Intermediary API Clearing for Non-Deliverable Interest Rate Swaps

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Solution Overview

Problem

Existing clearing house computing systems face inefficiencies and complexity in processing non-deliverable interest rate swaps due to the need for interfacing with remote systems in non-deliverable currency jurisdictions, leading to increased operational risks and inefficiencies.

Innovation Solution

A clearing framework with an application programming interface (API) and user interface screens for processing non-deliverable interest rate swaps, including functions for trade messaging, curve building, valuation, and cashflow generation, which allows for efficient clearing without requiring remote connections.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If existing clearing house computing systems interface with remote computing systems in non-deliverable currency jurisdictions to clear non-deliverable interest rate swaps, then clearing capability for non-deliverable swaps is achieved, but operational efficiency deteriorates and system complexity increases

Engineering Contradiction:

Improveclearing capability for non-deliverable swapsVSAvoidoperational efficiency

Core Design Contradiction:

Adaptability or versatilityVSProductivity

Solution Approach 1:

The patent introduces an intermediary clearing house computing system that acts as a mediator between deliverable and non-deliverable currency markets. The system uses deliverable currency as an intermediary medium to clear non-deliverable interest rate swaps without requiring direct interfaces with remote non-deliverable currency jurisdictions, thereby maintaining clearing capability while improving operational efficiency.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The patent extracts the clearing function for non-deliverable swaps from the remote computing systems in non-deliverable currency jurisdictions and consolidates it within the deliverable clearing house computing system. This extraction eliminates the need for external interfaces while preserving the clearing capability for non-deliverable instruments.

Inventive Principle:

Principle #2Taking out (Extraction)

2Adaptability or versatility

If existing clearing house computing systems interface with remote computing systems in non-deliverable currency jurisdictions, then clearing of non-deliverable swaps is enabled, but system complexity increases

Engineering Contradiction:

Improveclearing capability for non-deliverable swapsVSAvoidsystem complexity

Core Design Contradiction:

Adaptability or versatilityVSDevice complexity

Solution Approach 1:

The clearing house computing system serves as an intermediary that handles all complexity internally rather than requiring external interfaces. The system mediates between non-deliverable swap contracts and deliverable currency settlements, absorbing the complexity of non-deliverable currency handling within its own architecture while presenting a simplified interface to users.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The patent merges the clearing functions for both deliverable and non-deliverable swaps into a single integrated computing system. By combining these previously separate functions, the system eliminates the need for multiple external interfaces while maintaining comprehensive clearing capability across different currency types.

Inventive Principle:

Principle #5Merging (Combining)

3Adaptability or versatility

If remote interfaces are used for clearing non-deliverable swaps, then clearing functionality is achieved, but operational risks increase

Engineering Contradiction:

Improveclearing capability for non-deliverable swapsVSAvoidoperational risk

Core Design Contradiction:

Adaptability or versatilityVSReliability

Solution Approach 1:

The clearing house computing system acts as a protective intermediary that isolates the deliverable currency market from risks associated with non-deliverable currency jurisdictions. By handling all non-deliverable swap clearing internally using deliverable currency mechanisms, the system reduces exposure to external operational risks while maintaining clearing functionality.

Inventive Principle:

Principle #24Intermediary (Mediator)

Data Source

PatentUS20250252496A1API framework for clearing non-deliverable interest rate swaps

Publication Date: 2025.08.07 CHICAGO MERCANTILE EXCHANGE INC

AI summary

Systems and methods are provided for a clearing framework for clearing a non-deliverable interest rate swap. The clearing framework includes an application programming interface (API) including functions for processing trade messages including information used by a clearing house computing system in clearing non-deliverable interest rate swaps; one or more user interface screens comprising information corresponding to one or more non-deliverable interest rate swaps and one or more user interface screens comprising information of cleared interest rate swaps, one an API for reporting clearing information, wherein the one or more functions comprise a first messaging function to confirm clearing of the one or more non-deliverable interest rate swaps and a second messaging function to request consent to clear the one or more non-deliverable interest rate swaps.