| CPC G06Q 40/03 (2023.01) [G06Q 40/04 (2013.01); G06Q 2220/00 (2013.01)] | 7 Claims |
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1. A method for managing credit risk using a distributed ledger maintained by a plurality of participants, the method comprising:
determining, by a clearing broker computing device, a line of credit to provide from a clearing broker to an investment manager;
minting, by the clearing broker computing device, a token representing the line of credit from the clearing broker for entering into equities trades by broadcasting a first transaction to a distributed ledger maintained by a plurality of participants in a distributed ledger network requesting to mint the token, and including a credit amount, a name of the clearing broker providing the line of credit, and a duration;
generating, by the clearing broker computing device, a second transaction including a transfer of the token representing the line of credit from the clearing broker to the investment manager, wherein the second transaction is stored in the distributed ledger;
augmenting, by the clearing broker computing device, the second transaction with a cryptographic signature from the clearing broker to prove an identity of the clearing broker issuing the line of credit, wherein the second transaction is signed using a private cryptographic key owned by the clearing broker;
transmitting, by the clearing broker computing device to at least one other participant in the distributed ledger network, the second transaction including the name of the clearing broker providing the line of credit, wherein a validator determines that the private cryptographic key used to sign the second transactions corresponds to a public cryptographic key owned by the clearing broker and the validator includes the second transaction in the distributed ledger in response to determining that the private cryptographic key corresponds to the public cryptographic key;
in response to the validator including the second transaction in the distributed ledger and in response to receiving a request to settle a trade involving equities by the investment manager:
monitoring, by the clearing broker computing device, the distributed ledger to determine that the investment manager has the token or transferred the token back to the clearing broker; and
settling, by the clearing broker computing device, the trade involving equities by the investment manager in response to (i) determining that the investment manager has the token and burns the token, (ii) determining that the name included in the token matches the name of the clearing broker, (iii) determining that the credit amount is sufficient to cover a cost of the trade, and (iv) determining that the token has not expired, wherein the token is transferred as proof of the line of credit provided to the investment manager by the clearing broker, and wherein once the token has been burned, the line of credit cannot be used again.
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