurality of trading participants to the user;

at least one display displaying the performance of the selected plurality of trading participants in rank order based on second filter results and on a market complexity factor wherein the rank order is based on a star score comprising one-half to five stars derived from the plurality of trading participants percentile within the second filter results of the trade and settlement data,

vi) display to the user failed trade settlement data for the selected plurality of trading participants; and

C) one or more workstations operatively connected to the communication network, wherein each workstation provides access to the server to view the first and second filtered failed trade data in accordance with criteria selected by the user.

2. The computer system in accordance with claim 1 wherein the server is programmed to rank the selected plurality of participants by best to worst failed trade performance.

3. The computer system in accordance with claim 2 wherein the server is programmed to communicate the failed trade rankings of said selected plurality participants to one or more entities that have access rights to the computer system.

4. The computer system in accordance with claim 1 wherein the server is programmed for counting total trades by the plurality of participants for ranking at least said selected plurality of participants in terms of one or more metrics selected from the group comprising:

a) a selected participant'"'"'s individual total failed trades count as compared to an aggregate total trade count for the plurality of participants;

b) a selected participant'"'"'s individual total failed trade count as compared to an aggregate total failed trade count for the plurality of participants;

c) a selected participant'"'"'s individual total failed trade count as compared to its individual total trade count;

d) a selected participant'"'"'s total trade settlement amount as compared to the aggregate total trade settlement amount for the plurality of participants;

e) the aggregate total failed trade settlement amount for the plurality of participants;

f) for the selected plurality of participants'"'"' failed trades, the average number of days past the settlement date that the trades actually settled.

5. The computer system in accordance with claim 1 wherein the server is further programmed to:

compute a plurality of core failed trade metrics for the plurality of trading participants; and

rank the selected trading participants according to a (a) selected trade metric or (b) composite failed trade metric based on multiple core failed trade metrics.

6. The computer system in accordance with claim 1 wherein the market complexity factor is an efficiency ratio that is calculated by security type for a market in which at least one of trading participants execute and settle trades.

7. The computer system in accordance with claim 6 wherein the server applies the market complexity factor to trade metrics of the trading participants to obtain market complexity figures and applies a formula to the market complexity figures for each of the trading participants to generate a formula result.

8. The computer system in accordance with claim 7 wherein the formula is a weighted average.

9. The computer system in accordance with claim 7 wherein the server generates the rank order based on ordering the formula result for each of the trading participants.

10. The computer system in accordance with claim 6 wherein the efficiency ratio is based on an assessment of a plurality of categories related to an efficiency of trade settlement within the market based on the security type.

11. The computer system in accordance with claim 10 wherein a plurality of categories include two or more of:

a trade matching category, a settlement type category, a securities type category, a depository category, a failure provisions category, a trade date/settlement date lapse category, a regulatory oversight category, and a securities legal frame work category.

12. A method using a computer system to derive failed trade settlement data for multiple broker/dealer participants in financial trades, said computer system coupled to a data communications network, a database operatively connected to said network, a server operatively connected to the network and the database;

and one or more workstation operatively connected to the server, comprising the computer-implemented steps of;

a) receiving and recording actions and performance including trade data from participants, said trade data including trade orders to the market, acceptance of the trade orders, date of closing and the dates when such orders are actually settled;

b) extracting failed trade settlements from said trade data, wherein a failed trade settlement is a trade that actually settles beyond an established time when the trade should have settled;

c) analyzing failed trade settlements from said trade data at four distinct levels wherein the four distinct levels comprise the following;

ultimate parent, parent, principal broker, and principal/clearer combination whereby the four distinct levels are hierarchical;

d) recording said failed trade settlements for each participant;

e) ranking failed trade settlements by each participant based on a market complexity factor whereby the market complexity factor is applied when trade data is across more than one market wherein the market complexity factor is an efficiency ratio that is calculated by security type for the market in which at least one of trading participants execute and settle trades,

f) ranking failed trade settlement performance for a plurality of participants based on user selectable filter criteria wherein the user selectable filtering criteria comprises a first and second filtering step whereby the first filtering step is based on time over which a user wishes to view data and the second filtering step comprises one or more of the following criteria;

a) a time period;

b) a transaction type;

c) a payment type;

d) a security type;

e) a geographic region;

f) a country; and

g) displaying to a user failed trade settlement rank data for a selected plurality of trading participants.

13. The method in accordance with claim 12 further including aggregating failed trade data for the plurality of participants and ranking two or more selected participants in accordance with best to worst failed trade performance.

14. The method in accordance with claim 13 further including communicating to one or more workstations the ranking of said two or more selected participants to one or more entities that have access rights to that data.

15. The method of programming a computer system to derive failed trade data in accordance with claim 12, further comprising:

computing a plurality of core failed trade metrics for the plurality of trading participants; and

ranking selected trading participants according to a (a) selected trade metric or (b) a composite failed trade metric based on multiple core failed trade metrics.

16. A method comprising the computer-implemented steps of:

identifying a trading participants peer group that comprises a plurality of trading participants wherein the trading participants peer group is a particular subset of brokers from a applicable universe of brokers;

retrieving trade data that comprises details of trades in which each of the plurality of trading participants engaged;

retrieving planned settlement data describing a planned settlement date on which each of the trades engaged in by each of the trading participants was planned to settle;

retrieving actual settlement data describing an actual settlement date on which each of the trades engaged in by each of the trading participants actually settled;

performing a first filter of the actual settlement data and of the planned settlement data to identify any failed trade settlements for each of the plurality of trading participants, wherein a failed trade settlement is a trade where the actual settlement date is after the planned settlement date wherein the first filter criteria is a period over which the actual settlement data is to be viewed;

performing a second filter on the trade data that outputs filtered trade data indicating a performance of the plurality of trading participants pursuant to one or more user selectable criteria, wherein the user selectable criteria includes one or more of;

a) a time period,

b) a transaction type,

c) a payment type,

d) a security type,

e) a geographic region, and

f) a country;

analyzing the filtered trade data for the plurality of trading participants at four distinct levels wherein the four distinct levels comprise the following;

ultimate parent, parent, principal broker, and principal/clearer combination whereby the four distinct levels are hierarchical;

deriving a set of performance metrics associated with the filtered trade data for each of the plurality of trading participants, wherein at least one of the set of performance metrics measures performance individually for each of the plurality of trading participants and at least one of the set of performance metrics measures performance for each of the plurality of trading participants relative to the trading participants peer group wherein the set of performance metrics is applied across the four distinct levels whereby the set of performance metrics comprises at least one of the following;

a) a selected participant'"'"'s individual total failed trades count as compared to an aggregate total trade count for the plurality of participants;

b) a selected participant'"'"'s individual total failed trade count as compared to an aggregate total failed trade count for the plurality of participants;

c) a selected participant'"'"'s individual total failed trade count as compared to its individual total trade count;

d) a selected participant'"'"'s total trade settlement amount as compared to the aggregate total trade settlement amount for the plurality of participants;

e) the aggregate total failed trade settlement amount for the plurality of participants;

f) for the selected plurality of participants'"'"' failed trades, the average number of days past the settlement date that the trades actually settled;

ranking each individual broker within the plurality of trading participants based on each of the at least one of the set of performance metrics wherein the ranking comprises a star score from one-half to five stars depending on a percentile ranking of the individual broker within the set of performance metrics;

generating a composite ranking for each of the plurality of trading participants whereby the composite ranking is generated by taking a simple average of individual rankings for at least the following metrics, comprising;

individual trades to aggregate trade count, individual fail count to aggregate fail count, individual fail rate, and average fail duration wherein the composite ranking comprises a star score from one-half to five stars depending on a percentile ranking of the plurality of trading participants within the set of performance metrics; and

ranking the plurality of trading participants across all markets with trade activity at the ultimate parent and parent levels and across any individual market or combination of markets at the principal broker level wherein a market complexity factor is used when trading activity is across more than one market, the market complexity factor being an efficiency ratio that is calculated for a market in which at least one of the trading participants execute and settle trades, wherein the market complexity factor is applied to trade metrics of the at least one of the trading participants to obtain market complexity figures that are included in a weighted average formula to generate a formula result for the at least one of the trading participants, the composite ranking being based on the formula result, wherein the efficiency ratio is based on an assessment of a plurality of categories related to an efficiency of trade settlement within the market, the plurality of categories including two or more of;

a trade matching category, a settlement type category, a securities type category, a depository category, a failure provisions category, a trade date/settlement date lapse category, a regulatory oversight category, and a securities legal frame work category, wherein the composite ranking aggregates the plurality of trading participants and ranks two or more selected trading participants in accordance with best to worst failed trade performance.