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 method comprising:
receiving, by at least one processor of one or more servers of a clearing organization, open ended mutual fund (OEMF) data and OEMF futures contract (FC) data in real time from a plurality of trading centers via a first communications network specifically configured for communicating with the clearing organization, the at least one processor operatively coupled to a memory configured to store computer-readable instructions executable by the at least one processor;
storing, by the at least one processor, the OEMF data and the OEMF FC data in a storage device;
determining, by the at least one processor, real time position information of a plurality of accounts;
monitoring, by the at least one processor, the real time position information of the plurality of accounts;
receiving, via an input portion of an interactive graphical user interface (GUI) of a member computer of a plurality of member computers, user input comprising a request for an optional physical settlement of a requested number of shares of an OEMF FC defining a position, the member computer associated with an account of the plurality of accounts;
receiving, by the at least one processor, a first electronic message from the member computer via the first communications network, the first electronic message comprising the request;
identifying, by the at least one processor, the first electronic message from among a plurality of electronic messages received from the plurality of member computers;
determining, by the at least one processor, that the request is compatible with processing by a downstream third-party computer system by:
determining that the first electronic message is timely in that it was received on a predetermined day and before a predetermined time set by the clearing organization and prior to a cutoff time of the downstream third-party computer system for submission of electronic orders, and
validating that the requested number of shares of the OEMF FC is within a predetermined range of number of shares;
accepting, by the at least one processor, the request;
confirming, by the at least one processor, based on the monitoring of the real time position information of the plurality of accounts, that a current position of the account after the predetermined time corresponds in type to the position;
generating, by the at least one processor, an electronic order to redeem the requested number of shares of the OEMF FC based on the confirming;
sending, by the at least one processor, the electronic order to the downstream third-party computer system for processing before the cutoff time via a second communications network;
sending, by the at least one processor, a second electronic message comprising information associated with the electronic order to the member computer via the first communications network; and
displaying, via a display portion of the interactive GUI, the information associated with the electronic order on the member computer.
2 . The method of claim 1 , wherein the accepting the request supersedes any prior election request for a same OEMF FC for the account.
3 . The method of claim 1 , further comprising:
reducing a size of the requested number of shares of the OEMF FC if said size is larger than a size of the current position; and
computing a maximum number of shares of the OEMF FC PS available for physical settlement.
4 . The method of claim 1 , wherein the type of the position comprises a long position.
5 . The method of claim 1 , wherein the account is associated with a writer and the type comprises a short position.
6 . The method of claim 1 , wherein the requested number of shares of the OEMF FC accommodates both a mandatory round lot component and an optional odd lot component.
7 . The method 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.
8 . The method of claim 7 , 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.
9 . A 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:
receiving open ended mutual fund (OEMF) data and OEMF futures contract (FC) data in real time from a plurality of trading centers via a first communications network specifically configured for communicating with a clearing organization, the one or more processors associated with one or more servers of the clearing organization;
storing the OEMF data and the OEMF FC data in a storage device;
determining real time position information of a plurality of accounts based on the OEMF data and the OEMF FC data;
monitoring the real time position information of the plurality of accounts;
receiving, via an input portion of an interactive graphical user interface (GUI) of a member computer of a plurality of member computers, user input comprising a request for an optional physical settlement of a requested number of shares of an OEMF FC defining a position, the member computer associated with an account of the plurality of accounts;
receiving a first electronic message from the member computer via the first communications network, the first electronic message comprising the request;
identifying the first electronic message from among a plurality of electronic messages received from the plurality of member computers;
determining that the request is compatible with processing by a downstream third-party computer system by:
determining that the first electronic message is timely in that it was received on a predetermined day and before a predetermined time set by the clearing organization and prior to a cutoff time of the downstream third-party computer system for submission of electronic orders, and
validating that the requested number of shares of the OEMF FC is within a predetermined range of number of shares; accepting the request;
confirming, based on the monitoring of the real time position information of the plurality of accounts, that a current position of the account after the predetermined time corresponds in type to the position;
generating an electronic order to redeem the requested number of shares of the OEMF FC based on the confirming;
sending the electronic order to the downstream third-party computer system for processing before the cutoff time via a second communications network;
sending a second electronic message comprising information associated with the electronic order to the member computer via the first communications network; and
displaying, via a display portion of the interactive GUI, the information associated with the electronic order on the member computer.
10 . The non-transitory computer-readable medium of claim 9 , wherein the accepting the request supersedes any prior election request for a same OEMF FC for the account.
11 . The non-transitory computer-readable medium of claim 9 , wherein the program instructions, when executed by the one or more processors, further cause the one or more processors to perform the functions of:
reducing a size of the requested number of shares of the OEMF FC if said size is larger than a size of the current position; and
computing a maximum number of shares of the OEMF FC available for physical settlement.
12 . The non-transitory computer-readable medium of claim 9 , wherein the type of the position comprises a long position.
13 . The non-transitory computer-readable medium of claim 9 , wherein the account is associated with a writer and the type comprises a short position.
14 . The non-transitory computer-readable medium of claim 9 , wherein the requested number of shares of the OEMF FC accommodates both a mandatory round lot component and an optional odd lot component.
15 . The non-transitory computer-readable medium of claim 9 , 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.
16 . The non-transitory computer-readable medium of claim 15 , 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.