Systems, methods and computer program products for monitoring credit risks in electronic trading systems

Abstract

A credit monitoring system in an electronic trading system forms a complex check to determine if two particular counterparties will except each other for a particular trade based upon their respective predefined credit preferences. In accordance with an embodiment, credit preferences imputed by each counterparty with regard to the other counterparty are referenced to determine the trade eligibility of either party with respect to the other for a particular financial transaction instrument. Indication of whether a counterparty can enter into the proposed trade is conveyed to the respective trader, preferably using a color coding scheme in which various colors represent the relevant credit status with regard to the viewing trader. The complex check performed by the system may be embodied in a simple yes/no statement, in terms of maturity of a particular financial instrument, or in terms of a risk quotient (i.e., risk equivalent or RQ) initially determined by the system, though modifiable by the trader.

Wherefore, the following is claimed:  
     
         1 . A system for credit screening an electronic trade of a financial instrument between a first trader and a second trader, comprising: 
 means for receiving first credit preference information of said first trader with respect to said second trader, wherein said first credit preference information relates to at least one financial instrument;    means for receiving second credit preference information of said second trader with respect to said first trader, wherein said second credit preference information relates to at least one financial instrument;    means for evaluating said first and second credit preferences with respect to a trade of a first financial instrument to determine respective trade eligibility of said first and second traders to trade with each other; and    means for reporting said respective trade eligibility to said first trader and said second trader.    
     
     
         2 . The system of  claim 1 , wherein said means for reporting includes a first indication representing that said first and second traders will trade with each other, a second indication representing that said first trader will trade with said second trader but said second trader will not trade with said first trader, and a third indication representing that said second trader will trade with said first trader but said first trader will not trade with said second trader.  
     
     
         3 . The system of  claim 1 , wherein said means for reporting includes a color coding scheme for presenting said first, second and third indications respectively to said first and second traders.  
     
     
         4 . The system of  claim 3 , wherein said color coding scheme includes a first color associated with said first indication, a second color associated with said second indication, and a third color associated with said third indication.  
     
     
         5 . The system of  claim 1 , wherein said first credit preference information is defined in terms of a yes/no statement.  
     
     
         6 . The system of  claim 1 , wherein said first credit preference information is defined in terms of maturity of a financial instrument.  
     
     
         7 . The system of  claim 1 , wherein said first credit preference information is defined in terms of a risk equivalent.  
     
     
         8 . The system of  claim 7 , wherein said risk equivalent is automatically determined by said system.  
     
     
         9 . The system of  claim 1 , wherein said first and second credit preference information is maintained in anonymity.  
     
     
         10 . The system of  claim 1 , wherein said first and second credit preference information can be updated in essentially real-time by said first and second traders, respectively.  
     
     
         11 . A method for screening order information proposing a trade of a financial instrument via an electronic trading system, comprising the steps of: 
 receiving first credit preference information defined by a first trader with respect to a second trader;    receiving second credit preference information defined by the second trader with respect to the first trader; and    encoding the order information that is presented to the first and second traders proposing a trade utilizing the first and second credit preference information.    
     
     
         12 . The method of  claim 11 , further comprising the step of modifying the first credit preference information by the first trader.  
     
     
         13 . The method of  claim 11 , wherein said step of encoding includes a first indication representing that the first and second traders will trade with each other, a second indication representing that the first trader will trade with the second trader but the second trader will not trade with the first trader, and a third indication representing that the second trader will trade with the first trader but the first trader will not trade with the second trader.  
     
     
         14 . The method of  claim 11 , wherein the first credit preference information and the second credit preference information are defined as preferences with regard to at least one financial instrument.  
     
     
         15 . The method of  claim 11 , further comprising the step of maintaining the first and second credit preference information in anonymity.  
     
     
         16 . The method of  claim 11 , wherein said step of receiving the first credit preference information includes the step of receiving first credit preference information that is defined in terms of a yes/no statement.  
     
     
         17 . The method of  claim 11 , wherein said step of receiving the first credit preference information includes the step of receiving first credit preference information that is defined in terms of maturity of a financial instrument.  
     
     
         18 . The method of  claim 11 , wherein said step of receiving the first credit preference information includes the step of receiving first credit preference information that is defined in terms of a risk equivalent.  
     
     
         19 . The system of  claim 18 , further comprising the step of determining the risk equivalent automatically by the electronic trading system  
     
     
         20 . A computer program product for use with a data processing system for credit screening order information proposing a trade of a financial instrument via an electronic trading system, said computer program product comprising: 
 a computer usable medium having computer-readable code means embodied in said medium, said computer-readable code means comprising:    computer readable program code means for receiving first credit preference information of said first trader with respect to said second trader;    computer readable program code means for receiving second credit preference information of said second trader with respect to said first trader;    computer readable program code means for evaluating said first and second credit preferences with respect to a trade of a first financial instrument to determine respective trade eligibility of said first and second traders to trade with each other; and    computer readable program code means for reporting said respective trade eligibility to said first trader and said second trader.    
     
     
         21 . The computer program product of  claim 20 , wherein said computer readable program code means for reporting includes a first indication representing that said first and second traders will trade with each other, a second indication representing that said first trader will trade with said second trader but said second trader will not trade with said first trader, and a third indication representing that said second trader will trade with said first trader but said first trader will not trade with said second trader.  
     
     
         22 . The computer program product of  claim 20 , wherein said first credit preference information defines preferences with regard to a single financial instrument.  
     
     
         23 . The computer program product of  claim 20 , wherein said first credit preference information is defined in terms of a yes/no statement.  
     
     
         24 . The computer program product of  claim 20 , wherein first said credit preference information is defined in terms of maturity of a financial instrument.  
     
     
         25 . The computer program product of  claim 20 , wherein said first credit preference information is defined in terms of a risk equivalent.  
     
     
         26 . The computer program product of  claim 20 , wherein said risk equivalent is automatically determined by said system.  
     
     
         27 . The computer program product of  claim 20 , wherein said first and second credit preference information is maintained in anonymity.  
     
     
         28 . The method of  claim 11 , wherein said step of encoding includes an indication presented to the first trader representing that the first trader will trade with the second trader but the second trader will not trade with the first trader, further comprising the step of providing a credit over-ride process that allows the first trader to deal with the second trader directly if the second trader agrees.