System and method of implementing massive early terminations of long term financial contracts
A method of and system for terminating or assigning outstanding OTC derivative transactions between a plurality of financial institutions (banks). The system comprises: a processing station arranged to receive transaction data describing a plurality of transactions from a plurality of banks via the Internet. The processing station comprises: a linking module for linking different versions of the same transaction received from different parties to that transaction; an analysis module for determining a set of linked transactions between a plurality of different banks, wherein each bank has debts and claims towards other banks in the set; a calculation module arranged to calculate an aggregated value of each set of linked transactions and select the set of linked transactions which has an aggregated value within bank-specified tolerance limits acceptable for executing a termination; and an execution module for executing a termination or assignment of the selected set of linked transactions.
1. A computer-implemented method of exchanging derivatives related data for prematurely terminating derivative related transactions, the method comprising:
receiving, at a processing unit over a communication network, trade data associated with derivative related transactions, wherein the derivative related transactions include outstanding derivative related transactions for compression having designated maturity dates and for which parties thereto agree to be bound by a premature termination of the outstanding derivative related transactions in accordance with a compression package generated by the processing unit; and
at the processing unit, using the trade data to generate a compression package which includes at least three involved parties, satisfies parameters agreed to by the involved parties and is for prematurely terminating outstanding linked derivative related transactions of the compression package automatically at a date at which (i) there is no prescribed value and no prescribed method of determining a value at which termination of the outstanding linked derivative related transactions of the package should take place, and (ii) there is no obligation for the involved parties to prematurely terminate the outstanding linked derivative related transactions of the package.
2. The method of claim 1 further comprising:
transmitting, using the processing unit, over a second communication network, execution data indicating the date on which the outstanding linked derivative related transactions of the package are automatically prematurely terminated.
3. The method of claim 1 , wherein the processing unit is located at a financial institution.
4. The method of claim 3 , wherein the processing unit is associated with a party having the ability to cause execution of the premature termination of the outstanding linked derivative related transactions of the package.
5. The method of claim 1 further comprising:
transmitting, using the processing unit, over the communication network, the compression package.