Electronic trading confirmation system

• US 8,005,743 B2
• Filed: 09/17/2002
• Issued: 08/23/2011
• Est. Priority Date: 11/13/2001
• Status: Active Grant

• Current Assignee: Intercontinental Exchange Holdings, Inc. (Intercontinental Exchange, Inc.)
• Original Assignee: Intercontinental Exchange, Inc.
• Inventors: Worley, Cynthia L., Rane, Sanjay, Tullis, Henry D. III, Hughes, Tracy, Tupper, Bruce, Xia, DongChun, Marcial, Edwin, Vice, Charles
• Primary Examiner(s): Kalinowski; Alexander
• Assistant Examiner(s): Ebersman; Bruce I
• Application Number:
  US10/245,848
• Publication Number:
  US 20030093362A1
• Time in Patent Office: 3,262 Days
• Field of Search: None
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: H02J 3/008 involving trading of energy or energy transmission rights
• CPC Class Codes: Y04S 10/50 Systems or methods supporting the power network operation or management, involving a certain degree of interaction with the load-side end user applications
• CPC Class Codes: Y04S 50/10 Energy trading, including energy flowing from end-user application to grid

Abstract

A system and method of confirming trades of financial instruments such as OTC derivatives is disclosed. The system includes a data interface which accepts data relating to a trade from both the trader and counter party. The data includes different data fields of differing importance. The system includes a matching engine which compares the submitted data and assigns the trade a status depending on which of the data fields match. The system allows a user to filter trades on their status and display the details relating to that trade. The system also allows a user to display the data fields and change the data fields in order to change the status of the trades. The system thus allows a user to electronically confirm a trade and also identify unmatched trades and the information necessary to reconcile such unmatched trades.

Claims

1. A computer system for matching and categorizing trades between a trader and a counter party based on an electronic submission of a data file representing details in data fields of a trade by the trader and a second data file representing details in data fields of the trade by the counter party, the system comprising:

a data interface engine which reads the data files and data fields, the data interface engine comprising computer-readable instructions for performing the reading operation;

a matching engine coupled to the data interface engine which compares selected subsets of data fields in the data files and categorizes the trade to indicate which of the selected subsets of data fields are inconsistent, the matching engine comprising computer-readable instructions for performing the comparison and categorization operations;

a memory configured to store the data interface engine computer-readable instructions and the matching engine computer-readable instructions;

a processor configured to execute the data interface engine computer-readable instructions and the matching engine computer-readable instructions; and

a database coupled to the matching engine which stores trade data read from the data files and designated category.

2. The system of claim 1 further comprising a web based server which sends a webpage to display a graphical user interface on a connected computer to enable a trader or counter party to activate the data interface engine and the matching engine.

3. The system of claim 2 wherein the webpage includes scripts to allow the submission of data files including data fields for a trade.

4. The system of claim 3 wherein the scripts include an Extensible Markup Language (XML) interface for use with an application specific interface capable of running on the connected computer.

5. The system of claim 3 wherein the scripts include a https interface capable of receiving a secure data file from the connected computer.

6. The system of claim 1 wherein at least two of the selected subsets of data fields are further defined as key data fields and required data fields, respectively.

7. The system of claim 6 wherein at least two other of the selected subsets of data fields are further defined as informational data fields having data which is for informational purposes only and as product master data fields which have a singular value stored in a product master table in the database.

8. The system of claim 7 wherein the trader may display all of the data fields of a specific trade and wherein each field has a symbol indicating whether it is a key data field, a required data field, an informational field or a product master data field.

9. The system of claim 6 wherein the matching engine categorizes the trade based on a comparison of key and required data fields, wherein the trade is categorized as one of:

matched indicating that all data fields match;

unmatched indicating that key data fields are consistent but at least one other data field is inconsistent;

pending indicating that one or more key data fields are inconsistent;

alleged indicating that the counter party alleges having made a trade; and

canceled indicating that the trade has been withdrawn.

10. The system of claim 2 wherein results of the matching engine are displayed on the connected computer according to the assigned trade category.

11. The system of claim 10, wherein the webpage has script for enabling the trader and counter party to submit new values for inconsistent data fields and to submit the new values to the matching engine for comparison.

12. The system of claim 10 where the webpage has script to enable the trader and counter party to display trades meeting a certain defined criteria.

13. The system of claim 12 wherein the matching engine enables the trader and counter party to rename data fields.

14. The system of claim 1, wherein trades and trade data stored in said database is searchable by at least one of the trader and counter party according to the trade category.

15. The system of claim 1, further comprising:

a data input port for receiving trade data from the two or more trading participants; and

a data processing module in communication with the matching engine for processing the received trade data and providing the processed trade data to the matching engine.

16. The system of claim 1, wherein the database if further configured for storing trade-confirmation data and trade life cycle data.

17. The system of claim 16, wherein the data interface is further configured to report matched trades, trade-confirmation data, and life cycle data, the life cycle data including information relating to each stage of a trade'"'"'s life cycle.

18. The system of claim 17, wherein the data interface further comprises:

an XML API interface for receiving XML-type trade data;

a tab delimited file interface for receiving trade data in a tab delimited format; and

a Simple Object Access Protocol (SOAP) data interface protocol for inputting trade data to the system.

19. The system of claim 18, wherein the data interface further comprises an XML module for providing an XML response mechanism for requests received via the XML API interface.

20. The system of claim 19, wherein the data interface further comprises an e-mail notification interface for providing responses to requests based on predefined specific events occurring within the processing system.

21. The system of claim 20, wherein the data processing module comprises a web server cluster, a weblogic application server cluster, a trade mapping engine, and an e-mail server.

22. The system of claim 21, wherein the matching engine employs a rules-based architecture for matching predefined data fields in data files provided by two or more trading participants, said rules-based architecture comprising tables for segregating trade data and XML tags for defining trade product characteristics, the trade product characteristics being used as matching criteria.

23. A computer implemented method of electronically confirming trading of financial products which include data fields which are agreed upon between a trader and a counter party, the method comprising:

submitting trader data including different data fields relating to a trade via an electronic interface to a computing device;

submitting counter party data including different data fields relating to the trade via an electronic interface to the computing device;

comparing by the computing device pre-defined subsets of the data fields submitted by the trader and the counter party to determine a consistency between the trader and counter party data;

categorizing by the computing device the trade based on the comparing step to indicate which of the subsets of data fields are inconsistent;

storing by the computing device the trade data according to the trade category; and

generating by the computing device an electronic trade confirmation if certain of the subsets of data fields are consistent.

24. The method of claim 23 further comprising:

each of the trader and counter party entering data fields in a respective data record contained in a respective data file, wherein the submitting steps further comprise each of the trader and counter party transmitting their respective data files to a matching engine embodied in the computing device for comparison; and

translating the data fields in the data file to a standard data format for a specific trade type.

25. The method of claim 23 wherein the submitting trader data and counter party data steps further comprise transmitting a data file via a web interface and wherein the data is converted via web script to a standard data format.

26. The method of claim 23 further comprising grouping the data fields submitted by the trader and the counter party into pre-defined subsets of data according to a degree of importance for purposes of confirming the trade.

27. The method of claim 26, wherein the subsets of data fields include groupings of key fields and required fields.

28. The method of claim 27 wherein the categorizing step categorizes the trade as one of:

matched indicating that all data fields are consistent;

unmatched indicating that key data fields are consistent but at least one other data field is inconsistent;

pending indicating that one or more key data fields are inconsistent;

alleged indicating that a counter party has submitted the trade; and

canceled indicating that the trade has been withdrawn.

29. The method of claim 23 further comprising retrieving the stored trade data according to the trade category, at least one of the trader and counter party editing one or more data fields which are inconsistent between the trader and the counter party, and recomparing the data fields to determine a revised trade category.

30. The method of claim 28 further comprising displaying the trade and the data fields by the category of the trade and highlighting data fields which are inconsistent between the trader and the counter party.

32. The method of claim 30 wherein the trader and counter party pay the owner of the matching engine a fee for each trade categorized as matched that is confirmed.

31. A computer-implemented method of electronically confirming a trade of financial products between a party and a counter party having a master agreement governing the trades of the financial products, comprising:

amending a master agreement to allow electronic trade confirmation;

connecting both a trader and a counter party electronically to a matching engine;

submitting trader data including different data fields relating to a trade to the matching engine;

submitting counter party data including different data fields relating to the trade to the matching engine;

in the matching engine, comparing pre-defined subsets of the trader and counter party data fields and categorizing the trade based on the comparison to indicate which of the subsets of data fields are inconsistent;

storing the trade according to the trade category; and

generating an electronic trade confirmation if certain of the trader and counter party subsets of data fields are consistent.

33. The method of claim 31, further comprising at least one of the trader and counter party retrieving and editing the stored trade according to the trade category.

34. The method of claim 31, further comprising automatically reporting trade confirmation data, trade consummation data, and trade life cycle data associated with the trade.

35. A system for electronically confirming trading of financial products which include data fields which are agreed upon between a trader and a counter party, the system comprising:

a data interface configured to read trader data and counter party data relating to a trade brokered through a brokerage firm, said data being provided via an electronic interface;

a matching means configured to compare pre-defined subsets of the trader and counter party data submitted by the brokerage firm and to categorize the trade based on the comparison; and

a confirmation means for generating an electronic confirmation configured to confirm the trade if certain of the subsets of trader and counterparty data are consistent,

wherein said matching and confirmation means are embodied in at least one computing device.

36. The system of claim 35, wherein the matching means comprises a central trade processing system comprising a matching engine.

37. The system of claim 36, wherein the matching engine is configured to categorize the brokered trade according to the extent to which certain subsets of trader and counter party data are consistent, wherein said trade category indicates which of the pre-defined subsets of data are inconsistent.

38. The system of claim 37, further comprising a database coupled to the central trade processing system for storing the trade data and trade category relating to the brokered trade, said database being accessible for retrieving, editing, and re-storing said trade data according to the trade category.

39. The system of claim 38, further comprising a plurality of brokerage firm terminals in communication with the central trade processing system via an electronic interface, one or more trader terminals in communication with the central processing system, and one or more counter party terminals in communication with the central processing system, wherein the trader and counter party terminals are operable to access trade data and electronic confirmation data relating to one or more trades brokered by any of a plurality of brokerage firms via said brokerage firm terminals.

40. The method of claim 36, wherein the matching engine is configured to provide a broker matching service for confirming, consummating, and reporting electronic over-the-counter trading transactions to broker-type trading participants.

41. An electronic trade confirmation system comprising:

a central trade processing system comprising one or more processors for processing transaction data provided by one or more brokerage firms according to computer-readable instructions stored in a memory, said transaction data relating to one or more trades brokered through said one or more brokerage firms, and for generating electronic confirmations based on said processing;

a database coupled to the central trade processing system for storing transaction data relating to the one or more trades;

one or more brokerage firms in communication with the central trade processing system via one or more brokerage firm terminals, each providing transaction data relating to their respective trades; and

one or more trader terminals in communication with the central trade processing system, said trader terminals being operable to access transaction data and trade confirmation data relating to one or more trades brokered by any of the one or more brokerage firms.

42. A system for categorizing trades between a trader and a counter party based on an electronic submission of a data file representing details in data fields of a trade by the trader and a second data file representing details in data fields of the trade by the counter party, wherein certain of the data fields are grouped into a pre-defined data subset defined as key data fields and certain other of the data fields are grouped into a pre-defined data subset defined as required data fields, the system comprising:

a data interface engine for reading the data files and all data fields, the data interface engine comprising computer-readable instructions for performing the reading operation;

a matching engine coupled to the data interface engine for comparing the pre-defined data subsets and assigning one of a plurality of trade categories to the trade based on the comparison, the matching engine comprising computer-readable instructions for performing the comparison and assignment operations, said categories comprising;

matched to indicate that all data fields match;

unmatched to indicate that all key data fields match but at least one other data field does not;

pending to indicate that one or more key data fields do not match;

alleged to indicate that the counter party alleges having made a trade; and

canceled to indicate that the trade has been withdrawn;

a memory configured to store the data interface engine computer-readable instructions and the matching engine computer-readable instructions;

a processor configured to execute the data interface engine computer-readable instructions and the matching engine computer-readable instructions; and

a database coupled to the matching engine which stores the trade category and trade data read from the data files.

43. The system of claim 42, further comprising a web based server which sends a webpage to display a graphical user interface on a connected computer to enable a trader or counter party to activate the data interface engine and the matching engine.

44. The system of claim 43, wherein results of the matching engine are displayed on the connected computer according to the trade category.

45. The system of claim 44, wherein the web based server further comprises script for enabling the trader and counter party to display trades according to the trade category, and to edit data values of inconsistent data fields.