FinXML Intermediary for Capital Market Integration
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Solution Overview
Problem
Current systems for conducting financial transactions in capital markets, particularly for institutional investors and financial institutions, lack the ability to seamlessly create, price, negotiate, and execute complex transactions like interest and currency derivatives, foreign exchange, loans, and fixed-income instruments in an online environment with standard vocabularies and messaging systems, failing to integrate with existing proprietary systems.
Innovation Solution
A system and method utilizing XML-based syntax (FinXML) and XSL-based processing language (FinScript) for standard data interchange, enabling automated processing and integration with internal systems for transaction pricing, payment scheduling, and trade settlement, facilitating complex capital market transactions through a Connect Processor and Connect Messaging Server.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If proprietary trading systems are used for complex capital market transactions, then transaction execution capability is improved, but system integration capability deteriorates
Solution Approach 1:
The patent introduces an XML-based messaging system as an intermediary layer between proprietary trading systems and the internet. This messaging system uses standardized XML schemas to represent financial transactions, allowing different proprietary systems to communicate through a common language without requiring direct integration. The XML messages act as mediators that translate between system-specific formats and internet-based communication protocols.
Solution Approach 2:
The patent segments the trading system into distinct modular components: internet-facing web servers, XML message processing engines, proprietary trading system interfaces, and database systems. Each component handles specific functions and communicates through standardized XML interfaces, allowing independent development, deployment, and integration of different trading functionalities while maintaining overall system coherence.
2Adaptability or versatility
If standardized XML vocabulary is implemented for financial data interchange, then system integration capability is improved, but processing complexity increases
Solution Approach 1:
The patent creates simplified XML schema copies and templates that represent common financial transaction types. These pre-defined schemas act as reusable templates that can be instantiated multiple times with different parameters, reducing the need to create complex schemas from scratch for each transaction type and simplifying the integration process.
Solution Approach 2:
The patent uses XML parameters and attributes to dynamically control message processing behavior. By changing parameter values in XML schemas (such as transaction types, currencies, instruments), the same processing framework can handle diverse financial transactions without requiring separate processing logic for each case, thereby managing complexity through parameterization rather than structural duplication.
3Productivity
If automated processing is implemented for straight-through processing, then productivity is improved, but system complexity increases
Solution Approach 1:
The patent implements self-service automation where the XML message format itself contains all necessary processing instructions, routing information, and validation rules. The messages are designed to be self-descriptive and self-routable, allowing automated processing systems to handle transactions without human intervention or complex external control systems. The standardized XML schemas enable messages to carry their own processing logic through structured data elements.
Data Source
AI summary
The present invention provides a system and method that enables users, such as institutional investors and financial institutions, to interactively engage in capital market transactions, including the trading of Over-the-Counter financial products, via the Internet (including the World Wide Web). The system includes a variety of servers, applications, and interfaces that enable users to interactively communicate and trade financial instruments among one another, and to manage their portfolios. Interactive communications supported by the system include: requesting price quotes, monitoring and reviewing quote requests, issuing price quotes, monitoring and reviewing price quotes, negotiation between users, acceptance of price quotes, reporting, portfolio management, analysis of financial information and market data, calendaring, and communications among users and/or system administrators, including e-mail, chat, and message boards.The present invention also supports communications with the server side in an automated manner via an automated processor. Such automated communications enable connectivity with users' internal, back-end systems to execute automated, straight-through processing, including transaction pricing, payment scheduling and journaling, derivatives trading, trade confirmation, and trade settlement. Such communications are facilitated using a novel XML-based syntax (FinXML™) and XSL-based processing language (FinScript™). FinXML provides a standard data interchange language for capital market transactions and supports a broad set of elements and attributes that represent a wide variety of financial transactions, reference data, and market data. The common description of the FinXML syntax can be used for all aspects of straight-through-processing, including deal creation, confirmation, settlement, payment, risk management, and accounting.