BACKGROUND OF THE INVENTION

Field of the Invention

The instant disclosure relates generally to the trading of financial instruments and, more specifically, to methods and apparatuses for generating and operating one or more swaps trading platforms.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) (Pub.L. 111-203, H.R. 4173) was signed into federal law by President Barack Obama on Jul. 21, 2010. Passed as a response to the late-2000s recession, it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression. Dodd-Frank enacted changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation's financial services industry.

One particular aspect of Dodd-Frank focuses on the regulation of swap trading. As known in the art, a “swap” is the exchange of one asset or liability for a similar asset or liability for the purpose of lengthening or shortening maturities, or raising or lowering coupon rates, to maximize revenue or minimize financing costs. Title VII of the Dodd-Frank Act regulates swap trading. Specifically, Title VII requires that (i) swaps subject to the clearing requirements of Section 2(h)(I) of the Commodity Exchange Act (“CEA”) be executed either on a Designated Contract Market (“DCM”) or on a Swap Execution Facility (“SEP”), unless no DCM or SEP made the swap “available for trading” and (ii) no person may operate a facility for the trading or processing of swaps unless the facility is registered as a SEP or as a DCM. As known in the art, a SEP is a regulated platform for swap trading that provides pre-trade information (e.g., bids and offers) and an execution mechanism for swap transactions among eligible participants.

Additionally, the U.S. Treasury Department has exempted foreign exchange (“FX” or “Forex”) swaps and forwards from the Dodd-Frank regulations, although the reporting requirements set forth in Dodd-Frank continue to apply to the trading of these instruments. Further, FX non-deliverable forwards still need to be traded on a SEP and cleared. Further still, FX options may eventually require SEP trading as well.

The Dodd-Frank regulations are expected to greatly impact entities and institutions involved in swap trading. For example, most customers will not be allowed to trade non-deliverable forwards (NDFs) bilaterally, including single-dealer platforms, although, some customers may qualify for end-user exemption. Additional issues facing customers include: (i) the need to become a SEP member; (ii) the need to connect to clearing houses via clearing members; (iii) collateral requirements; and (iv) the need to know and comply with SEP rules under Dodd-Frank.

Banks are also expected to be greatly affected by Dodd-Frank. One exemplary issue that Dodd-Frank creates for banks is migration risk due to customers' strong preference to limit the number of trading venues that they employ. Currently, banks do not have trading platforms that are SEP compliant. Accordingly, when customers want to trade instruments that need to go through a SEP compliant platform, they need to leave the bank's platform. The hassle associated with jumping back and forth between several different platforms causes many customers to simply stop using banks' trading platforms altogether. Accordingly, it would be desirable to create an intuitive interface between a banks' trading platform and a SEP compliant platform, such that customers could quickly and seamlessly transition back and forth between the disparate platforms without undue hardship.

In addition, banks could lose out on the profitable NDF and options business, as well as spot, forwards, and swaps business to SEFs offering a complete product set. Additional issues affecting banks under Dodd-Frank include: (i) the need to become a SEP member; (ii) the need to connect to clearing houses via clearing members; (iii) collateral requirements; and (iv) the need to know and comply with SEP rules under Dodd-Frank.

Accordingly, new methods and apparatuses aimed at alleviating the drawbacks of conventional swaps trading platforms are desired.

SUMMARY OF THE INVENTION

The instant disclosure describes methods and apparatuses for, among other things, generating and operating a swaps trading platform that is SEP compliant. To this end, in one example, a computer-implemented method for generating a SEP compliant trading platform is provided. The method may include: (i) generating a swaps trading platform, wherein the generated swaps trading platform is configured to operate in accordance with a plurality of predefined rules associated with swaps execution facility (SEP) requirements; (ii) establishing one or more communication channels with respective one or more clearinghouses for the transmission of clearinghouse information concerning one or more trade requests; and (iii) establishing one or more communication channels with respective one or more swaps data repository (SDR) providers for the transmission of SDR information concerning the one or more trade requests.

In another example of the foregoing method, the method may additionally include obtaining the one or more trade requests and executing the one or more trade requests in accordance with the plurality of predefined rules associated with the SEP requirements. In one example, the method may further include: (i) transmitting the clearinghouse information concerning the one or more executed trade requests with one or more clearinghouses via the one or more communication channels with the respective one or more clearinghouses and/or (ii) transmitting the SDR information concerning the one or more executed trade requests with one or more SDR providers via the one or more communication channels with the respective one or more SDR providers.

In still another example, the step of generating the swaps trading platform may include embedding a selectable non-SEP compliant portal in the swaps trading platform. In this example, the method may also include the steps of: (i) obtaining selection information selecting the selectable non-SEP complaint portal and (ii) transitioning from the generated swaps trading platform to a non-SEP compliant swaps trading platform based on the selection of the selectable non-SEP compliant portal.

In one example, the plurality of predefined rules associated with the SEP requirements are associated with one or more of the following: (i) market snapshot at execution; (ii) mid-mark; (iii) counterparty legal entity identifier (LEI); and/or (iv) unique swaps identifier (USI). In another example, the trade-type requiring execution in the SEP includes one or more of the following: (i) a non-deliverable forward (NDP) and/or (ii) a foreign exchange option.

In another example, a computer-implemented method for operating a SEP compliant swaps trading platform is provided. In this example, the method may include: (i) obtaining one or more trade requests, wherein the one or more trade requests concerns a trade-type requiring execution in a swaps execution facility (SEP); (ii) executing the one or more trade requests in accordance with a plurality of predefined rules associated with SEP requirements; (iii) communicating clearinghouse information regarding the executed one or more trade requests with one or more clearinghouses; and (iv) communicating swaps data repository (SDR) information regarding the executed one or more trade requests with one or more SDR providers for storage in a SDR.

In still another example, a method of embedding portals in both a SEP compliant platform and a non-SEP compliant platform is provided. In this example, the method may include (i) embedding a selectable non-SEP compliant portal in a first swaps trading platform, wherein the first swaps trading platform is configured to operate in accordance with a plurality of predefined rules associated with swaps execution facility (SEP) requirements and (ii) embedding a selectable SEP compliant portal in a second swaps trading platform, wherein the second swaps trading platform is not configured to operate in accordance with the plurality of predefined rules associated with the SEP requirements. As used herein, “embedding” may include, for example, generating a simple, intuitive, selectable interface allowing customers to jump back and forth from the non-SEP compliant platform to the SEP compliant platform. In one example, such an interface could comprise a radio button embedded in a non-SEP compliant platform (e.g., webpage). In this example, when a user clicks the radio button (which could be labeled, for example, “SEP”) on a non-SEP compliant platform, they are transferred to a SEP compliant platform in near real-time. Similarly, the present disclosure includes embedding a separate interface in a SEP compliant platform which a user could select to be transferred to a non-SEP compliant platform. In this manner, users may switch back and forth between non-SEP compliant and SEP compliant platforms efficiently without the need to partake in intervening steps of, for example, logging out of the non-SEP compliant platform, opening the SEP compliant platform, logging into the SEP compliant platform, and then trading.

