Centralized Trading Platform for Tri-Party Custody
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Solution Overview
Problem
Large financial institutions face challenges in efficiently, effectively, and securely managing the exchange of information between internal and external computer systems, particularly in tri-party trading scenarios where assets are held by third-party custodians, leading to outdated or inaccurate position information and difficulties in trading complex mutual funds and ETFs.
Innovation Solution
Implementing centralized trading and tracking computing platforms that provide real-time or up-to-date views of assets held by third-party custodians, enabling accurate trading and omnibus processing for retirement plans, and supporting tri-party trading operations by integrating with external systems to validate, create, and settle trades.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If assets are held by third-party custodians to mitigate risk, then security and risk mitigation are improved, but position information becomes outdated or inaccurate
Solution Approach 1:
The system establishes continuous feedback loops where position information flows from custodian systems back to trading systems in real-time. This enables trading systems to maintain accurate views of asset positions while assets remain held by third-party custodians, resolving the information lag problem without compromising security.
Solution Approach 2:
The patent introduces intermediary computing platforms that act as mediators between custodian systems and trading systems. These platforms receive position data from custodians, process and validate the information, and distribute it to relevant trading systems, ensuring accurate position information is available without requiring assets to be held internally.
2Measurement precision
If centralized trading platforms integrate with external custodian systems, then trading accuracy is improved, but system complexity increases
Solution Approach 1:
The patent designs universal trading and tracking platforms that can interface with multiple different custodian systems through standardized protocols. This multi-functionality allows a single platform to serve various custodians without requiring custom integration for each, reducing overall system complexity while maintaining accurate position information.
Solution Approach 2:
The system employs configurable parameters and adaptable interface specifications that can be adjusted to match different custodian system requirements. By making integration parameters changeable rather than fixed, the platform can accommodate various custodian systems without fundamental redesign, managing complexity while achieving accurate position tracking.
Data Source
AI summary
Methods, systems, and computer-readable media for deploying and implementing centralized trading and tracking computing platforms to support tri-party trading are presented. In some embodiments, a central trading computing platform may receive, from a discretionary and managed accounts administration computer system associated with a financial institution, trade information defining one or more trades in one or more mutual funds for one or more accounts administrated by the financial institution. Subsequently, the central trading computing platform may validate the trade information and create order information based on the trade information. Then, the computing platform may send the order information to a clearing entity computer system. The order information created may be configured to cause the clearing entity computer system to settle the one or more trades in the one or more mutual funds for the one or more accounts administrated by the financial institution with a custodian different from the financial institution.