Electronic Conversion of Trade Transaction Agreements into Structured Products
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Solution Overview
Problem
The submission and processing of trade transaction agreements at post-trade processing facilities are complex, time-consuming, and prone to human errors due to the need for manual decomposition of bundles into individual products, leading to confusion and inefficiency.
Innovation Solution
A method and system for electronically converting trade transaction agreements into structured products suitable for submission to post-trade processing facilities, where trade information is received, constructed into allowable products, and submitted with identified parties, allowing for efficient processing and reducing manual errors.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If trade transaction agreements are manually decomposed and submitted as individual products, then post-trade processing facilities can process the transactions, but the submission process becomes time-consuming and error-prone
Solution Approach 1:
The system performs preliminary electronic conversion of trade transaction agreements into structured products before submission to post-trade processing facilities. The conversion module automatically decomposes bundles into individual structured products (swaps, calls, puts) and prepares them for submission, eliminating the need for manual decomposition at the processing facility and reducing both time and errors.
Solution Approach 2:
The patent introduces an intermediary conversion module that acts as a bridge between the trade transaction agreement and the post-trade processing facility. This intermediary automatically converts complex bundles into acceptable structured products, reducing manual intervention and improving both accuracy and efficiency.
2Adaptability or versatility
If bundles of vanilla products are submitted as complex structures, then the trade transaction agreement maintains its完整性, but post-trade processing facilities cannot process them due to lack of listing
Solution Approach 1:
The conversion module automatically segments complex trade transaction agreements and bundles into individual structured products (swaps, calls, puts) that are listed and accepted by post-trade processing facilities. This segmentation maintains the完整性 of the original agreement while making each component processable by the facility.
Solution Approach 2:
The system changes the structural parameters of the trade transaction agreement by converting it from a complex bundle format into standardized structured product formats that match the listing requirements of post-trade processing facilities, enabling automatic processing.
3Measurement precision
If manual decomposition and analysis of trade agreements is performed, then individual products can be identified, but human error increases significantly
Solution Approach 1:
The conversion module enables self-service by automatically performing the decomposition, analysis, and identification of individual structured products within trade transaction agreements without human intervention. The system uses predefined rules and algorithms to accurately identify and separate products, eliminating human error while maintaining precision.
Solution Approach 2:
The patent replaces the manual mechanical process of decomposition and analysis with an automated electronic conversion system. The conversion module uses computer algorithms to identify and separate structured products, substituting human cognitive processes with automated computational processes that are more accurate and reliable.
4Loss of information
If multiple responses from post-trade processing facilities are reviewed for reconciliation, then complete processing information is obtained, but the reconciliation process becomes confusing and complicated
Solution Approach 1:
The system merges multiple responses from post-trade processing facilities into a unified reconciliation view. The conversion module tracks and consolidates processing information for all individual structured products derived from a single trade transaction agreement, presenting a consolidated status that reduces complexity while maintaining completeness of information.
Data Source
AI summary
A trade transaction agreement, defined as a basket, of one or more structured products, may be converted into one or more structured products. Trade information that represents the trade transaction agreement may be initially provided or specified in various forms, to subsequently be analyzed to construct the trade transaction agreement into its corresponding structured products. The structured products are suitable for submission to post-trade processing facilities for subsequent processing thereof and are accordingly submitted. The structured products may be submitted to a variety of post-trade processing facilities, or one post-trade processing facility may be utilized.