Rules engine having user activated rules of selectable scope and selectable outcomes
Orders for execution of securities transactions and requests for asset movement are screened by a rules engine and may be automatically approved. The rules engine has rules which are user configurable. The rules may be configured to provide different outcomes, to provide a user selectable scope of application and to provide user selectable parameters. A transaction is processed against the rule set applicable thereto in order of increasing scope of the rules. That is, rules applicable to the account level are processed before rules applicable to the registered representative, office or firm. Individual broker-dealer firms may each configure rules applicable to their own firms independently of rules applicable to any other firm serviced by the rules engine.
This invention disclosed herein is related to and claims priority from co-pending U.S. Provisional Patent Application Ser. No. 60/195,196 filed Apr. 7, 2000 by inventors Syed K. Quraishi et al. and entitled RULES BASED ORDER PROCESSING, which is hereby incorporated herein in its entirety by reference.
BACKGROUND OF THE INVENTION1. Field of the Invention
The invention disclosed herein relates to computer systems and, more particularly, to rules-based systems for order execution and asset movement processing.
2. Description of Related Art
In the securities industry, the traditional approach to placing orders is for a customer to call his stock broker who, typically, is associated with a broker-dealer firm which has personnel or connections with personnel on the floors of various trading exchanges. The customer's order is reviewed by the registered representative with whom he works and a plurality of reviews take place within the registered representative's firm prior to forwarding the customer's order to a specialist on the floor of an appropriate exchange for execution.
Recently, a number of on-line trading companies have been formed which permit customers to utilize their personal computers to place orders for execution over a network, such as the internet.
In the field of artificial intelligence, rules based systems are known in which one or more conditions trigger a rule *resulting in a desired outcome for the condition(s) presented.
There are a number of problems associated with the techniques of the prior art. First, the regulatory environment of securities trading is extremely complex and changes rapidly. Different security firms have different environments and different policies for implementing compliance with regulatory requirements. When market conditions are good, hiring of registered representatives occurs rapidly creating an immediate training problem. When market conditions are bad, downsizing results in reallocation of responsibilities which may also require new training for particular individuals who survive the downsizing. As in any environment in which large amounts of money are involved, there is always a potential for fraud.
BRIEF SUMMARY OF THE INVENTIONThe problems of the prior art are overcome, in accordance with the invention, by providing techniques for automating the handling process for customer orders and asset movement requests, especially in the securities industry.
This is accomplished, in accordance with the invention, by providing a rules engine which is designed and configured (1) to prevent problems in the order handling, approval and execution processes, (2) to ensure compliance with regulatory requirements, (3) to enforce diverse policies for different broker-dealer firms using the rules engine and to allow broker-dealer firms to flexibly tailor, in real time, their own policies appropriate to various levels of administrative hierarchy within the firm.
The foregoing and other features, aspects and advantages of the present invention will become more apparent from the following detailed description of the present invention when taken in conjunction with the accompanying drawings.
The object, features and advantages of the system of the present invention will be apparent from the following descriptions, in which:
A broker-dealer firm may have a plurality of offices, each with an office supervisor 113. At the firm level, there might also be supervisory personnel 114 responsible for all offices. Typically, when firm policy dictates, certain transactions will be forwarded to an approval desk 115 for approval prior to being forwarded to a specialist on the floor of an exchange for execution.
The internal network 110 associated with a broker-dealer firm has a gateway 116 which serves as an interface to the larger network 100. Rules engine 140 may operate in a service bureau model to service a plurality of broker-dealer firms or, alternatively, the rules engine 140 can be operated internally within a single broker-dealer firm for automating the processing of orders within that firm.
Typically, the rules engine 140 will have a systems administrator 141 which will have total access to all security levels of the rules engine system. A compliance administrator 142 may service all broker-dealer firms or, alternatively, each broker-dealer firm may have an individual compliance administrator.
A plurality of databases, 150-1, 150-2, 150-3, 150-4, 150-5, 150-6 and 150-7 in this example, provide information utilized by the rules engine in carrying out order or asset management automation. The intra-day PNB database 150-1 maintains position and balance information, such as account activity occurring during a trading day, so that current information is always available to the rules engine. The PONA database 150-2 is an on-line database of names and addresses of account holders. The PROM database 150-3 is a market product master database which maintains up to date information on each security that might be subject to an order submitted to the rules engine 140 or a trade approved by the rules engine. It obtains current information over the network 100 on an ongoing basis. The MAXX database 150-4 is a position and balance database which is updated at the end of each trading day. The KUST database 150-5, is a documentation database indicating whether certain forms are on file for a particular customer. An example of such forms would be a margin agreement signed by the customer. If such an agreement were in the files, the KUST database would reflect this fact. The ACAM database 150-6 is a reference to the cash available in a particular customer's account. The PCAT reference database contains indications that an account is in a mode of transfer between broker-dealers.
A number of order execution processes 160, are available to receive approved orders for transactions in respective types of securities from the rules engine 140. The SUBSCRIBE order execution system 160-1 handles transactions in annuities. The TOPS order execution system 160-2 handles approved orders for equities and options and may execute transactions on a plurality of exchanges, 170. The MIPS order execution and processing system 160-4 handles mutual funds transactions. The AMPS process 165 carries out transfers of funds from one account to another in response to a request from a broker-dealer firm.
Following an exemplary order, end client 112 would telephone his registered representative 111 using an available telephone system 117 and place an order. The registered representative is associated with a Broker-Dealer firm #1 (110) which forwards the order over network 100 and through communications interface 130 to rules engine 140 for validation. The validation process is described more in detail hereinafter. Using information from the databases 150, the rules engine will take the actions described hereinafter. One of those actions may be automatic approval of an order for processing by sending to an exchange or market for execution. If that is the case, the rules engine forwards the order to a selected one of the order execution process 160 to be forwarded over the network 100 to an exchange or a market 170 for execution. The results of the execution are returned and incorporated into the databases. The end client may be an individual or an institution. Some end clients 112′ may connect directly or indirectly to the broker-dealer network without going through a registered representative.
An end client 112 or 112′ may have serveral accounts and may, on occasion, request a transfer of assets from one account to another. The request is forwarded to the rules engine 140 and, if the request is approved after being subjected to rules analysis, the transfer will be carried out using AMPS process 165.
The rules engine may also service clients 120 which may be an individual or an institution.
A rules management process 220, described more hereinafter, enables rules to be created and modified on a real-time basis, and viewed by authorized users interacting with the rules engine, typically over a communications interface. Order/transaction processing 230 permits orders or transactions received over the communications interface 240 to be subjected to application of the rules that relate to accounts, registered representatives, offices and the broker-dealer firm from which the order originates.
The rules engine selectively produces the following audit reports.
A rules assignment report lists the rules assigned or unassigned at each applicable level of the correspondent broker-dealer firm. The levels include account, investment professional (registered representative) office and firm. It lists any changes made to the rules engine assignment for the broke-dealer firm as well as the personal identification of the individual who made the change.
A rules log file lists any changes made with reference to the rules assignment. The report reflects the level of assignment before and after the change as well as the personal identification of the individual who made the change and when the change was made.
A daily order log documents an audit trail for orders that are approved by the rules engine, as well as those orders that have not been approved. This reports details the funds available in the client's account at the time an order was placed if it is an opening transaction and details the available position if it is the closing transaction.
An order processing and execution log details pertinent information for orders processed by the rules engine that were sent to a particular order and execution unit 160 for execution. This log details whether the rules engine automatically approves the order. It also details whether the order required additional approval because it failed one or more rules, and lists the rules that may have been violated as well. If the order is manually approved, the report will indicate the user ID of the individual who approved the order.
The rule shown in
As noted above, the scope of a particular rule can be set to be applicable only to a particular account, to a particular registered representative, to a particular office of a broker-dealer firm or to the broker-dealer firm itself. That is, for a particular level, the scope of the rule would be applied to all transactions, originating from that account, registered representative, office or firm, depending upon the scope selected.
It is convenient to group sets of rules into distinct categories. Examples of such categories include account status, account restriction, documentation, factor, margin, options, order size, position and balances, registration, retirement, stockwatch, trade restriction, security restriction and suitability.
The application of a particular rule, such as shown in
Considering parameters, examples of parameters that might be associated with a particular rule would be a trading limit by either dollar amount as a parameter or a quantity of securities purchased as a parameter. Similarly, an order for purchase of securities might be checked against the firm's watch list to see if a warning message should be posted. As another example, there might be a dollar limit for the purchase of low-priced securities. Each of these parameters can be associated with a particular rule at any particular level.
A complete set of rules, as currently implemented, are contained in Appendix A, which is attached to this specification.
A worksheet may be conveniently used for a particular scope (account, registered rep, office or firm) listing each of the rules with number, rule name, comments, rule type (optional or mandatory), default outcome and check boxes for permitted outcomes and blanks for entry of parameters, to assist broker-dealers in setting up the rules.
The rule management process 220 will now be addressed in more detail. The normal security measures associated with any computer system are available. Access partitions are enforced so that one broker-dealer firm cannot access the information from another. Within a broker-dealer firm, access is limited by user ID to those functions that are appropriate to that user. When a new broker-dealer firm is brought into the system, a number of steps occur.
Exemplary edits that a user might apply to a rules set would be to enable the rule by entering an indicator such as “Y” within the assigned field of the field or to disable a rule by entering “N” in that field. In addition, one can set rule parameters or edit them and one may set or edit the outcomes of a particular rule. A parameter field receives the indication “Y” for example, when parameters are to be associated with a particular rule that permits a drop down screen to be activated which will enable entry of the parameters associated with determining a rule is satisfied or violated. Parameters can be edited, if the parameters where previously established using the same drop down screen.
Although not all users are authorized to make changes to rules, a read only version of the rules assignment update process shown in
Rules may also be set on an exception basis. For example, if one wanted to impose a rule on all registered representatives in a particular broker-dealer firm, one could impose the rule, excepting out any one or more particular registered representative from application of the rule.
It may be desirable to have separate system administrators for each broker-dealer firm with reduced security access over that which would be held by a global system administrator.
In some embodiments, the AMPS system 165 operates slightly differently. Since the broker-dealer may not be the custodian of the funds, the request to transfer funds is either stopped upfront or sent to a designated person at the custodian of the funds for approval, rather than sent for approval to the broker-dealer firm from which the request to transfer funds originates.
The broker-dealer firms have the ability to customize the messages returned in response to a rules violation to suit their particular preferences.
Although the present invention has been described and illustrated in detail, it is clearly understood that the same is by way of illustration and example only and is not to be taken by way of limitation.
Claims
1. A rules engine, comprising:
- a. an input circuit for receiving at least one transaction;
- b. a storage medium having rules stored thereon, at least one rule having a plurality of outcomes appropriate to a transaction capable of being selected by a user.
2.-26. (canceled)
Type: Application
Filed: Jun 4, 2013
Publication Date: Apr 17, 2014
Inventors: Syed K. Quraishi (Edison, NJ), Morgan C. Hamm (Bedminster, NJ), Jorge Alfonso (Orlando, FL), Claire H. Santaniello (Jersey City, NJ)
Application Number: 13/986,766
International Classification: G06Q 40/04 (20120101);