Electronic Trading System Straight-Through Processing

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Solution Overview

Problem

Current electronic trading systems face delays and high costs due to the complexity of interactions among multiple entities involved in transaction settlement, lacking seamless and instantaneous processing, and often require human intervention to manage risks.

Innovation Solution

A direct order book-based electronic trading system that interfaces with users and custodial entities for real-time buy/sell requests, utilizing standardization and dematerialization techniques, and employing algorithms to determine the necessity of straight-through processing (STP) based on transaction risk factors, ensuring secure and timely transactions.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If multiple entities and systems are involved in transaction settlement, then verification and security are improved, but transaction time and complexity increase significantly

Engineering Contradiction:

Improvetransaction securityVSAvoidtransaction completion time

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The patent combines multiple settlement entities and systems into a single integrated electronic trading platform. The platform consolidates order matching, verification, and settlement functions that were previously distributed across multiple independent systems, enabling straight-through processing (STP) without manual intervention or delays from inter-system communication.

Inventive Principle:

Principle #5Merging (Combining)

Solution Approach 2:

The system performs preliminary verification of buyer funds and seller asset ownership before transactions are executed. By pre-validating transaction eligibility and maintaining real-time account balances, the system eliminates post-trade verification delays and enables immediate settlement upon trade execution.

Inventive Principle:

Principle #10Preliminary action

2Reliability

If manual verification and settlement processes are used, then transaction security is maintained, but processing speed and efficiency decrease

Engineering Contradiction:

Improvesettlement accuracyVSAvoidtransaction processing speed

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The patent replaces manual verification and settlement processes with automated electronic systems. The platform uses computer algorithms to match orders, verify transaction eligibility, and execute settlements automatically, eliminating the need for human traders and operators while maintaining accuracy through systematic validation rules.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The system enables self-service trading where users can independently execute trades, verify their own transaction status, and access settlement information without requiring manual intervention from operators. The automated platform handles all verification and settlement functions autonomously based on pre-programmed business rules.

Inventive Principle:

Principle #25Self-service

3Reliability

If multiple intermediaries are involved in the trading process, then transaction verification is improved, but overhead costs increase

Engineering Contradiction:

Improveownership verificationVSAvoidsystem overhead

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent extracts and eliminates unnecessary intermediary entities from the trading process. By implementing direct electronic matching between buyers and sellers on a single platform, the system removes multiple layers of intermediaries while maintaining verification integrity through automated validation of asset ownership and buyer credentials.

Inventive Principle:

Principle #2Taking out (Extraction)

4Reliability

If physical delivery methods are used for asset transfer, then ownership verification is concrete, but delivery time and complexity increase

Engineering Contradiction:

Improveownership transferVSAvoidasset delivery time

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The patent replaces physical delivery methods with electronic transfer of asset ownership records. Instead of physically moving certificates or assets, the system electronically updates ownership registers and account balances, achieving immediate transfer of ownership rights without the delays and complexities of physical logistics.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Data Source

PatentUS8165952B2Electronic trading system

Publication Date: 2012.04.24 PREVENTIA

AI summary

An electronic trading system facilitates electronic trades of fungible trading elements. Fungible trading elements are electronically displayed and the system facilitates the trading operations. A risk factor for a particular transaction may be determined and based on this risk factor, the electronic trading system may elect straight through processing (STP) operations to conclude a trade. Otherwise the risk factor may indicate avoiding the STP and allowing other settlement means. The electronic trading system also include the dematerialization of the trading elements, therefore verifying ownership prior to exchange and as such as more robust and secure trading platform.