Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Finance
Reexamination Certificate
1999-02-16
2003-01-28
Trammell, James P. (Department: 2764)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Finance
C705S038000
Reexamination Certificate
active
06513019
ABSTRACT:
FIELD OF THE INVENTION
The present invention is generally directed to data processing systems for financial management. More particularly, the present invention is directed to a data processing system that provides substantial throughput for real time standardization, aggregations derivation, consolidation, integration, structuring, storage and distribution of financial data of a broad scope that is obtained from multi-formatted disparate sources.
BACKGROUND OF THE INVENTION
For at least the last twenty years, the financial industry has been at the leading edge in bringing to practical application new computer systems that manage and support sophisticated transactions and recordkeeping. This aggressive effort is not surprising. The financial industry includes banks, brokerage firms, and investment managers that consider as fundamental to the success of their business, the timely, accurate, and complete processing of transactions associated with the capital and assets of both clients that are both institutional and individual in nature, and of the firms themselves. These transactions include the trading of numerous and diverse forms of financial instruments such as equities (company shares-both common and preferred) warrants, bonds, options, commodities, loans, repurchase agreements, and a full collection of complex fixed income (i.e., bonds) and sophisticated derivative products, denominated in multiple currencies. Due to the increasingly complex nature of these financial instruments, and as the result of mergers and acquisitions, multiple disparate systems are used. Each system is used for one, or a specific subset of, financial products, lines of business, legal entities, currencies, or locations. This specialization has also caused fragmentation, making it difficult for customers and firms to assess their total financial position in time to control risks and respond to opportunities, resulting in the occasional downfall of leading financial institutions, sometimes in spectacular fashion (see FIG.
1
). It also makes it difficult to keep regulatory, legal, management, and compliance information consistent and mandates the commitment of substantial resources for correcting the inconsistencies.
Definitions
As used in this document:
Standardization is the process of conforming disparate values for the same data field into the same standard value, or standardizing a set of fields that describe a business object into a standard set. Examples: standardizing the currency code for Deutsche Marks to “DEM” wherever it is used; standardizing the set of fields that fully record a securities purchase transaction; and standardizing the format for transmitting the standard set of fields that describe a customer or counterparty.
Information means values and objects that are created by derivation, aggregation, consolidation, or integration or otherwise acting upon detailed data (“data”).
Derivation is the process of deriving information from a collection of data. For example, when a stock or bond is sold, the currency gain/loss and market gain/loss is derived from a collection of data that include cost basis in local currency, sales proceeds in local currency, currency exchange rate, and taxable or base equivalent currency(ies) for the owner(s) of the Account.
Aggregation is the process of accumulating a net balance from a series of transactions over a period of time. For example aggregating the net currency gain/loss and net market gain/loss for a series of gains and losses that resulted from a series of sell transactions for a customer' or trader's account since a given date (account opening, start of the year, start of the quarter, etc.).
Consolidation is the process of 1) grouping Accounts for access and aggregation by criteria such as customer, counterparty, trader, investment manager, book, desk, legal entity, location, and the like; 2) creating a composite of market data that pertains to each financial instrument from data that originates from multiple sources (e.g. identifiers, prices, indicative data, and corporate action announcements for the same financial instrument are received from separate sources and are consolidated into a composite); and 3) creating a composite of data pertaining to the same customer or counterparty that originates from multiple sources (e.g., identifiers, addresses, settlement instructions, credit authorizations, buying preferences, access authorizations, etc. for the same customer or counterparty are received from separate sources and are consolidated into a composite).
Structuring is the process of organizing data, and information that is derived from the data, into interrelated, normalized structures that resolve redundancies and anomalies. This includes the addition of unique values that are used to create “primary-foreign key” relationships that interrelate pairs of data tables.
Integration is the process of interrelating and information across disciplines. For example, interrelating a Position (i.e., a Quantity and Cost of a Financial Instrument) with the indicative and price information about the Financial Instrument in which the Position is held; and also interrelating the Position with the descriptive information (e.g., processing instructions, address) about the Customer that owns the Position, the Account in which the Position is held, the Counterparty that is the custodian for the Position, and the Counterparty (e.g. dealer) that is responsible for delivering the Position (when pending settlement) to the custodian. Integration also means that messages are sent among components of the system to produce an integrated result. For example, when the Market Data Information Server receives a corporate action notification, it creates an entitlement message that instructs the Accounting Information Server by what amount to adjust Positions and/or Cash Receivable, and also sends a message to the Alert Notification Server to send a notification to the Customers or Counterparties that are entitled to the proceeds of the corporate action.
Storage is the process of recording data and information in a relational-object database. This includes the addition of physical keys, indexes, and the like that support rapid and flexible access to the data and information.
Distribution is extracting data and information from a database and sending it to one or more application systems or user desktop computers. This process often also consists of denormalizing and translating the data and information into a format and value set that is most easily processed by the receiving application or user desktop (i.e., web server application that presents data to a browser-based user desktop).
Risk-exposure, inventory, liquidity, and the like-is dynamically altered with each transaction. Numerous functions within the firm have substantial interest in seeing these details-and quickly. For example, firms are particularly concerned with knowing the availability and location of all collateral that can be used to raise funds quickly in the event of a liquidity shortage, and on the most favorable terms. The risk manager also seeks the firm's, or a counterparty's, total position and cash versus each counterparty and currency, integrated with current and complete details (i.e., “market data”) of each financial instrument that is traded in customer portfolios or in the firm's inventory, to input into automated risk assessments. Based on the resulting information, the risk manager acts to rebalance positions of the firm or the customer so that its exposure may be reduced. The sooner the inputs can be gathered, standardized, aggregated, and consolidated, the sooner the risk assessment can be performed and corrective action can be taken.
Other examples include the high profile governmental regulations that apply to many, if not most, financial institutions. Specifically, essentially every firm includes dedicated resources to insure regulatory compliance, sometimes with entire departments focused on this task. Firm profitability, general ledger, and financial statemen
Elisca Pierre E
Financial Technologies International, Inc.
Morgan & Lewis & Bockius, LLP
Trammell James P.
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