System and method for enhanced electronic networked settlement processor
A system and method are provided for settlement and delivery of cash settled futures contracts overlying open-ended mutual fund shares with optional delivery of mutual fund shares when physical settlement is elected. On the last date of the contract, a party which has an open position in the contract tenders the clearing organization a request to elect optional physical settlement of a specified number of shares of the mutual fund in additional to the standard cash settlement of those contracts. The clearing organization, upon acceptance and when it is certain of the requestor's final position in the futures contract, it processes the election request against the requestor's final position and possibly submits an order on behalf of the requestor to the investment company which manages the mutual fund to purchase or redeem shares of the open-ended mutual fund in a quantity roughly the size of the requestor's final contract position.
1. A system for operating an enhanced electronic networked settlement processing system, the system comprising:
one or more servers in communication with a member computer associated with an account via a communications network interface, the member computer comprising a graphical user interface (GUI), the one or more servers comprising a system processor and a memory storing computer-readable instructions executable by the system processor,
the system processor of the one or more servers configured to:
store open ended mutual fund (OEMF) data related to an OEMF in the memory, the stored OEMF data structured to comprise data related to fund assets and a plurality of fund shares having a value related to the fund assets; and
store OEMF futures contract (FC) data relating to an OEMF FC in the memory, the OEMF FC data defining: a) a plurality of contract shares of the fund shares, which constitutes a contract size, b) a contract settlement date, and c) contract settlement terms, the member computer configured to:
send a first electronic message responsive to user input via the GUI, comprising a request for an election for an optional OEMF FC physical settlement (PS) of a requested number of shares defining a final position, the first electronic message comprising the request for the election, and
the system processor of the one or more servers further configured to:
receive, via the communications network interface, the first electronic message from the member computer;
upon determining that the first electronic message is timely and the requested number of shares defining the final position is within a predetermined range of number of shares:
generate and send an electronic order to redeem the requested number of shares to a third party computer system,
send, via the communications network interface, a second electronic message to the member computer, the second electronic message comprising information relating to the electronic order, and
display, via the GUI, the information relating to the electronic order on the member computer; and
upon determining that the first electronic message is untimely and the requested number of shares defining the final position is outside the predetermined range of number of shares:
ignore and terminate the request,
send, via the communications network interface, an electronic rejection message to the member computer, and
display, via the GUI, the electronic rejection message on the member computer.
2. The system of claim 1 , wherein when the first electronic message is determined to be timely, the system processor is further configured to accept the request for the election which supersedes any prior election request for a same OEMF FC for the account.
3. The system of claim 1 , wherein when the requested number of shares defining the final position is determined to be within the predetermined range of number of shares, the system processor is further configured to:
reduce a size of the requested number of shares if said size is larger than a size of a current position; and
compute a maximum number of shares that the OEMF FC PS may handle as a final number of OEMF shares covered by the final position in the OEMF FC.
4. The system of claim 1 , wherein the final position comprises a long position.
5. The system of claim 1 , wherein the account is associated with a writer and the final position comprises a short position.
6. The system of claim 1 , wherein the requested number of shares accommodates both a mandatory round lot component and an optional odd lot component.
7. A non-transitory computer-readable medium for operating an enhanced electronic networked settlement processing system, the non-transitory computer-readable medium storing program instructions that, when executed by one or more processors, causes the one or more processors to perform the functions:
in a networked computer system comprising one or more servers in communication with a member computer associated with an account via a communications network interface, the member computer comprising a graphical user interface (GUI):
storing open ended mutual fund (OEMF) data related to an OEMF in a memory, the stored OEMF data structured to comprise data related to fund assets and a plurality of fund shares having a value related to the fund assets;
storing OEMF futures contract (FC) data relating to an OEMF FC in the memory, the OEMF FC data defining: a) a plurality of contract shares of the fund shares, which constitutes a contract size, b) a contract settlement date, and c) contract settlement terms;
sending, by the member computer, a first electronic message responsive to user input via the GUI, comprising a request for an election for an optional OEMF FC physical settlement (PS) of a requested number of shares defining a final position, the first electronic message comprising the request for the election;
receiving, by the one or more servers via the communications network interface, the first electronic message from the member computer;
upon determining that the first electronic message is timely and the requested number of shares defining the final position is within a predetermined range of number of shares:
generating and sending an electronic order to redeem the requested number of shares to a third party computer system,
sending, via the communications network interface, a second electronic message to the member computer, the second electronic message comprising information relating to the electronic order, and
displaying, via the GUI, the information relating to the electronic order on the member computer; and
upon determining that the first electronic message is untimely and the requested number of shares defining the final position is outside the predetermined range of number of shares:
ignoring and terminating the request,
sending, via the communications network interface, an electronic rejection message to the member computer, and
displaying, via the GUI, the electronic rejection message on the member computer.
8. The non-transitory computer-readable medium of claim 7 , wherein when the first electronic message is determined to be timely, the program instructions further cause the one or more processors to perform the functions of:
accepting the request for the election which supersedes any prior election request for a same OEMF FC for the account.
9. The non-transitory computer-readable medium of claim 7 , wherein when the requested number of shares defining the final position is determined to be within the predetermined range of number of shares, the program instructions further cause the one or more processors to perform the functions of:
reducing a size of the requested number of shares if said size is larger than a size of a current position; and
computing a maximum number of shares that the OEMF FC PS may handle as a final number of OEMF shares covered by the final position in the OEMF FC.
10. The non-transitory computer-readable medium of claim 7 , wherein the final position comprises a long position.
11. The non-transitory computer-readable medium of claim 7 , wherein the account is associated with a writer and the final position comprises a short position.
12. The non-transitory computer-readable medium of claim 7 , wherein the requested number of shares accommodates both a mandatory round lot component and an optional odd lot component.