Settlement Approval Service With Dual Ledgers for Compliant Share Trading
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Solution Overview
Problem
Existing systems lack an efficient and compliant platform for creating and trading digital securities representing real assets, particularly in real estate and other tangible assets, while maintaining transaction privacy and compliance with securities regulations.
Innovation Solution
A transaction platform with semi-redundant ledgers that synchronize automatically, including a primary ledger for confidential data and a secondary blockchain ledger for public record, enabling anonymous trading of tokenized assets with automated auditing and compliance mechanisms.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of information
If a centralized ledger is used for transaction recording, then data confidentiality is maintained, but system reliability and transparency are reduced
Solution Approach 1:
The system divides the ledger into two separate components: a centralized primary ledger for confidential data storage and a distributed secondary blockchain ledger for transparent transaction recording. This segmentation allows each ledger to serve its specific purpose optimally - the primary ledger maintains confidentiality while the secondary ledger provides transparency and reliability.
Solution Approach 2:
The patent introduces an intermediary synchronization mechanism that bridges the primary and secondary ledgers. This intermediary component enables data to flow from the confidential primary ledger to the transparent secondary ledger in a controlled manner, ensuring both confidentiality and transparency are maintained simultaneously.
2Reliability
If manual compliance verification is performed, then regulatory accuracy is improved, but processing speed and productivity are reduced
Solution Approach 1:
The system implements automated compliance verification where the platform itself performs regulatory checks through integrated transfer agent services and settlement approval mechanisms. This self-service approach eliminates manual compliance verification while maintaining regulatory accuracy, thereby improving transaction processing speed.
Solution Approach 2:
The patent incorporates automated feedback loops where transaction data is continuously verified against regulatory requirements through programmatic checks. The system automatically approves or rejects transactions based on compliance criteria, providing real-time feedback without manual intervention and maintaining both accuracy and speed.
3Reliability
If traditional securities trading platforms are used, then regulatory compliance is maintained, but accessibility for retail investors is limited
Solution Approach 1:
The platform is designed with multi-functionality to serve both institutional and retail investors simultaneously. It integrates traditional compliance mechanisms with modern digital asset trading capabilities, creating a universal platform that maintains regulatory compliance while expanding accessibility to diverse investor types.
Solution Approach 2:
The system changes key parameters of securities trading by tokenizing assets into digital representations that can be traded on a blockchain platform. This parameter change enables retail investors to access previously institutional-only markets while the platform maintains regulatory compliance through integrated approval and verification mechanisms.
4Reliability
If extensive manual auditing processes are implemented, then transaction security is improved, but operational complexity and time consumption are increased
Solution Approach 1:
The patent replaces manual auditing processes with automated programmatic verification systems. Smart contracts and automated compliance checking mechanisms perform security verification through code-based logic rather than human reviewers, reducing operational complexity while maintaining or enhancing transaction security.
Solution Approach 2:
The system introduces automated intermediary services that act as digital auditors, continuously monitoring and verifying transactions against predefined security criteria. These intermediary automated systems handle the auditing function without requiring extensive manual processes, thereby reducing operational complexity while maintaining security.
Data Source
AI summary
A system and method for determining whether to throttle or kill a sale of shares of an asset using a settlement approval service, including querying, by a settlement approval service, a transfer agent whether a buyer of shares of an asset is approved; querying, by the settlement approval service, a transfer agent whether a seller of shares of the asset is approved; based on the buyer and the seller being approved, querying, by the settlement approval service, the transfer agent as to whether the shares offered for sale are valid; and based on determining, by the settlement approval service, that the shares are valid, approving, by the settlement approval service, the sale of shares of the asset.