System and method of implementing massive early terminations of long term financial contracts

• US 8,301,551 B2
• Filed: 08/25/2011
• Issued: 10/30/2012
• Est. Priority Date: 11/24/1999
• Status: Expired due to Term

• Current Assignee: TriOptima AB (CME Group Incorporated)
• Original Assignee: TriOptima AB (CME Group Incorporated)
• Inventors: Brouwer, Derk Pieter
• Primary Examiner(s): Patel, Jagdish
• Assistant Examiner(s): Bartley, Kenneth
• Application Number:
  US13/217,836
• Publication Number:
  US 20120023002A1
• Time in Patent Office: 432 Days
• Field of Search: 705/35, 705/37, 705/38
• US Class Current: 705/37
• CPC Class Codes: G06Q 10/0637 Strategic management or analysis, e.g. setting a goal or target of an organisation; Planning actions based on goals; Analysis or evaluation of effectiveness of goals
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A method of and system for terminating or assigning outstanding OTC derivative transactions between a plurality of financial institutions (banks). The system comprises: a processing station arranged to receive transaction data describing a plurality of transactions from a plurality of banks via the Internet. The processing station comprises: a linking module for linking different versions of the same transaction received from different parties to that transaction; an analysis module for determining a set of linked transactions between a plurality of different banks, wherein each bank has debts and claims towards other banks in the set; a calculation module arranged to calculate an aggregated value of each set of linked transactions and select the set of linked transactions which has an aggregated value within bank-specified tolerance limits acceptable for executing a termination; and an execution module for executing a termination or assignment of the selected set of linked transactions.

Claims

1. A system for exchanging derivatives related data for prematurely terminating derivative related transactions, the system comprising:

a first processing unit adapted to provide, over a communication network, trade data associated with derivative related transactions over a communication network, wherein the derivative related transactions include outstanding derivative related transactions for compression having designated maturity dates; and

a second processing unit adapted to perform a compression process based on the trade data from the communication network by generating a compression proposal including at least three involved parties, according to parameters agreed to by the involved parties and for prematurely terminating outstanding linked derivative related transactions of the proposal at a date at which (i) there is no prescribed value and no prescribed method of determining a value at which termination of the outstanding linked derivative related transactions of the proposal should take place, and (ii) there is no obligation for the involved parties to prematurely terminate the outstanding linked derivative transactions of the proposal.

2. The system of claim 1, wherein the second processing unit is adapted to provide, over the communication network, the compression proposal to the first processing unit.

3. The system of claim 1, wherein the first processing unit is adapted to provide the trade data, over the communication network, to a derivative transaction unit from which transaction data describing outstanding linked derivative related transactions designated by an involved party among the involved parties as available for compression by the compression process can be accessed by the second processing unit.

4. The system of claim 1, wherein the trade data includes identification information corresponding to the outstanding linked derivative related transactions of the proposal.

5. The system of claim 1, wherein the trade data includes acceptance data indicating acceptance of premature termination of the outstanding linked derivative related transactions of the proposal.

6. The system of claim 5, wherein a predetermined result is obtained by a party to the outstanding linked derivative related transactions of the proposal when the outstanding linked derivative related transactions of the proposal are prematurely terminated responsive to the trade data.

7. The system of claim 5, wherein the first processing unit is adapted to provide the acceptance data over the communication network to a communication device associated with a party having the ability to cause execution of premature termination of the outstanding linked derivative related transactions of the proposal.

8. The system of claim 1, wherein the first processing unit is adapted to provide the trade data responsive to the compression proposal.

9. The system of claim 1, wherein the first processing unit is located at a financial institution.

10. The system of claim 1, wherein the first processing unit is adapted to evaluate the trade data against predetermined criteria to determine whether to provide acceptance data indicating acceptance by an involved party among the involved parties of the premature termination of the outstanding linked derivative related transactions of the proposal.

11. The system of claim 10, wherein the trade data is automatically evaluated against the predetermined criteria by the first processing unit to determine whether to provide the acceptance data.

12. The system of claim 1, wherein the first processing unit is adapted to control transmission of the trade data, over the communication network, by a transmission unit.

13. The system of claim 1, wherein the second processing unit is adapted to provide, over the communication network, the compression proposal to the first processing unit.

14. The system of claim 1, wherein the second processing unit is adapted to control transmission of the compression proposal, over the communication network, to the first processing unit by a transmission unit.

15. The system of claim 1, wherein the first processing unit is a derivative transaction unit at which transaction data describing outstanding linked derivative related transactions designated by an involved party among the involved parties as available for compression by the compression process can be stored.

16. A system for exchanging derivatives related data for prematurely terminating derivative related transactions, the system comprising:

a first processing unit adapted to receive, over a communication network, trade data associated with derivative related transactions over a communication network, wherein the derivative related transactions include outstanding derivative related transactions for compression having designated maturity dates; and

a second processing unit adapted to perform a compression process based on the trade data from the communication network by generating a compression proposal including at least three involved parties, according to parameters agreed to by the involved parties and for prematurely terminating outstanding linked derivative related transactions of the proposal at a date at which (i) there is no prescribed value and no prescribed method of determining a value at which termination of the outstanding linked derivative related transactions of the proposal should take place, and (ii) there is no obligation for the involved parties to prematurely terminate the outstanding linked derivative transactions of the proposal.

17. The system of claim 16, wherein the trade data includes identification information corresponding to the outstanding linked derivative related transactions of the proposal.

18. The system of claim 16, wherein the second processing unit is adapted to perform the compression process based on acceptance data indicating acceptance by an involved party among the involved parties of premature termination of the outstanding linked derivative related transactions of the proposal.

19. The system of claim 16, wherein a predetermined result is obtained by a party to the outstanding linked derivative related transactions of the proposal when the outstanding linked derivative related transactions of the proposal are prematurely terminated responsive to the trade data.

20. The system of claim 16, wherein the first processing unit is adapted to provide acceptance data indicating acceptance by an involved party among the involved parties of premature termination of the outstanding linked derivative related transactions of the proposal based on an evaluation of the compression proposal.

21. The system of claim 16, wherein the first processing unit is located at a financial institution.

22. The system of claim 16, wherein the first processing unit is adapted to evaluate the trade data against predetermined criteria to determine whether to provide acceptance data indicating acceptance by an involved party among the involved parties of the premature termination of the outstanding linked derivative related transactions of the proposal.

23. The system of claim 22, wherein the first processing unit is adapted to provide the acceptance data over the communication network to a communication device associated with a party having the ability to cause execution of premature termination of the outstanding linked derivative related transactions of the proposal.

24. The system of claim 16, wherein the first processing unit is a derivative transaction unit at which transaction data describing outstanding linked derivative related transactions designated by an involved party among the involved parties as available for compression by the compression process can be stored.

25. The system of claim 16, wherein the first processing unit is adapted to receive, over the communication network, the compression proposal.

26. The system of claim 16, wherein the second processing unit is adapted to provide, over the communication network, the compression proposal to the first processing unit.

27. The system of claim 16, wherein the first processing unit is adapted to control transmission, over the communication network, of the trade data by a transmission unit.

28. The system of claim 16, wherein the second processing unit is adapted to control transmission, over the communication network, of the compression proposal to the first processing unit by a transmission unit.