System and method for distributed ledger-based day trading

Abstract

Disclosed are systems and methods for distributed ledger-based intraday trading. In one embodiment, the method may include: receiving a digital representation of a collateral amount from a cash borrower; receiving a digital representation of a cash amount from a cash provider; receiving an agreement from the cash borrower and the cash provider on intraday trade terms, the intraday trade terms including a duration of the intraday trade, a collateral trade amount for the collateral, and a cash trade amount for the cash; executing the intraday trade by a smart contract by providing the digital collateral trade amount to the cash provider and the digital cash trade amount to the cash borrower; and upon completion of the intraday trade, the smart contract returning the digital collateral trade amount to the cash borrower and returning the digital cash trade amount to the cash provider.

Description

[0001] Related applications

[0002] This application claims priority to and the benefit of U.S. Provisional Patent Application Serial No. 62 / 757,614, filed on November 8, 2018, the disclosure of which is incorporated herein by reference in its entirety. Technical Field

[0003] Embodiments generally relate to systems and methods for distributed ledger-based intraday trading, settlement, and record keeping. Background Art

[0004] As the availability of intraday liquidity decreases, the cost of liquidity continues to increase, potentially leading to pressures on payment, clearing, and settlement activities in financial markets. Furthermore, the intraday liquidity currently provided is often limited by unsecured, uncommitted credit, which increases credit / counterparty risk. Existing operational processes in the repo market hinder the meaningful use of intraday repo transactions to actively manage intraday liquidity, resulting in limited capital allocation. Summary of the Invention

[0005] Disclosed are systems and methods for distributed ledger-based intraday trading, settlement, and recordkeeping. In one embodiment, in an information processing device including at least one computer processor, a method for distributed ledger-based intraday trading may include: (1) receiving a digital representation of a collateral amount of a cash borrower at a distributed ledger; (2) receiving a digital representation of a cash amount of a cash provider at a distributed ledger; (3) receiving an agreement on intraday trade terms from the cash borrower and the cash provider at the distributed ledger, the intraday trade terms including a duration of the intraday trade, a collateral trade amount of the collateral, and a cash trade amount of the cash; (4) a smart contract executing the intraday trade by providing the digital collateral trade amount to the cash provider and the digital cash trade amount to the cash borrower; and (5) upon completion of the intraday trade, the smart contract returning the digital collateral trade amount to the cash borrower and returning the digital cash trade amount to the cash provider.

[0006] In one embodiment, the digital representation of the collateral amount on the distributed ledger may be ringfenced or locked by a collateral custodian.

[0007] In one embodiment, the digital representation of cash amounts on a distributed ledger can be separated or isolated from other cash by cash bank.

[0008] In one embodiment, a digital representation of the collateral amount may be written to a digital wallet of the cash borrower. A digital representation of the cash amount may be written to a digital wallet of the cash provider.

[0009] In one embodiment, the digital representation of the collateral amount on the distributed ledger can be the same as the collateral transaction amount. The digital representation of the cash amount on the distributed ledger can be the same as the cash transaction amount.

[0010] In one embodiment, the duration of a day trade may be minutes or hours.

[0011] In one embodiment, the collateral may be securities.

[0012] In one embodiment, the method may further include verifying that the digital representation of the collateral amount is sufficient for the collateral transaction amount; and verifying that the digital representation of the cash amount is sufficient for the cash transaction amount.

[0013] According to another embodiment, in an information processing device including at least one computer processor, a method for intraday trading based on a distributed ledger may include: (1) receiving an agreement on intraday trading terms from a cash borrower and a cash provider at a distributed ledger, the intraday trading terms including the duration of the intraday trading, a collateral trading amount of the collateral, and a cash trading amount of the cash; (2) receiving a digital representation of the collateral trading amount of the cash borrower at the distributed ledger; (3) receiving a digital representation of the cash trading amount of the cash provider at the distributed ledger; (4) a smart contract executing the intraday trading by providing the digital collateral trading amount to the cash provider and the digital cash trading amount to the cash borrower; and (5) upon completion of the intraday trading, the smart contract returning the digital collateral trading amount to the cash borrower and returning the digital cash trading amount to the cash provider.

[0014] In one embodiment, the collateral transaction amount of the collateral can be ringfenced or locked by the collateral custodian. The cash transaction amount of the cash can be separated or separated from other cash by the cash bank.

[0015] In one embodiment, a digital representation of the collateral transaction amount is written to the cash borrower's digital wallet, which may be located on a second distributed ledger.

[0016] In one embodiment, a digital representation of the cash transaction amount may be written to a digital wallet of the cash provider, which resides on a second distributed ledger.

[0017] In one embodiment, the duration of a day trade may be minutes or hours.

[0018] In one embodiment, the collateral may be securities. BRIEF DESCRIPTION OF THE DRAWINGS

[0019] In order to facilitate a more complete understanding of the present invention, reference is now made to the accompanying drawings, in which:

[0020] Figure 1 A system for day trading according to one embodiment is disclosed; and

[0021] Figure 2 A method for day trading according to one embodiment is described. DETAILED DESCRIPTION

[0022] Embodiments relate to systems and methods for intraday trading, settlement, and record keeping. Embodiments may utilize a distributed ledger (e.g., a blockchain-based ledger) in a multi-participant intraday repo platform.

[0023] Embodiments may use instantaneous or near-instantaneous settlement and recording of assets and expiration mechanisms to minimize the risk of not returning cash / securities upon expiration.

[0024] In an embodiment, a transaction flow may include the following elements or stages: (1) digital asset issuance; (2) transaction execution; (3) transaction settlement; (4) transaction maturity; and (5) digital asset redemption. For example, once digital asset balances representing cash and security interests in collateral have been issued, the cash provider and the borrower may agree to transaction terms, execute the transaction, and settle via the exchange of ownership of the digital asset balances. Ownership of the digital asset balances may provide the legal right to transfer the underlying, represented asset (e.g., cash, securities, or any collateral property) from one party to another.

[0025] refer to Figure 1 According to one embodiment, a system for intraday trading is disclosed. The system 100 may include a cash provider 110, a cash borrower 120, a collateral escrow agent 130, a collateral custodian 140, a cash bank agent 150, a cash bank 160, and an intraday trading engine 170.

[0026] In one embodiment, the cash provider 110 may be a provider of cash, and the cash borrower 120 may be a borrower of cash. The cash provider 110 and the cash borrower 120 may be individuals, companies, etc. The cash borrower may have assets.

[0027] The collateral custodian 140 may manage and hold collateral for the cash borrower 110. The collateral custodian agent 140 may represent or act on behalf of the collateral custodian 140 via the day trading engine 170.

[0028] The cash bank 160 may be any suitable financial institution that holds accounts for the cash provider 110. The cash bank agent 150 may represent or act on behalf of the cash bank 160 via the day trading engine 170.

[0029] The day trading engine 170 may be a computer program or application executed by a server, in the cloud, etc., that may facilitate the execution, settlement, and expiration of day trades, as well as record keeping of ownership positions. The day trading engine 170 may provide a distributed ledger for the execution and record keeping mechanisms of certain functions.

[0030] In one embodiment, cash providers 110 and cash borrowers 120 may be represented by nodes within a distributed ledger network, as well as collateral custodian agent 130 and cash bank agent 150 via, for example, ledgers 115, 125, 135, and 155, respectively.

[0031] refer to Figure 2 , according to one embodiment, discloses a method for intraday trading based on a distributed ledger.

[0032] In step 205, the cash borrower and cash provider may request the issuance of digital asset balances (collateral and cash, respectively) via, for example, a day trading engine. For example, the cash borrower and cash provider may instruct their respective custodians (e.g., collateral custodian and cash bank) to separate their underlying assets from the general asset pool held by their custodians.

[0033] In one embodiment, the day trading engine may communicate the request to the collateral agent and the cash banking agent.

[0034] In step 210, the collateral custodian may digitize the collateral by ring-fencing, locking, or otherwise segregating the collateral represented by the cash borrower's digital collateral balance and writing the representation of the digitized collateral to the distributed ledger. This effectively prevents the cash borrower from taking any other action on the underlying collateral represented by the digital balance. In one embodiment, legal title to the securities represented by the digital collateral balance may be transferred to an account for the benefit of the cash provider.

[0035] In one embodiment, the collateral agent may be responsible for ensuring that the underlying collateral meets the valuation and eligibility requirements of the collateral balance requested by the cash borrower on the day trading engine.

[0036] In one embodiment, the issuance of digital collateral can be accompanied by a ring-fenced and / or transferred ownership written to a distributed ledger. For example, the issuance of digital collateral can be written to the cash borrower's digital wallet. In one embodiment, the digital wallet can be on a side distributed ledger.

[0037] In step 215, the cash bank may digitize the cash by separating the cash represented by the cash provider's digital cash balance and writing the digital cash representation to the distributed ledger. This effectively prevents the cash provider from taking any other actions on the underlying cash represented by the digital cash. In one embodiment, the cash bank agent may be responsible for ensuring that the underlying cash meets the cash balance requested by the cash lender on the day trading engine.

[0038] In one embodiment, the issuance of digital cash can be recorded in a distributed ledger. For example, the issuance of digital cash can be recorded in a digital wallet of the cash provider. In one embodiment, the digital wallet can be on a side distributed ledger.

[0039] The intraday trading engine may have data transparency into the cash borrower's collateral account at the collateral custodian and the cash provider's cash account at the cash provider's bank. Alternatively, or in addition, the intraday trading engine may also have data transparency into the cash borrower's and cash provider's digital wallets.

[0040] It should be noted that steps 205 , 210 , and 215 may occur in any suitable order, may occur simultaneously, etc.

[0041] In one embodiment, if the collateral is digital collateral, it may not be necessary to digitize the collateral.

[0042] In step 220, the cash borrower and the cash provider may agree to the terms of the day trade. In one embodiment, the cash borrower and the cash provider may interact bilaterally. In another embodiment, the cash borrower and the cash provider may interact in a marketplace where active trade quotes and bids may be provided. The trade terms may include a duration (e.g., minutes, hours, etc.), collateral type (e.g., securities), collateral amount, cash amount, eligibility table, currency, price, interest, and any other necessary and / or desired information. The agreement on trade terms may constitute the legal execution of the day trade.

[0043] In one embodiment, the day trading engine can verify that the parties have the required digital asset balances before they can agree on the terms of the transaction and execute the trade. The agreed-upon transaction can be written to the distributed ledger, which can then provide the necessary coordination for the settlement and expiration of the transaction. For example, smart contracts can coordinate the transaction.

[0044] It should be noted that the agreement on transaction terms (e.g., step 220) may precede the digitization of collateral and / or cash (e.g., steps 210 and 215). For example, once the transaction is agreed upon, the day trading engine may cause the collateral custodian and cash bank to digitize the collateral and cash required for the transaction.

[0045] In step 225, the cash provider's digital cash may be transferred to the cash borrower (e.g., the cash borrower's digital wallet), and in return, the cash borrower's digital collateral may be transferred to the cash provider (e.g., the cash provider's digital wallet). This may occur simultaneously, substantially simultaneously, or in any desired order. The exchange of ownership may be facilitated and recorded on a distributed ledger.

[0046] In step 230, the cash borrower may exchange the digital cash for fiat cash. For example, the cash bank agent and / or the bank may verify the cash borrower's ownership through records maintained on a distributed ledger and provide the cash to the cash borrower. In one embodiment, the cash borrower may need to re-digitize the cash balance before maturity.

[0047] At the end of the intraday transaction, in step 235, the digital cash may be returned to the cash provider, and the digital collateral may be returned to the cash borrower. For example, the digital collateral may be returned to the cash borrower's digital wallet, and the digital cash may be returned to the cash provider's digital wallet. In one embodiment, a smart contract may coordinate the return of digital assets to the various parties.

[0048] The cash borrower may further pay the cash provider the agreed interest and any fees.

[0049] In one embodiment, the returned or updated balances in the parties' digital wallets may be written to the distributed ledger.

[0050] In step 240, the cash borrower and cash lender may each choose to redeem their digital asset balances. The collateral agent and cash bank agent may verify the cash borrower's and cash lender's ownership of their digital asset balances via the distributed ledger. The collateral custodian and cash bank may then release the collateral and cash assets from being separated, ring-fenced, or locked, respectively.

[0051] The disclosures of the following U.S. patent applications are incorporated herein by reference in their entirety: U.S. patent application serial number 16 / 653,369, U.S. patent application serial number 16 / 558,415, U.S. patent application serial number 15 / 869,421, U.S. provisional patent application serial number 62 / 725,331, and U.S. provisional patent application serial number 62 / 446,185.

[0052] While several embodiments have been disclosed, it should be recognized that these embodiments are not mutually exclusive and that certain elements or features from one embodiment may be used with another embodiment.

[0053] In the following, general aspects of embodiments of the systems and methods of the present invention will be described.

[0054] The system of the present invention, or a portion thereof, may be in the form of a "processor," such as a general-purpose computer. As used herein, the term "processor" should be understood to include at least one processor utilizing at least one memory. The at least one memory stores an instruction set. The instructions may be permanently or temporarily stored in one or more memories of the processor. The processor executes the instructions stored in the one or more memories to process data. The instruction set may include various instructions for performing one or more specific tasks, such as those described above. Such an instruction set for performing specific tasks may be characterized as a program, a software program, or simply as software.

[0055] In one embodiment, the processing machine may be a special purpose processor.

[0056] As described above, the processing machine executes instructions stored in one or more memories to process data. Such data processing may, for example, be in response to commands of one or more users of the processing machine, in response to previous processing, in response to a request from another processing machine, and / or any other input.

[0057] As described above, the processing machine used to implement the present invention can be a general-purpose computer. However, the processing machine can also utilize any of a variety of other technologies including special-purpose computers, computer systems (including, for example, microcomputers, minicomputers, or mainframes), programmed microprocessors, microcontrollers, peripheral integrated circuit components, CSICs (customer-specific integrated circuits) or ASICs (application-specific integrated circuits) or other integrated circuits, logic circuits, digital signal processors, programmable logic devices (such as FPGAs, PLDs, PLAs, or PALs), or any other device or device arrangement capable of implementing the process steps of the present invention.

[0058] The processor used to implement the present invention may utilize an appropriate operating system. Thus, embodiments of the present invention may include operating systems running iOS, OS X, Android, Microsoft Windows, TM Operating system, Unix operating system, Linux operating system, Xenix operating system, IBM AIX TM Operating system, Hewlett-Packard UX TMOperating system, Novell Netware TM Operating system, Sun Microsystems Solaris TM Operating system, OS / 2 TM Operating system, BeOS TM Operating system, Macintosh operating system, Apache operating system, OpenStep TM Operating system or other operating system or platform processor.

[0059] It should be understood that in order to practice the method of the present invention as described above, the processor and / or memory of the processing machine do not have to be physically located in the same geographical location. That is, each processor and memory used by the processing machine can be located in geographically different locations and connected so as to communicate in any suitable manner. Additionally, it should be understood that each of the processor and / or memory can be composed of different physical devices. Therefore, the processor does not have to be a single device located in one location, and the memory does not have to be another single device located in another location. That is, it is contemplated that the processor can be two devices located in two different physical locations. The two different devices can be connected in any suitable manner. Additionally, the memory can include two or more parts of the memory in two or more physical locations.

[0060] For further explanation, as described above, processing is performed by various components and various memories. However, it should be understood that according to another embodiment of the present invention, as described above, processing performed by two different components can be performed by a single component. In addition, as described above, processing performed by one different component can be performed by two different components. In a similar manner, according to another embodiment of the present invention, as described above, memory storage performed by two different memory portions can be performed by a single memory portion. In addition, as described above, memory storage performed by one different memory portion can be performed by two memory portions.

[0061] In addition, various technologies can be used to provide communication between various processors and / or memories, as well as to allow the processors and / or memories of the present invention to communicate with any other entity; for example, to obtain more instructions or access and use remote memory storage. Such technologies for providing such communication can include, for example, a network, the Internet, an intranet, an extranet, a LAN, an Ethernet, wireless communication via a cellular tower or satellite, or any client-server system that provides communication. Such communication technologies can use any suitable protocol such as TCP / IP, UDP, or OSI.

[0062] As described above, an instruction set can be used in the processing of the present invention. The instruction set can be in the form of a program or software. The software can be, for example, in the form of system software or application software. The software can also be in the form of, for example, a collection of separate programs, a program module within a larger program, or a portion of a program module. The software used can also include modular programming in the form of object-oriented programming. The software tells the processor how to process the data being processed.

[0063] In addition, it should be understood that the instructions or instruction sets used in the embodiments and operations of the present invention can be in a suitable form so that the instructions can be read by a processing machine. For example, the instructions forming a program can be in the form of an appropriate programming language, which is converted into machine language or object code to allow one or more processors to read the instructions. That is, a compiler, assembler, or interpreter is used to convert lines of programming code or source code written in a specific programming language into machine language. Machine language is binary-coded machine instructions that are specific to a specific type of processing machine, such as a specific type of computer. Computers understand machine language.

[0064] According to various embodiments of the present invention, any suitable programming language may be used. The programming language used may illustratively include, for example, assembly language, Ada, APL, Basic, C, C++, COBOL, dBase, Forth, Fortran, Java, Modula-2, Pascal, Prolog, REXX, Visual Basic, and / or JavaScript. Furthermore, it is not necessary to utilize a single type of instruction or a single programming language in conjunction with the operation of the systems and methods of the present invention. Rather, any number of different programming languages ​​may be utilized as needed and / or desired.

[0065] Likewise, in the practice of the present invention, the instructions and / or data used may utilize any compression or encryption technology or algorithm as needed. An encryption module may be used to encrypt data. In addition, for example, a suitable decryption module may be used to decrypt files or other data.

[0066] As described above, the present invention can be illustratively embodied in the form of a processor including, for example, a computer or computer system, which includes at least one memory. It should be understood that the instruction set (i.e., software) that enables the computer operating system to perform the above-mentioned operations can be included in any of a variety of one or more media as needed. In addition, the data processed by the instruction set can also be included in any of a variety of one or more media. That is, the specific medium (i.e., the memory in the processor) utilized to maintain the instruction set and / or data used in the present invention can, for example, take any of a variety of physical forms or transmission forms. The medium can illustratively be paper, paper transparency, optical disc, DVD, integrated circuit, hard disk, floppy disk, optical disc, magnetic tape, RAM, ROM, PROM, EPROM, wire, cable, optical fiber, communication channel, satellite transmission, memory card, SIM card or other remote transmission and any other medium or data source that can be read by the processor of the present invention.

[0067] Furthermore, the one or more memories used in a processor implementing the present invention may be in any of a variety of forms to allow the memory to hold instructions, data, or other information as needed. Thus, the memory may take the form of a database to hold data. For example, the database may use any desired file arrangement, such as a flat file arrangement or a relational database arrangement.

[0068] In the system and method of the present invention, various " user interfaces " can be utilized to allow the user to interact with one or more processing machines for implementing the present invention. As used herein, a user interface comprises any hardware, software or combination of hardware and software that allows the user to interact with the processing machine. The user interface can, for example, be in the form of a dialogue screen. The user interface can also comprise any one of a mouse, touch screen, keyboard, keypad, voice reader, voice recognizer, dialogue screen, menu box, list, check box, toggle switch, button or any other device that allows the user to receive information about the operation of the processing machine (when it processes instruction set) and / or provide information to the processing machine. Therefore, a user interface is any device that provides communication between a user and the processing machine. The information that a user provides to the processing machine through the user interface can be, for example, a form of command, data selection or some other input.

[0069] As mentioned above, processing machine utilizes user interface to carry out instruction set, makes processing machine process data for user.User interface is usually used for interacting with user to convey information or receive information from user by processing machine.But, should be understood that according to some embodiments of system and method of the present invention, human user does not actually need to interact with the user interface that processing machine of the present invention uses.But, it can also be expected that user interface of the present invention can interact with another processing machine rather than human user interaction (i.e. convey and receive information).Therefore, another processing machine can be characterized as user.In addition, it can be expected that the user interface utilized in system and method of the present invention can partially interact with another processing machine or a plurality of processing machines, also partially interact with human user.

[0070] Those skilled in the art will readily appreciate that the present invention is susceptible to widespread utilization and application. In addition to the embodiments and adaptations described herein, many embodiments and adaptations of the present invention and many variations, modifications, and equivalent arrangements will be apparent or reasonably suggested relative to the present invention and the foregoing description thereof without departing from the spirit or scope of the present invention.

[0071] Therefore, although the present invention has been described in detail herein with respect to exemplary embodiments thereof, it should be understood that this disclosure is merely illustrative and exemplary disclosure of the present invention and is intended to provide an enabling disclosure of the present invention. Therefore, the foregoing disclosure is not intended to be interpreted as excluding any other such embodiments, adaptations, variations, modifications, or equivalent arrangements or to limit the present invention to excluding any other such embodiments, adaptations, variations, modifications, or equivalent arrangements or otherwise excluding any other such embodiments, adaptations, variations, modifications, or equivalent arrangements.

Claims

1. A method for intraday trading based on a distributed ledger, comprising: In an information processing device comprising at least one computer processor: receiving, at a first distributed ledger and from a digital wallet of the cash borrower on a second distributed ledger, a digital representation of a collateral amount of the cash borrower, wherein the digital representation of the collateral on the first distributed ledger is ringfenced or locked by a collateral custodian, wherein the second distributed ledger is a side distributed ledger of the first distributed ledger; receiving, at the first distributed ledger and from a cash provider digital wallet on the second distributed ledger, a digital representation of a cash provider's cash amount; receiving, at the first distributed ledger, an agreement on intraday transaction terms from the cash borrower digital wallet and the cash provider digital wallet, the intraday transaction terms including a duration of the intraday transaction, a collateral transaction amount of the collateral, and a cash transaction amount of the cash; The smart contract executed on the first distributed ledger orchestrates the intraday trade by: Automatically providing the transaction amount of the digital collateral to the cash provider's digital wallet and providing the cash transaction amount to the cash borrower's digital wallet; Writing a first change in ownership of the cash transaction amount and the collateral transaction amount to the first distributed ledger; Upon completion of the intraday transaction, automatically returning the transaction amount of the digital collateral to the cash borrower's digital wallet, and returning the cash transaction amount to the cash provider's digital wallet; as well as Writing a second change in ownership of the cash transaction amount and the collateral transaction amount to the first distributed ledger.

2. The method of claim 1 , wherein the digital representation of the cash amount on the distributed ledger is separated from other cash by a cash bank.

3. The method of claim 1 , wherein the digital representation of the collateral amount on the distributed ledger is the same as the collateral transaction amount.

4. The method of claim 1 , wherein the digital representation of the cash amount on the distributed ledger is the same as the cash transaction amount.

5. The method of claim 1, wherein the duration of the intraday trade is one of minutes or hours.

6. The method of claim 1, wherein the collateral comprises securities.

7. The method according to claim 1, further comprising: verifying that the digital representation of the collateral amount is sufficient for the collateral transaction amount; and Verifying whether the digital representation of the cash amount is sufficient for the cash transaction amount.

8. A method for intraday trading based on a distributed ledger, comprising: In an information processing device comprising at least one computer processor: receiving, at a first distributed ledger, an agreement on intraday trade terms from a cash borrower and a cash provider, the intraday trade terms including an expiration time of the intraday trade, a collateral trade amount of the collateral, and a cash trade amount of the cash; receiving, at the first distributed ledger and from a digital wallet of the cash borrower on a second distributed ledger, a digital representation of the collateral transaction amount of the cash borrower, wherein the digital representation of the collateral on the second distributed ledger is ringfenced or locked by a collateral custodian, wherein the second distributed ledger is a side distributed ledger of the first distributed ledger; receiving, at the first distributed ledger and from a cash provider digital wallet, a digital representation of the cash of the cash provider; The smart contract executed on the first distributed ledger orchestrates the intraday trade by: Automatically providing the collateral transaction amount to the cash provider's digital wallet and the cash transaction amount to the cash borrower's digital wallet; Writing a first change in ownership of the cash transaction amount and the collateral transaction amount to the first distributed ledger; When the intraday transaction expires, the collateral transaction amount is automatically returned to the cash borrower's digital wallet, and the cash transaction amount is automatically returned to the cash provider's digital wallet; as well as Writing a second change in ownership of the cash transaction amount and the collateral transaction amount to the first distributed ledger.

9. The method of claim 8, wherein the duration of the intraday trade is one of minutes or hours.

10. The method of claim 8, wherein the collateral comprises securities.

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