Distributed Ledger Intercompany Netting via Tokenization

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Solution Overview

Problem

Intercompany netting processes are time-consuming and dependent on multiple parties, lacking efficiency and transparency.

Innovation Solution

Implementing distributed-ledger technology for intercompany netting, where funds are tokenized and transactions are executed through smart contracts on a distributed ledger, enabling secure, transparent, and automated transactions between entities within an organization.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Productivity

If traditional intercompany netting processes are used, then transactions can be completed between entities, but the process is time-consuming and involves multiple intermediaries

Engineering Contradiction:

Improvetransaction processing speedVSAvoidtime required for netting process

Core Design Contradiction:

ProductivityVSLoss of time

Solution Approach 1:

The patent extracts and removes the intermediary clearinghouse from the transaction process. By using distributed ledger technology, entities can transact directly with each other through smart contracts, eliminating the need for centralized intermediaries and reducing both time and complexity of the netting process

Inventive Principle:

Principle #2Taking out (Extraction)

Solution Approach 2:

The system enables entities to autonomously execute transactions through programmable smart contracts on the distributed ledger. The automated reconciliation and netting processes occur without human intervention or intermediary involvement, allowing entities to serve themselves in the transaction process

Inventive Principle:

Principle #25Self-service

2Ease of operation

If multiple parties are involved in intercompany netting, then transactions can be processed, but the process becomes complex and less transparent

Engineering Contradiction:

Improvesimplicity of netting processVSAvoidnumber of parties involved

Core Design Contradiction:

Ease of operationVSDevice complexity

Solution Approach 1:

The patent merges multiple transaction records and reconciliation processes into a single distributed ledger. All entities share a common ledger that automatically records and reconciles transactions, reducing the complexity that arises from multiple separate systems and parties

Inventive Principle:

Principle #5Merging (Combining)

3Loss of information

If traditional netting processes are used, then transactions are processed, but transparency is reduced due to multiple intermediaries

Engineering Contradiction:

Improvetransparency of transaction detailsVSAvoidnumber of intermediaries

Core Design Contradiction:

Loss of informationVSDevice complexity

Solution Approach 1:

The patent segments the transaction information into immutable blocks on the distributed ledger, with each transaction recorded as a separate, verifiable entry. This segmentation allows all participants to independently verify transaction details while maintaining a clear, transparent record that is accessible to all authorized entities

Inventive Principle:

Principle #1Segmentation

Data Source

PatentUS20230206223A1Systems and methods for distributed-ledger based intercompany netting

Publication Date: 2023.06.29 JPMORGAN CHASE BANK NA

AI summary

A method for distributed-ledger based intercompany netting may include: receiving, from a first entity within an organization, a deposit of a first amount of funds to a first account; tokenizing the first amount of funds and writing the first amount of funds to a first token wallet for the first entity on a distributed ledger; receiving, from a second entity within an organization, a deposit of a second amount of funds to a second account; tokenizing the second amount of funds and writing the second amount of funds to a second token wallet for the second entity on the distributed ledger; and executing a transaction involving a transfer of a transaction amount from the first entity to the second entity by deducting the transaction amount from a token balance in the first wallet and adding the transaction amount to a token balance in the second wallet.