System and method for processing and settling payment instructions relating to various financial instruments

Abstract

A system for facilitating settlement of payments relating to transactions involving financial instruments among multiple participants is provided. An interface receives from participants first and second instructions associated with a financial instrument of a first form, and first and second instructions associated with a financial instrument of a second form. A first processor establishes an association between, and applies a first set of pre-settlement rules to, the first and second instructions associated with the financial instrument of the first form. A second processor establishes an association between, and applies a second set of pre-settlement rules to, the first and second instructions associated with the financial instrument of the second form.

1 . A system to facilitate settlement of payments relating to transactions involving financial instruments among multiple participants, comprising:
 an interface configured to:
 receive at least one derivative instruction associated with a derivative transaction; and 
 receive from participants a first instruction associated with a financial instrument of a first form and a second instruction associated with the financial instrument of the first form, the financial instrument of the first form comprising a non-derivative instrument; 
   a first processor configured to:
 establish an association between the first and second instructions associated with the financial instrument of the first form; and 
 apply a first set of pre-settlement rules to the first and second instructions associated with the financial instrument of the first form; and 
   a second processor different from the first processor, the second processor configured to:
 apply a second set of pre-settlement rules to the at least one instruction associated with a derivative transaction. 
   
     
     
         2 . The system of  claim 1 , further comprising:
 a third processor different from the first and second processors configured to:
 direct the first and second instructions associated with the financial instrument of the first form to the first processor; and 
 direct the at least one derivative instruction to the second processor. 
   
     
     
         3 . The system of  claim 1 , wherein the financial instrument of the first form relates to at least one transaction chosen from among the group consisting of: a foreign exchange transaction, a non-deliverable forward transaction, and a foreign exchange option transaction. 
     
     
         4 . The system of  claim 3 , wherein the at least one derivative instruction is received from a clearing service and specifies information pertaining to positions resulting from instructions between two parties associated with the clearing service. 
     
     
         5 . The system of  claim 1 , wherein:
 the first processor is further configured to:
 accept the first and second instructions associated with the financial instrument of the first form; and 
   the second processor is further configured to:
 accept the at least one derivative instruction. 
   
     
     
         6 . The system of  claim 5 , wherein:
 the first processor is further configured to:
 validate the first and second instructions associated with the financial instrument of the first form; and 
   the second processor is further configured to:
 validate the at least one derivative instruction associated. 
   
     
     
         7 . The system of  claim 6 , wherein:
 the first processor is configured to establish an association between the first and second instructions associated with the financial instrument of the first form by:
 matching the first instruction associated with the financial instrument of the first form with the second instruction associated with the financial instrument of the first form based on specified criteria. 
   
     
     
         8 . The system of  claim 7 , wherein the second processor is configured to:
 generate a pair of additional instructions based on the at least one derivative instruction; and   match the pair of additional instructions.   
     
     
         9 . The system of  claim 7 , wherein:
 the first set of pre-settlement rules comprises:
 designating the first instruction associated with the financial instrument of the first form and the second instruction associated with the financial instrument of the first form as first settlement eligible instructions, after the first and second instructions have been matched; and 
 submitting the first settlement eligible instructions for settlement; and 
   the second set of pre-settlement rules comprises:
 designating the pair of additional instructions as second settlement eligible instructions, after the pair of additional instructions have been matched; and 
 submitting the second settlement eligible instructions for settlement. 
   
     
     
         10 . The system of  claim 9 , further comprising:
 a third processor configured to:
 settle the first settlement eligible instructions and the second settlement eligible instructions. 
   
     
     
         11 . The system of  claim 1 , wherein:
 the system is maintained by an entity, and each participant maintains at least one account with the entity;   payment entitlements arising from an instruction received from a participant are automatically paid to the participant's account with the entity; and   payment obligations arising from an instruction received from a participant are automatically paid-out from the participant's account with the entity.   
     
     
         12 . The system of  claim 1 , wherein:
 the first set of pre-settlement rules comprises:
 designating as settlement eligible the first and second instructions associated with the financial instrument of the first form; and 
 submitting the first and second instructions associated with the financial instrument of the first form for settlement; and 
   the second set of pre-settlement rules comprises:
 accepting the at least one derivative instruction; and 
 submitting the at least one derivative instructions to the first processor. 
   
     
     
         13 . The system of  claim 12 , wherein the first processor is further configured to:
 validate the at least one derivative instruction;   generate a pair of additional instructions based on the at least one derivative instruction;   establish an association between the pair of additional instructions;   designate the pair of additional instructions as settlement eligible; and   submit the pair of additional instructions for settlement.   
     
     
         14 . A system to facilitate settlement of payments relating to transactions involving financial instruments among multiple participants, comprising:
 an interface configured to:
 receive from participants a first instruction associated with a foreign exchange transaction and a second instruction associated with the foreign exchange transaction; and 
 receive at least one instruction associated with a derivative transaction; 
   a first processor configured to:
 establish an association between the first and second instructions associated with the foreign exchange transaction; and 
 apply a set of pre-settlement rules to the first and second instructions associated with the foreign exchange transaction; and 
   a second processor different from the first processor, the second processor configured to:
 accept the at least one derivative instruction associated with the derivative transaction; and 
 submit the at least one derivative instruction to the first processor; 
   wherein the first processor is further configured to:
 validate the at least one derivative instruction; 
 generate a pair of additional derivative instructions based on the at least one derivative instruction; 
 establish an association between the pair of additional derivative instructions; 
 designate the pair of additional derivative instructions as settlement eligible; and 
 submit the pair of additional derivative instructions for settlement. 
   
     
     
         15 . The system of  claim 14 , wherein the at least one instruction associated with the derivative transaction is received from a clearing service and specifies information pertaining to positions resulting from instructions between two parties associated with the clearing service. 
     
     
         16 . The system of  claim 15 , wherein:
 the first processor is further configured to:
 validate the first and second instructions associated with the foreign exchange transaction. 
   
     
     
         17 . The system of  claim 16 , wherein:
 the first processor is configured to establish an association between the first and second instructions associated with the foreign exchange transaction by:
 matching the first instruction associated with the foreign exchange transaction with the second instruction associated with the foreign exchange transaction based on specified criteria. 
   
     
     
         18 . An apparatus to facilitate settlement of payments relating to transactions involving financial instruments among multiple participants, comprising:
 means for receiving at least one instruction associated with a derivative transaction;   means for receiving from participants a first instruction associated with a financial instrument of a first form and a second instruction associated with the financial instrument of the first form, the financial instrument of the first form comprising a non-derivative instrument;   means for establishing an association between the first and second instructions associated with the financial instrument of the first form;   means for applying a first set of pre-settlement rules to the first and second instructions associated with the financial instrument of the first form; and   means for applying a second set of pre-settlement rules to the at least one instruction associated with a derivative transaction.   
     
     
         19 . A method to facilitate settlement of payments relating to transactions involving financial instruments among multiple participants, comprising:
 receiving at least one instruction associated with a derivative transaction;   receiving from participants a first instruction associated with a financial instrument of a first form and a second instruction associated with the financial instrument of the first form, the financial instrument of the first form comprising a non-derivative instrument;   establishing an association between the first and second instructions associated with the financial instrument of the first form, by a first processor;   applying a first set of pre-settlement rules to the first and second instructions associated with the financial instrument of the first form; and   applying a second set of pre-settlement rules to the at least one instruction associated with a derivative transaction, by a second processor different from the first processor.   
     
     
         20 . The method of  claim 19 , wherein the financial instrument of the first form relates to at least one transaction chosen from among the group consisting of: a foreign exchange transaction, a non-deliverable forward transaction, and a foreign exchange option transaction. 
     
     
         21 . The method of  claim 20 , wherein:
 the at least one instruction associated with the derivative transaction specifies information pertaining to positions resulting from instructions between two parties associated with the clearing service;   the method further comprising:
 receiving the at least one instruction associated with the derivative transaction from a clearing service. 
   
     
     
         22 . A method to facilitate settlement of payments relating to transactions involving financial instruments among multiple participants, the method comprising:
 receiving from participants a first instruction associated with a foreign exchange transaction and a second instruction associated with the foreign exchange transaction;   receiving at least one instruction associated with a derivative transaction;   establishing, by a first processor, an association between the first and second instructions associated with the foreign exchange transaction;   applying, by the first processor, a set of pre-settlement rules to the first and second instructions associated with the foreign exchange transaction;   accepting, by a second processor different from the first processor, the at least one instruction associated with the derivative transaction;   submitting, by the second processor, the at least one instruction associated with the derivative transaction to the first processor;   validating, by the second processor, the at least one instruction associated with the derivative transaction;   generating, by the second processor, a pair of additional instructions based on the at least one instruction associated with the derivative transaction;   establishing, by the second processor, an association between the pair of additional instructions;   designating the pair of additional instructions as settlement eligible; and   submitting the pair of additional instructions for settlement.   
     
     
         23 . The method of  claim 22 , wherein:
 the at least one instruction associated with the derivative transaction specifies information pertaining to positions resulting from instructions between two parties associated with the clearing service;   the method further comprising:
 receiving the at least one instruction associated with the derivative transaction from a clearing service. 
   
     
     
         24 . The method of  claim 23 , further comprising:
 validating, by the first processor, the first and second instructions associated with the foreign exchange transaction.