Standardization and management of over-the-counter financial instruments
A method of managing financial products is disclosed. The method includes receiving transaction parameters associated with a financial transaction, determining a standardized financial product, wherein the standardized financial transaction reflects the transaction parameters associated with the financial position, calculating a net present value position between the financial position and the standardized financial product, and clearing the net present value position through a clearing party.
1. A method of managing financial products, the method comprising:
receiving, using at least one processor, transaction parameters associated with an open financial position, wherein the open financial position is a negotiated interest rate swap between counterparties;
identifying, using the at least one processor, a standardized financial product, where the standardized financial product reflects the transaction parameters associated with the negotiated interest rate swap; and
converting, using the at least one processor, the negotiated interest rate swap associated with the received transaction parameters to the identified standardized financial product; wherein converting further comprises:
determining, using the at least one processor, a net present value position between the negotiated interest rate swap and the identified standardized financial product; and
clearing, using the at least one processor, the net present value position between the negotiated interest rate swap and the identified standardized financial product.
2. The method of claim 1 , wherein receiving transaction parameters includes receiving transaction parameters selected from the group consisting of: an interest rate; a maturity; a start date; and a notional amount.
3. The method of claim 1 , further comprising:
periodically marking to market an open financial position associated with the interest rate swap.
4. The method of claim 3 , where the open financial position is marked to market at least daily.
5. The method of claim 1 further comprising: rolling the open financial position into a second open financial position associated with a second standardized financial product as a function of a maturity of the interest rate swap.
6. The method of claim 5 further comprising: calculating a rate associated with the second standardized financial product.
7. A method of managing financial products, the method comprising:
defining using at least one processor, one or more transaction parameters associated with a negotiated interest rate swap;
identifying, using the at least one processor, an exchange traded financial product, wherein the exchange traded financial product reflects the defined one or more transaction parameters associated with the negotiated interest rate swap;
converting, using the at least one processor, the negotiated interest rate swap associated with the defined one or more transaction parameters to the identified exchange traded financial product; wherein converting further comprises:
calculating, using the at least one processor, a net present value position between the negotiated interest rate swap and the exchange traded financial product; and
clearing, using the at least one processor, the negotiated interest rate swap accord to net present value position through a central clearing party.
8. The method of claim 7 , wherein defining the one or more transaction parameters includes defining one or more transaction parameters selected from the group consisting of: an interest rate; a maturity; a start date; and a notional amount.
9. The method of claim 7 , further comprising:
periodically marking to market the interest rate swap.
10. The method of claim 7 further comprising:
rolling the interest rate swap into a second interest rate swap associate with a second exchange traded financial product as a function of a maturity of the interest rate swap.
11. The method of claim 7 further comprising:
calculating a rate associated with the second exchange traded financial product.
12. A method of managing financial products, the method comprising:
defining, using at least one processor, at least one transaction parameter on a first date, wherein the at least one transaction parameter is associated with a negotiated interest rate swap;
identifying, using the at least one processor, a standardized exchange traded financial product, wherein the standardized exchange traded financial product begins on a second date, and where the standardized exchange traded financial product reflects the at least one transaction parameters associated with the negotiated interest rate swap;
converting, using the at least one processor, the negotiated interest rate swap associated with the defined at least one transaction parameter to the identified standardized exchange traded financial product; wherein converting further comprises:
calculating, using the at least one processor, a net present value position between the negotiated interest rate swap on the first date and the standardized exchange traded financial product on the second date; and
clearing, using the at least one processor, the net present value position through a clearing party.
13. The method of claim 12 , wherein defining at least one transaction parameter includes defining at least one transaction parameter selected from the group consisting of: an interest rate; a maturity; a start date; and a notional amount.
14. The method of claim 12 further comprising:
rolling the second transaction financial product into a third transaction as a function of a maturity.
15. The method of claim 14 further comprising:
calculating a rate associated with the third transaction.