Automated method and a system for clearing and settling trades in a CSD-system
View Patent ↗A method for financial transactions within a Central Securities Depository comprises a clearing process and a settlement process. The clearing process preparing the transactions for the settlement process selects a settlement rule to be followed in the clearing process. The rule defines how the transaction is to be settled and a settlement obligation group. The group includes a number of settlement instructions that must be settled at the same time. The clearing process also “locks in” the assets with which the transactions are concerned thereby reserving the assets for a specific settlement instruction. The settlement process includes selecting transfer instructions for all settlement obligations belonging to the settlement obligation group. The transfer instructions are irrevocable instructions to transfer the assets between participants in the CSD. The settlement process also checks that all transfer instructions are carried out successfully and reports the result of the settlement to the participants involved.
1. An automated, computer-implemented method for carrying out financial transactions within a Central Securities Depository (CSD), comprising an automated, computer-implemented clearing process and an automated, computer-implemented settlement process, the clearing process preparing a financial transaction for the settlement process using the following automated, computer-implemented sub-process steps:
providing a set of settlement rules to be followed in the clearing process,
selecting, by a first computer process, a settlement rule from the set of settlement rules to be followed in the clearing process, the settlement rule defining how the financial transaction is to be settled,
defining, by a second computer process, a settlement instruction group including a number of settlement instructions to be settled at the same time, where the settlement instructions describe obligations of participants to the financial transaction,
following the selecting and defining steps, locking-in, by a third computer process, the assets to which the financial transaction concerns, the locking-in having the effect of reserving said assets for a specific settlement,
reserving by the third computer process said assets for the specific settlement based on the locking-in step, thereby clearing the financial transaction for settlement,
and the settlement process includes the following automated, computer-implemented sub-process steps:
providing a set of transfer instructions,
selecting, by a fourth computer process, transfer instructions from the set of transfer instructions for all settlement instructions belonging to said settlement instruction group, said transfer instructions being irrevocable instructions to transfer the locked-in assets between participants in the CSD,
transferring by the fourth computer process the locked-in assets between the participants in the CSD,
checking, by a fifth computer process, that said transfer instructions are carried out successfully to complete settlement of the financial transaction, and
following the selecting and checking steps, reporting, by a sixth computer process, the result of the settlement to participants involved in the financial transaction.
2. An automated system for carrying out financial transactions within a Central Securities Depository (CSD), said system comprising:
a computer having an input for receiving financial transaction information and a output,
wherein the computer is configured to perform an automated function for a clearing process and an automated function for a settlement process, the computer being configured to implement the clearing process function for a financial transaction using the following computer implemented sub-functions:
a first automated sub-function for the selection from a set of provided settlement rules of a settlement rule to be used in the clearing process, the settlement rule defining how the financial transaction is to be settled,
a second automated sub-function for the definition of a settlement instruction group including a number of settlement instructions to be settled at the same time, where the settlement instructions describe obligations of participants involved in the financial transaction,
a third automated sub-function for locking-in the assets to which the financial transaction concern, the locking-in having the effect of the system reserving said assets for a specific settlement, for reserving said assets for the specific settlement based on the locking-in step, thereby clearing the financial transaction for settlement and
wherein the computer is configured to perform the settlement process function using the following computer-implemented sub-functions:
a fourth automated sub-function for selecting transfer instructions from a set of provided transfer instructions for all settlement instructions belonging to said settlement instruction group, said transfer instructions being irrevocable instructions to transfer the locked-in assets between participants in the CSD, and for transferring the locked-in assets between participants in the CSD,
a fifth automated sub-function for checking that said transfer instructions are carried out successfully to complete the settlement of the financial transaction, and
a sixth automated sub-function for reporting via the output the result of the settlement to participants involved in the financial transaction.