News Column

"System, Method, Article for Facilitating Derivatives Transactions" in Patent Application Approval Process

March 6, 2014



By a News Reporter-Staff News Editor at Politics & Government Week -- A patent application by the inventor Horton, Leonard (Seattle, WA), filed on September 24, 2013, was made available online on February 20, 2014, according to news reporting originating from Washington, D.C., by VerticalNews correspondents.

This patent application is assigned to Direct Swap Inc.

The following quote was obtained by the news editors from the background information supplied by the inventors: "The present disclosure is directed to systems, methods and articles to facilitate derivatives transactions.

"Derivatives are financial instruments whose value depends on--or derives from--certain external variables. Those variables may be underlying assets, such as stocks or commodities, or some other metric, such as weather, unemployment or an economic index, etc. Derivatives commonly take the form of contracts, such as futures, options or swaps.

"Derivatives may be broadly categorized by (i) the relationship between the asset and the derivative (e.g., forwards, options, swaps), the type of underlying asset (e.g., equities, foreign exchange, interest rates, commodities), and (iii) the market or manner in which they trade or are transacted. Forwards are a contract to buy or sell an asset at a future date for a set price. Futures are similar to forwards, except standardized contracts are used and futures may be traded on exchanges. Options give a holder the right, but not the obligation, to buy or sell an asset. Swaps are contracts to exchange cash flows on or before a specified future date based on the underlying value of the external variable.

"The major classes of underlying assets include interest rates, foreign exchange rates (currency), credit default, commodities, equity securities, etc.

"Generally speaking, derivatives transactions may be purely speculative in nature or may be used for commercial risk management purposes, such as hedging transactions. Speculative derivatives transactions can take an almost infinite number of forms, and may greatly magnify gains and losses relative to a transaction in the underlying asset. Hedging transactions may improve the operations and profitability of an operating business.

"Derivatives transactions typically are either exchange traded, or traded over-the-counter. Exchange trades generally use standardized contracts defined by the exchange, which acts as an intermediary in the transaction. Over-the-Counter (OTC) transactions are privately negotiated transactions directly between two parties with or without an intermediary, and are often of a non-standard type. OTC transactions are generally arranged by banks or other financial institutions."

In addition to the background information obtained for this patent application, VerticalNews journalists also obtained the inventor's summary information for this patent application: "In an embodiment, a system comprises: one or more memories; and one of more processing devices configured to automatically provide a derivatives transactions service, the automatically providing the derivatives transaction service including: qualifying prospective users of the service based on a user type and credit evaluation; determining approved transaction types for qualified users; identifying approved risk mitigation methods for qualified users; enrolling qualified users in the service; and providing to a qualified user at least one of: transaction search services; transaction offer services; portfolio management services; and transaction negotiation services. In an embodiment, providing the derivative transaction service includes providing a private marketplace to qualified users to conduct transactions. In an embodiment, providing the private market place includes providing credit support services. In an embodiment, the credit support services comprise due diligence credit support services (e.g., verifying information related to a proposed credit support mechanism, such a letter of credit). In an embodiment, providing the derivative transaction service includes selectively providing a qualified user with an indication of information related to a counter party of a potential transaction. In an embodiment, providing the derivative transaction service includes providing due diligence services. In an embodiment, providing the private marketplace comprises providing social connection services to users of the private marketplace. In an embodiment, providing the derivative transaction service comprises providing online access to the derivative transaction service. In an embodiment, providing the derivative transaction service comprises verifying compliance with a regulatory scheme. In an embodiment, the verifying compliance comprises verifying compliance with a Dodd Frank End User Clearing Exception (EUCE). In an embodiment, the verifying compliance with the EUCE comprises verifying a transaction is exempt from clearing and margin requirements of the regulatory scheme. In an embodiment, providing the derivative transaction service comprises reporting to comply with a regulatory scheme. In an embodiment, the reporting includes reporting to comply with a Dodd Frank End User Clearing Exception. In an embodiment, providing the derivative transaction service comprises providing collateral management services and analytic tools.

"In an embodiment, a computer implemented method of providing a derivatives transaction service comprises: qualifying prospective users of the service based on a user type and credit evaluation; determining approved transaction types for qualified users; identifying approved risk mitigation methods for qualified users; enrolling qualified users in the service; and providing to a qualified user at least one of: transaction search services; transaction offer services; portfolio management services; and transaction negotiation services. In an embodiment, the qualifying, the determining, the enrolling and the providing are performed by one or more configured computing systems. In an embodiment, providing the derivative transaction service includes providing a private marketplace to qualified users to conduct transactions. In an embodiment, providing the private market place includes providing due diligence credit support services. In an embodiment, providing the derivative transaction service includes selectively providing a qualified user with an indication of information related to a counter party of a potential transaction. In an embodiment, the indication is an identity of the counter party. In an embodiment, providing the derivative transaction service includes providing due diligence services. In an embodiment, providing the private marketplace comprises providing social connection services to users of the private marketplace. In an embodiment, providing the derivative transaction service comprises providing online access to the derivative transaction service. In an embodiment, providing the derivative transaction service comprises verifying compliance with a regulatory scheme. In an embodiment, the verifying compliance comprises verifying compliance with a Dodd Frank End User Clearing Exception (EUCE). In an embodiment, the verifying compliance with the EUCE comprises verifying a transaction is exempt from clearing and margin requirements of the regulatory scheme. In an embodiment, providing the derivative transaction service comprises generating reports to comply with a regulatory scheme. In an embodiment, the generated reports includes reports to comply with a Dodd Frank End User Clearing Exception. In an embodiment, providing the derivative transaction service comprises providing collateral management services and analytic tools.

"In an embodiment, a non-transitory computer-readable medium's contents cause a computing system to perform a method, the method comprising: qualifying prospective users of a derivatives transaction service based on a user type and credit evaluation; determining approved transaction types for qualified users; identifying approved risk mitigation methods for qualified users; enrolling qualified users in the service; and providing to a qualified user at least one of: transaction search services; transaction offer services; portfolio management services; and transaction negotiation services. In an embodiment, the contents are instructions which configure at least one processing device of the computing system to perform the method. In an embodiment, the method comprises one or more of the methods described herein.

"In an embodiment, a system comprises: means for qualifying prospective users of a derivatives transaction service based on a user type and credit evaluation; means for determining approved transaction types for qualified users; means for identifying approved risk mitigation methods for qualified users; means for enrolling qualified users in the service; and means for providing to a qualified user at least one of: transaction search services; transaction offer services; portfolio management services; and transaction negotiation services.

"An embodiment facilitates providing a private marketplace of qualified participants conducting transactions with known credit support mechanisms. In an embodiment, a participant qualification process allows clients access to information regarding a counterparty to a potential transaction, reducing transaction risks. In an embodiment, the information includes the identity of the counterparty. In an embodiment, credit support due diligence reduces credit risks associated with uncleared transactions. In an embodiment, the marketplace forms a community with access to different kinds of social connection opportunities between participants in the marketplace. In an embodiment, online delivery and a highly automated process are employed, reducing transaction fees. In an embodiment, business processes and platform mechanics facilitate compliance with the Dodd Frank End User Clearing Exception to except transactions from the mandatory clearing and margin requirements of the Dodd Frank Act. In an embodiment, regulatory reporting necessary for compliance with the Dodd Frank End User Clearing Exception is performed for a client of the marketplace. In an embodiment, the system includes a comprehensive suite of tools, such as collateral management and analytic tools. In an embodiment, some of the tools may be proprietary to a service provider.

BRIEF DESCRIPTION OF THE SEVERAL VIEWS OF THE DRAWING(S)

"FIG. 1 is a high level process flow diagram of an embodiment of a method for performing derivatives transactions.

"FIG. 2 is a functional block diagram of an embodiment of an environment suitable for providing derivatives transactions services.

"FIG. 3 is a process flow process diagram of an embodiment of a method of managing recruitment of prospective users of a derivatives transactions service.

"FIG. 4 is a process flow process diagram of an embodiment of a method of qualifying prospective users of a derivatives transactions service.

"FIG. 5 is a process flow diagram of an embodiment of a method of enrolling users of a derivatives transactions service.

"FIGS. 6A, 6B and 7 are process flow diagrams of an embodiment of a method of operating a derivatives transactions service.

"FIG. 8 is a process flow diagram illustrating other processes of an embodiment of method of operating a derivatives transactions service.

"FIGS. 9A-9D are a functional block diagram of an embodiment of a derivatives transactions service system."

URL and more information on this patent application, see: Horton, Leonard. System, Method, Article for Facilitating Derivatives Transactions. Filed September 24, 2013 and posted February 20, 2014. Patent URL: http://appft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fsearch-adv.html&r=790&p=16&f=G&l=50&d=PG01&S1=20140213.PD.&OS=PD/20140213&RS=PD/20140213

Keywords for this news article include: Direct Swap Inc.

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Politics & Government Week


Story Tools