Automated Collateral Eligibility Ranking System
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Solution Overview
Problem
In global capital markets, identifying suitable collateral for financial transactions is challenging due to increased risk aversion and complex credit requirements, making it difficult to derive maximum value from collateral holdings securely and efficiently.
Innovation Solution
A computer-implemented system and method that assesses the eligibility of financial securities as collateral by using a processor with a database and search module to identify eligible security positions based on user-defined criteria, applying rulesets via an algorithm to determine collateral preference rankings, and providing a user interface for intuitive results.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If manual collateral assessment methods are used, then flexibility in evaluating individual securities is maintained, but the process becomes time-consuming and complex
Solution Approach 1:
The patent replaces manual mechanical assessment processes with an automated computer-implemented system that uses algorithms and databases to evaluate securities. The system automatically searches for eligible collateral, applies credit requirements, and generates assessments without manual intervention, thereby reducing time loss while maintaining assessment quality.
Solution Approach 2:
The system enables self-service by allowing users to input security parameters and receive automated collateral eligibility assessments. The computer system independently performs the evaluation using predefined rules and algorithms, eliminating the need for manual review while providing users with immediate results.
2Reliability
If comprehensive credit requirements are applied, then risk mitigation is improved, but the complexity of identifying eligible collateral increases
Solution Approach 1:
The patent segments the collateral identification process into distinct modular components: database storage of credit requirements, search module for identifying potential collateral, analysis module for evaluating eligibility, and output generation. This segmentation manages complexity by organizing functions into separate, manageable modules that can be independently maintained and updated.
Solution Approach 2:
The computer system acts as an intermediary between the complex credit requirements and the users seeking collateral identification. It translates comprehensive credit criteria into automated evaluation algorithms, shielding users from the complexity while ensuring all risk mitigation requirements are systematically applied.
3Productivity
If automated eligibility screening is implemented, then processing speed is improved, but the need for separate security submissions is eliminated
Solution Approach 1:
The computer system performs multiple functions within a single integrated platform: it stores credit requirements, searches for eligible collateral, evaluates securities against criteria, and generates assessments. This multi-functionality eliminates the need for separate security submissions and manual processes, improving productivity while maintaining ease of operation through a unified interface.
Data Source
AI summary
A data processing system manages collateral risk associated with a trade of a financial instrument includes a processor and a memory that contains a database configured to store a ruleset relating to determining eligibility of collateral to be considered for a desired trade. A search module searches for accounts that could potentially accept a security position based upon established search criteria. Search results are stored in the memory, and are used to identify one or more security positions eligible for use as collateral for the trade. A collateral analysis module determines a collateral preference ranking by at least applying the ruleset via an algorithm executed by the processor so as to confirm an eligibility of security positions eligible for use as collateral for the trade by testing in accordance with the ruleset. The processor outputs a relative collateral preference indication via a user interface.