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 comprising:
one or more servers in communication with a member computer via a communications network interface, the one or more servers comprising at least one processor and a memory storing computer-readable instructions executable by the at least one processor, the member computer associated with an account and comprising a graphical user interface (GUI),
the at least one processor of the one or more servers configured to:
store, in the memory, open ended mutual fund (OEMF) data related to an OEMF and OEMF futures contract (FC) data relating to an OEMF FC,
the member computer configured to:
send, to the one or more servers, via the communications network interface, a first electronic message responsive to user input via the GUI, the first electronic message comprising a request for an election for an optional OEMF FC physical settlement (PS) of a requested number of shares defining a final position, and
the at least one processor of the one or more servers further configured to:
determine, responsive to receiving the first electronic message, whether the first electronic message is timely and the request meets at least one predetermined condition,
upon determining that the first electronic message is timely and the request meets the at least one predetermined condition:
generate and send an electronic order to redeem the requested number of shares to a third party computer system,
send a second electronic message comprising information relating to the electronic order to the member computer, and
display, via the GUI, the information relating to the electronic order on the member computer, and
otherwise, terminate the request upon determining that the first electronic message is untimely and the request fails to meet the at least one predetermined condition.
2. The system of claim 1 , wherein when the first electronic message is determined to be timely, the at least one 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 the at least one predetermined condition comprises the requested number of shares defining the final position being within a predetermined range of number of shares.
4. The system of claim 3 , wherein when the requested number of shares defining the final position is determined to be within the predetermined range of number of shares, the at least one 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.
5. The system of claim 1 , wherein the final position comprises a long position.
6. The system of claim 1 , wherein the account is associated with a writer and the final position comprises a short position.
7. The system of claim 1 , wherein the requested number of shares accommodates both a mandatory round lot component and an optional odd lot component.
8. The system of claim 1 , wherein the OEMF data is structured to comprise data related to fund assets and a plurality of fund shares having a value related to the fund assets.
9. The system of claim 8 , wherein the OEMF FC data defines: 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.
10. The system of claim 1 , wherein when the first electronic message is determined to be untimely and the request fails to meet the at least one predetermined condition, the at least one processor is further configured to send, via the communications network interface, an electronic rejection message to the member computer.
11. The system of claim 10 , wherein the electronic rejection message is configured to be displayed on the member computer via the GUI.