SYSTEM AND METHOD FOR MANAGING FINANCIAL ACCOUNT INFORMATION
CROSS REFERENCE TO RELATED APPLICATIONS
This application claims priority to U.S. Patent application No.09/785,596, filed
February 16,2001. This application is divided out of patent application
No.1000/KOLNP/2003.
BACKGROUND
The following invention relates to financial accounts and, in particular, to a system
and method for managing financial account information.
One of the services provided by financial institutions is engaging in transactions with
or on behalf of its clients. For example, if a client wants to purchase 100 shares of a
particular stock, the financial institution will make the purchase on behalf of the client and
charge the client's account the purchase price of the security involved plus a commission fee.
The fees earned as a result of performing these transactions represent a significant portion of
the financial institution's revenues. Additionally, the information associated with these
accounts, when aggregated across the financial institution, becomes a key source for
management decisions in the areas of risk management, customer service, marketing and
operations processing.
Establishing a successful transactional business requires that the client account
information be properly managed. The process of managing client account information
typically includes filling out a new account form for each client account opened which
requests information such as the client's name, address, legal status, advisors that are
authorized to place orders on behalf of the client, the sales person managing the account and
the names of any guarantors of transactions executed in that account. In addition, client
account information may also include the client's preferences such as settlement instructions,
tax withholding information and where to send statements, confirmations and other
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correspondence. Once the client information is gathered, it is typically entered into a
computerized client account management system.
Also, associated with each client account is a list of all the transactions or positions
the particular client has engaged in or with through the financial institution. So, for example,
if the client purchased 100 shares of XYZ Corp., the details of that transaction, such as the
transaction date, instrument type, quantity, price and commission will be stored in a
transaction database and associated with the particular client account. In this way, the
financial institution can use the client account and transaction information stored in the client
account management system to track and manage its transactional business.
A benefit of a client account management system is that it allows the financial
institution to assess its exposure with respect to a particular transaction or series of
transactions. For instance, if the financial institution learns that one of its clients, Acme
Corp., is having liquidity problems, then the client account management system can be
queried to identify all the transactions the financial institution engaged with or on behalf of
Acme Corp. Based on this information, the financial institution can make a business decision
as to (a) whether Acme Corp. has sufficient assets to cover any losses incurred, and (b)
whether the trading limit of Acme Corp. should be reduced to limit the risk to the financial
institution. Thus, the client account management system plays a key role in helping the
financial institution manage the risks associated with each client's transactions.
Another benefit of the client management account system is that it helps the financial
institution analyze the profitability of its transactional business and also identify new areas of
business opportunity. By tracking all the transactions involving each client, the firm can
determine which clients are the most profitable, which transactions are successful and what
areas of business should be pursued to increase the financial institution's overall profitability.
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Although an effective client account management system is central to operating a
profitable transaction business, the prior art client account management systems are unable to
provide a financial institution with the reliable, maintainable and easily accessible
information it needs to help assess the risk and determine the profitability of its sales and
trading businesses. The ineffectiveness of the prior art client account management systems is
the result of a number of factors.
First, the prior art systems are generally poor at enforcing and maintaining data
integrity. For example, assume Acme Corp. wants to open up three different accounts with a
financial institution (Acme Corp. may have numerous accounts with the same financial
institution because, for example, it wants to segregate transactions involving different
investment instruments into different accounts). In the prior art systems, this generally
required that Acme Corp.'s company information be entered into the system three separate
times - one time for each new account opened. Because of the multiple data entries, the
company information that is actually entered each time may vary slightly due to error or
inconsistent punctuation and abbreviations. For instance, one account entry may use the
name Acme Corp. while another entry may use Acme Co. A prior art account management
system was analyzed and it was found that, due to inconsistent punctuation and abbreviations
of the name of a particular client that had over 600 accounts entered into the system, the
system maintained over thirty unique spellings for the client's name. If the spelling for each
account associated with a particular client is different, the system is unable to determine
which accounts are related to a particular client. As a result, the system would be unable to
identify all the transactions performed by the particular client through its related accounts, a
step that is necessary to assess properly the risk and profitability resulting from each client's
transactions.
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Another drawback of the prior art client account management systems is the inability
of these systems to manage effectively multiple accounts of different but related entities.
Often, a client uses several accounts in which to transact business, with each account being
associated with a different legal entity related to the client such as, for example, a subsidiary
or a parent. Although the name that appears on each account is different, the risk associated
with those related accounts may correlate to the creditworthiness of the client family (i.e.,
ultimate parent). Therefore, for the purposes of risk management, it would be beneficial if all
the transactions executed under the different accounts associated with the particular client
could be aggregated to determine the total exposure to that client. The prior art systems,
however, cannot easily manage the hierarchies of related accounts and relationships among
accounts associated with a given client and, as a result, these systems cannot readily identify
related transactions for the purpose of risk management.
Another deficiency of the prior art systems is the lack of precision in identifying the
roles the various legal entities play in a particular client account. For example, associated
with a given account are various legal entities such as the actual principal (or beneficial
owner, for e.g., the XYZ Fund), the order placer for the principal (e.g., the XYZ Management
Co.), the legal entity of the financial institution that will transact on behalf of the client, the
salesperson managing the client account and, if required, the entity acting as a guarantor of
the client's transactions. What typically occurs in the prior art systems is that although the
data entry person may enter into the client account record the names of these related entities,
the system does not automatically tag these entities in a manner that identifies their
relationship with the client and the role they play. So, for example, if ABC Corp. is acting as
the guarantor of Acme Corp. transactions, ABC Corp.'s name may be entered into the Acme
Corp. account record by the data entry person but the system does not necessarily recognize
that ABC Corp. is a guarantor of Acme Corp. for risk management purposes. As a result,
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when a risk analysis of Bob Smith's own transactions are performed, the system won't include
in the risk calculation the exposure stemming from ABC Corp.'s guarantee of Acme Corp's
transactions.
In summary, because the prior art client account management systems do not manage
client account information and account relationships effectively, the client account and
transaction information cannot be easily leveraged to help manage the risk and assess the
profitability of the financial institution's sales and trading businesses.
SUMMARY OF THE INVENTION
The present invention is directed to a system and method for overcoming the
deficiencies of the prior art. According to the present invention a system is provided that
includes a party (i.e., legal entity) file having a plurality of party records with each of the
plurality of party records having party information relating to one of a plurality of parties.
Also included is an account file having a plurality of account records with each of the
plurality of account records having account information relating to one of a plurality of
accounts. Each of the plurality of account records also includes a link to at least one of the
plurality of party records. Finally, a transaction file is included having a plurality of
transaction records with each of the plurality of transaction records having transaction
information relating to one of a plurality of transactions. Each of the plurality of transaction
records includes a link to one of the plurality of account records.
In an exemplary embodiment of the present invention, the plurality of parties includes
at least one principal party and each of the plurality of account records includes a link to one
of the plurality of party records having information relating to the at least one principal party.
In an exemplary embodiment of the present invention, the plurality of parties includes
at least one order placer party and each of the plurality of account records includes a link to
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one of said plurality of party records having information relating to the at least one order
placer party.
In an exemplary embodiment of the present invention, the plurality of parties includes
at least one salesperson party and each of the plurality of account records includes a link to
one of the plurality of party records having information relating to the at least one salesperson
party.
In an exemplary embodiment of the present invention, the plurality of parties includes
at least one booking company party and each of the plurality of account records includes a
link to one of the plurality of party records having information relating to the at least one
booking company party.
In an exemplary embodiment of the present invention, the plurality of parties includes
at least one guarantor party and each of the plurality of account records includes a link to one
of the plurality of party records having information relating to the at least one guarantor
party.
In an exemplary embodiment of the present invention, each of the plurality of party
records have a hierarchical relationship field. A first of the plurality of party records stores
party information relating to a first party and a second of the plurality of party records stores
party information relating to a second party wherein the first party and the second party have
a hierarchical relationship. The hierarchy relationship field of the first of the plurality of
party records and the hierarchical relationship field of the second of the plurality of party
records indicate the hierarchical relationship between the first party and the second party.
In an exemplary embodiment of the present invention, each of the plurality of party
records have a party relationship field. A first of the plurality of party records stores party
information relating to a first party and a second of the plurality of party records stores party
information relating to a second party, the first party and the second party have a party
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relationship. The party relationship field of the first of the plurality of party records and the
party relationship field of the second of the plurality of party records indicate the party
relationship between the first party and the second party. In an exemplary embodiment, the
party relationship between the first party and the second party is a guarantor-guarantee
relationship.
In an exemplary embodiment, a method of determining the risk associated with a
plurality of transactions associated with one party of a plurality of parties is provided. First,
the parties related to the one party is identified. Next, those account records in which the one
party or the related parties is a principal is retrieved from the account file. Next all
transaction records that are linked to those account records are identified. Finally, an
aggregate risk exposure for all transactions of the identified transaction records may be
determined by a risk management system.
In an exemplary embodiment, the method of determining the risk resulting from a
plurality of transactions associated with the one party further includes the step of identifying
all guarantors associated with the retrieved account records. Next, all guarantors of the one
party are identified and a total guarantee amount is determined. Finally, the aggregate risk
exposure is evaluated in view of the total guarantee amount.
In an exemplary embodiment of the method of determining the risk associated with a
plurality of transactions associated with one party, the parties related to the one party are
identified via the hierarchical relationship field.
In an exemplary embodiment of the method of determining the risk associated with a
plurality of transactions associated with one party, the guarantors of the one party are
identified via the party relationship field.
Using the system of the present invention, the financial institution can manage client
account information by creating party hierarchies (i.e., relationships between multiple legal
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entities) for different purposes such as credit, legal and marketing with each of these purposes
using a differing grouping of parties. As such, the present invention accommodates this need
by allowing the linkage of parties to other parties for many defined purposes. The financial
institution may then use the system to manage risk by locating all parties linked together in a
certain hierarchy for "legal purposes" or "credit purposes," selecting the role of interest such
as principal or principal's guarantor, and then retrieving all accounts in which those parties
are playing that role. The transactions in those accounts are then identified for the purposes
of measuring exposure to risk. The financial institution may also use the system to identify
marketing opportunities by locating all parties linked together in a certain hierarchy for
"marketing purposes," selecting the role of interest such as order placer, and then retrieving
all accounts in which those parties are playing that role.
Thus, the present invention provides a system and method for managing client
account information and account relationships effectively so that such information can be
used to help manage the risk and assess the profitability of a financial institution's sales and
trading businesses.
The invention accordingly comprises the several steps and the relation of one or more
of such steps with respect to each of the others, and the apparatus embodying features of
construction, combinations of elements and arrangement of parts which are adapted to effect
such steps, all as exemplified in the following detailed disclosure, and the scope of the
invention will be indicated in the claims.
BRIEF DESCRIPTION OF THE DRAWINGS
For a fuller understanding of the invention, reference is had to the following
description taken in connection with the accompanying drawings, in which:
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FIG. 1 is a block diagram of a party file, account file and transaction file data
structure of the present invention;
FIG. 2 is a block diagram showing the format of a party record of the party file of
FIG. 1;
FIG. 3 A is a block diagram of the party file of FIG. 1 showing hierarchical
relationships between party records;
FIG. 3B is a block diagram of the hierarchical relationship of FIG. 3 A;
FIG. 4 is a block diagram of the party file of FIG.1 showing party relationships
between party records;
FIG. 5 is a block diagram showing the format of an account record of the account file
of FIG. 1;
FIG. 6 is a block diagram showing the linkage between an account record and a
plurality of party records in accordance with the present invention;
FIG. 7 is a screen shot of an account record entry screen in accordance with an
exemplary embodiment of the present invention;
FIG. 8 is a block diagram showing the format of an transaction record of the
transaction file of FIG. 1;
FIG. 9 is a block diagram showing the linkage between an account record and a
plurality of transaction records in accordance with the present invention;
FIG. 10 is a block diagram showing the linkage between related accounts in
accordance with present invention; and
FIG. 11 is a flow diagram of the method of evaluating the risk associated with a group
of transactions in accordance with the present invention.
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DESCRIPTION OF PREFERRED EMBODIMENTS
Central to the client account management system of the present invention is the
concept of an "account." An account is a bucket into which a plurality of related transactions
are placed. Each account has associated therewith a number of parties each of which plays a
role in that account. For example, each account has a party that plays the role of a principal,
i.e., the beneficial owner of the account. Another party associated with each account is an
order placer - the party that is authorized by the principal of the account to initiate
transactions in the account. Other types of parties that may be associated with an account
include, but are not limited to, a booking company (i.e., the entity associated with the
financial institution that transacts with the order placer), an account salesperson and a
guarantor. Thus, each account includes a particular set of parties that have defined roles with
respect to that account.
If a client desires to enter into transactions using a combination of parties, the system
first searches existing accounts to determine whether the desired combination of parties
occurs in any of the existing accounts or whether the combination of parties is unique. If the
desired combination of parties does occur in an existing account, then that account is used for
the transactions. If the desired combination of parties is unique, then a new account is
established for that set of parties. For example, assume a client has an existing account No.
0001 that includes Principal Acme, Order Placer ABC Investment Advisors, Booking
Company DEF & Co. and Salesperson Bob. If the client would like to also transact business
with Salesperson Ted, then a new account No. 0002 would be created that has as parties
Principal Acme, Order Placer ABC Investment Advisors, Booking Company DEF & Co. and
Salesperson Ted. By creating a new account for this set of parties, the system is able to track
separately the performance of Salesperson Bob and Salesperson Ted with respect to
transactions involving Principal Acme. A new account is also created if a different operative
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agreement governs the transaction so that trades can be properly grouped via account into
netting buckets. In general, a new account is created whenever a transaction occurs that has
associated therewith a unique combination of principal, order placer, salesperson booking
company and operating agreement.
Each account has linked to it the transactions performed under that account. So, for
example, if Order Placer ABC Investment Advisors placed an order with Salesperson Bob to
buy 100 shares of IBM for Principal Acme of Account No. 0001, that transaction is linked to
Account No. 0001. By organizing accounts and transactions in this manner, the system is
able to associate such transactions with the particular set of parties linked to that account.
This party-transaction relationship allows the system of the present invention to perform
various analyses such as determining the risk exposure per principal, profitability per
salesperson as well as numerous others calculations.
To achieve these benefits, the client account management system of the present
invention employs the data architecture shown in FIG. 1. According to the invention, client
data is partitioned into three data files: a party file 3, an account file 5 and a transaction file 7.
Referring now to FIG. 2, there is shown a block diagram showing the format of a
record in party file 3. Referring also to FIG. 3A, there is shown a block diagram of party file
3 that includes a plurality of records 3(1), 3(2)... 3(N) with each record 3(x) including fields
for storing information about one party contained in the system. For example, each record
3(x) of party file 3 includes a field for the party's name 21, legal name 22 , address 23,
contact person 24, telephone number 25, FAX number 201, email address 202, legal form 25,
marital status (if the party is an individual) 28, and jurisdiction of organization (if the party is
a legal entity) 26. A person of ordinary skill in the art will recognize that, in addition to these
fields, record 3(x) may include fields for any other information relating to a particular party
that is desirable to maintain.
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Some of the fields in record 3(x) may call for information that is not relevant for
every party and therefore is not utilized for a particular party. For instance, if a particular
party is a legal entity such as a corporation, then marital status field 28 has no relevance and
is ignored for that particular record. In such a case, when data is being entered into a party
record for that particular party, the system will not request data relating to the party's marital
status. In addition, the values the system accepts for a particular field may depend on a value
previously entered for a related field. For example, if Spain is the value selected for
jurisdiction of organization field 26, then the possible values the system presents for legal
form field 25 will be specific to Spain. In this way, party record 3(x) includes fields and the
system presents possible values for such fields to accommodate a wide range of party types
while still maintaining a streamlined data entry process.
Referring now to FIG. 4, there is shown a block diagram of party file 3 showing
relationships between particular party records 3(x). Each party record 3(x) also includes a
party relationship field 29 that facilitates the creation of relationships between different
parties stored in party file 3. For example, if XYZ Corp. is a party stored in party record 3(5)
and Mr. Smith, a board member of XYZ Corp. is a party stored in party record 3(7), it is
useful to identify Mr. Smith as a board member of XYZ Corp. so that his obligations with
respect to buying/selling XYZ Corp. stock are not violated. To create such a relationship
between XYZ Corp. and Mr. Smith, party relationship field 29(5) of party record 3(5) will
contain a link, using known database programming techniques, to party record 3(7)
identifying that party as a board member of the party contained in party record 3(5). Also,
party relationship field 29(7) of party record 3(7) will contain a link to party record 3(5)
identifying that party as a company that the party contained in party record 3(7) is a board
member of.
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In this way, party relationship field 29 can be used to establish links between parties
in party file 3 to create any desired relationship between the parties. For example, if the party
of party record 3(3) is a guarantor for all transactions performed by the party of party record
3(1), then the appropriate links will be stored in party relationship fields 29(3) and 29(1) to
establish this guarantor-guarantee relationship. In a similar manner, any other desired party
relationships may be established.
In addition to establishing party relationships as described above, party record 3
includes a hierarchical relationship field 27 for identifying parties that are related to each
other in a hierarchical structure. Hierarchical relationship field 27 consists of an HQ1 field
27A and an HQ2 field 27B. Hierarchical relationship field 27 is used as follows. Assume the
party of party record 3(6) is a corporation and that corporation owns a subsidiary corporation
that is a party stored in party record 3(4). Assume further that the corporation of party record
3(4) owns a subsidiary corporation that is a party stored in party record 3(1). To identify that
these three corporations are all related entities (which may not be apparent from the party
names), a link is placed in HQl field 27A(1) of party record 3(1) pointing to HQ2 field
27B(4) of party record 3(4) that indicates that the party of party record 3(4) is the parent of
the party of party record 3(1). Similarly, a link is placed in HQl field 27A(4) of party record
3(4) pointing to HQ2 field 27B(6) of party record 3(6) that indicates that the party of party
record 3(6) is the parent of the party of party record 3(4). When the tree structure defined by
the links stored in hierarchical relationship fields 27(1), 27(4) and 27(6) is traversed, the
hierarchical relationship between the three corporations is determined, as shown in FIG. 3B.
As will be shown later, determining the hierarchical relationship between parties is necessary
to effectively perform risk management and profitability analysis.
Although the creation of party relationships and hierarchical relationships has been
shown using links placed in party relationship field 29 and hierarchical relationship field 27,
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respectively, to create a tree structure to identify the desired relationships, it will be
understood by one possessing ordinary skill in the art that any other technique to identify the
party and hierarchical relationships between the parties may be used. Additionally, the
system has the ability to maintain multiple hierarchies.
Referring now to FIG. 5, the format of account file 5 is shown. Account file 5
includes a plurality of records 5(1), 5(2) ... 5(N) with each record 5(x) including fields for
storing information about one account that is added to the system. For example, each account
record 5(x) of account file 5 includes an account number field 51, an account type field 54
(e.g., cash or margin), a commission rate field 58, and an operative agreement field 56 that
references the agreement that governs the client-financial institution relationship. In addition,
each account record 5(x) includes a field that contains a link to parties that play a role in
account 5(x), including a principal link field 53, an order placer link field 55, a booking
company link field 57, a salesperson link field 59, and a guarantor link field 52. A person of
ordinary skill in the art will recognize that, in addition to these fields, each record 5(x) may
also include fields for links to additional parties having other roles as well as any other
information relating to a particular account that is desirable to maintain.
Referring now to FIG. 6, there is shown a block diagram that demonstrates the linkage
between a particular account record and various party records. For example, account record
5(6) has a principal link field 53(6) that contains a link to a party record 3(4) in party file 3
that stores information relating to the party who is the principal associated with account 5(6).
Likewise, account record 5(6) has an order placer link field 55(6), a booking company link
field 57(6) and a salesperson link field 59(6) that hold links to party records 3(8), 3(18) and
3(9), respectively. These party records store information relating to the party who is the
order placer, booking company and salesperson for the account.
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There are numerous advantages that result from storing party information in party file
3 and then creating links between account record 5(x) and the party records 3(x) for
associating the relevant parties to a particular account. First, using links to the desired party
records in party file 3, the user does not have to input repeatedly party information each time
that party is associated with a new account which results in significant time savings. Also,
because party information is only entered in once (at the time it is entered into party file 3),
data entry errors and inconsistencies that would often occur each time the same party
information is reentered are eliminated. In addition, data maintenance becomes more
efficient because updated party information flows to all accounts in which that party plays a
role. Furthermore, because the process of associating a party to an account relies on linking
to the particular party record in party file 3, the party information used for that particular
party will necessarily be consistent across all accounts in which that particular party plays a
role. In addition, the data architecture of the present invention simplifies the process of
changing the party information because if the party information stored in party file 3 is
modified, those modifications apply to all account records 5(x) that point to that particular
party record. As will be shown below, because these benefits significantly improve the
accuracy and consistency of the party information stored in party file 3, they will greatly
increase the reliability of any data analysis, such as risk analysis and profitability analysis,
that requires accurate and consistent information.
Another advantage of storing party information in the manner of the present invention
is that the roles performed by the parties associated with each account are clearly defined.
Referring now to FIG. 7, there is shown an account entry screen 71 according to an
exemplary embodiment of the present invention. Entry screen 71 includes a plurality of entry
fields corresponding to the roles performed by each party associated with the account. For
example, included in entry screen 71 is a principal entry field 73 in which the principal(s) for
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the particular account is (are) entered. Likewise, entry screen 71 includes an order placer
entry field 75, a sales person entry field 77 and a booking company entry field 79. In
addition, entry screen 71 provides additional entry fields 78 for entering parties that take on
other roles in the account. Because the party information is entered into specific entry fields,
the role that a particular party will play in the account is clearly defined in the system.
Furthermore, because the party records that are linked to a particular account record may also
include party relationship and hierarchical relationship information, as explained above, the
additional relationship information maintained at the party record level is incorporated into
the particular account record thereby adding further definition to the roles of the parties.
Entry screen 71 includes a search parties button 72 which, when activated, presents
the user with a list of parties stored in party file 3. To enter a party into an account, the user
searches through this list of parties and selects the desired party. Alternatively, when search
parties button 72 is activated, a search screen is provided in which the user can enter search
terms. Based on the search terms, a fuzzy search of the parties is performed and matches to
the search terms are provided to the user. Upon selection, the relevant party information for
the selected party is retrieved from party file 3 and displayed in the appropriate entry field.
Thus, party information does not have to be reentered thereby reducing input errors and
improving data integrity. In addition, a "fuzzy search" capability is provided for locating a
party in party file 3. By using a fuzzy search algorithm according to techniques well known
in the art, once the user enters a portion of a party name, the system will present the user with
a list of potentially matching parties based on phonetics and/or pattern matching.
Referring now to FIG. 8, the format of transaction file 7 is shown. Transaction file 7
includes a plurality of records 7(1), 7(2) ... 7(N) with each record 7(x) including fields for
storing information relating to a particular transaction. For example, each transaction record
7(x) of transaction file 7 may include an account number field 81, a transaction number field
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82, a transaction date/time field 83, a transaction type field 85 (e.g., buy or sell), an
instrument type field 87 (e.g., stock or bond), a purchase quantity field 89, a purchase price
field 88 and a commission amount field 86. A person of ordinary skill in the art will
recognize that, in addition to these fields, each record 7(x) may also include fields for any
other information relating to a particular transaction that is desirable to maintain.
Referring now to FIG. 9, there is shown a block diagram that demonstrates the linkage
between a particular account record and various transaction records associated with that
particular account. As described above, each account record 5(x) has stored in account
number field 5 l(x) an account number that uniquely identifies the account. When a
transaction is performed under a particular account, for example, account 5(6), the account
number that is stored in account number field 51(6) is stored in account number fields 81(1),
81(2), and 81(8) of transaction records 7(1), 7(2) and 7(8), respectively. Thus, account
record 5(6) is linked to associated transactions records 7(1), 7(2), and 7(8) via the unique
account number of account number field 51(6).
Referring now to FIG. 10, there is shown a block diagram depicting the linkage
between related accounts in accordance with the present invention. The example in FIG. 10
includes account record 5(1) which stores the account information for a particular client
account. Account record 5(1) includes links to party records 3(1), 3(2), 3(3), 3(4) and 3(15)
which store the party information of the various parties associated with the particular client
account. In this example, party record 3(1) stores the party information of the principal on
the account, party record 3(2) the order placer, party record 3(3) the sales person, party record
3(4) the booking company and party record 3(15) the guarantor on the account. Account
record 5(1) is also linked to transaction records 7(l)-7(4), each of which stores information
regarding transactions executed on behalf of the principal of account record 5(1). Similarly,
account record 5(2) includes links to associated party information that are stored in party
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records 3(1), 3(5), 3(6) and 3(7) and that represent information pertaining to the principal,
order placer, salesperson and booking company, respectively. In addition, party record 3(1)
is linked to party record 3(17) which indicates that a party relationship exists between the two
parties. For purposes of this example, the nature of this party relationship is that of
guarantor-guarantee, i.e. the party of party record 3(17) is a guarantor of all transactions
performed by the party of party record 3(1) (i.e., transactions of transaction records 7(1) -
7(9) - in contrast to the guarantor party of party record 3(15) which only guarantees
transactions associated with the account of account record 5(1)). Account record 5(2) is also
linked to transaction records 7(5)-7(9). Finally, account record 5(3) is linked to party records
3(8), 3(9), 3(6) and 3(11) which identify the principal, order placer, salesperson and booking
company, respectively. Account record 5(3) is also linked to transaction records 7(10) -
7(13).
In this example, the accounts of account records 5(1), 5(2) and 5(3) are related
because the principals for each of these accounts are related. The principal of the accounts of
account records 5(1) and 5(2) is the same - the party of party record 3(1). The principals of
the accounts of account records 5(2) and 5(3), the parties of party record 3(1) and 3(8),
respectively, are hierarchically related. Because these accounts are related, the transactions
that are executed in both of the accounts (i.e., the transactions of transaction records 7(1) -
7(13)) are viewed together when determining the total exposure or profitability resulting from
transactions performed on behalf of the principal of party record 3(1) and any related parties.
The accounts of account records 5(2) and 5(3) are also related in another way because
they share a common salesperson - the party of party record 3(6). Therefore, when
analyzing the profitability of transactions performed by the salesperson of party record 3(6),
the transactions executed in both accounts (i.e., transactions of transaction records 7(5) -
7(13)) are viewed together.
18

Referring now to FIG. 11, there is shown a flowchart of the steps required to perform
a risk management analysis using the account management and transaction aggregation
capabilities of the system of the present invention. Assume, for the purposes of this example,
that a risk analysis of all transactions executed on behalf of Party A as an account principal is
desired. The first step, defined in Step 1, is to identify all of the parties that are related to
Party A. The process of identifying the parties related to Party A includes examining the
hierarchical relationships and party relations Party A is part of, as was previously described.
Once all the parties related to Party A are identified, then, in Step 2, all accounts which have
as a principal either Party A, or one of the parties related to Party A, are identified. Next, in
Step 3, the transaction amounts of all of the transactions of all of the accounts identified in
Step 2 are aggregated to form a total transaction amount. Next, in Step 4, all accounts which
have as a guarantor either Party A, or one of the parties related to Party A, are identified.
Next, in Step 5, the transaction amounts of all of the transactions of all of the accounts
identified in Step 4 are aggregated to form a total guarantor amount.
Next, in Step 6, the party record of Party A, and the records of all parties related to
Party A, are examined to identify any party relationships that may exist in which a party is
acting as a guarantor to either Party A or any of the parties related to Party A. The guarantee
amount is then determined. In Step 7, all of the accounts in which either Party A or the
parties related to Party A are principals, are examined to identify any parties that are acting as
guarantors at the account level. A guarantee amount is determined. Next, in Step 8, all of the
guarantee amounts identified in Steps 6 and 7 are aggregated to form a total guarantee
amount. Finally, in Step 9, the total risk exposure associated with Party A is determined by
adding the total transaction amount to the total guarantor amount and subtracting from that
sum the total guarantee amount.
19

The example described above illustrates how the system of the present invention is
used to perform a risk analysis with respect to transactions associated with a particular
principal. It will be recognized by those of ordinary skill in the art that the calculation of the
risk associated with any particular party may be more complex depending upon the types of
transactions under consideration as well as other factors. No matter how complicated the risk
management calculations are for any particular situation, however, it is first necessary to
identify the total scope of transactions that must be considered in the risk management
calculations and any relevant party relationships. Using the data structures and methods of
the present invention, the transactions and party relationships that bear on the risk analysis
can be easily identified thereby increasing the accuracy of the risk management calculations.
Similarly, the methods described above may be used to determine the profitability of
the transactions associated with a particular principal or salesperson. Also, one of ordinary
skill in the art can adapt this method to perform any other analyses of the party, account and
transaction information maintained by the system. For example, the system and methods of
the present invention may be used to identify which financial products are being used by the
clients of the financial institution for the purpose of marketing existing or new financial
products to the financial institution's client base.
Thus, by using the data structures and methods of the present invention, a system is
provided in which the quality of account data is greatly improved. Also, because the system
tracks the roles each party plays with respect to a particular account as well as the
relationships between different parties, the client account and transaction information can be
easily leveraged to help manage the risks and assess the profitability of a financial
institution's transactional business.
Based on the above description, it will be obvious to one of ordinary skill to
implement the system and methods of the present invention in one or more computer
20

programs that are executable on a programmable system including at least one programmable
processor coupled to receive data and instructions from, and to transmit data and instructions
to, a data storage system, at least one input device, and at least one output device. Each
computer program may be implemented in a high-level procedural or object-oriented
programming language, or in assembly or machine language if desired; and in any case, the
language may be a compiled or interpreted language. Suitable processors include, by way of
example, both general and special purpose microprocessors. Furthermore, alternate
embodiments of the invention that implement the system in hardware, firmware or a
combination of both hardware and software, as well as distributing modules and/or data in a
different fashion will be apparent to those skilled in the art and are also within the scope of
the invention. In addition, it will be obvious to one of ordinary skill to use a conventional
database management system such as, by way of non-limiting example, Sybase, Oracle and
DB2, as a platform for implementing the present invention.
It will thus be seen that the objects set forth above, among those made apparent from
the preceding description, are efficiently attained. Also, certain changes may be made in
carrying out the above method and in the construction set forth without departing from the
spirit and scope of the invention, it is intended that all matter contained in the above
description and shown in the accompanying drawings shall be interpreted as illustrative and
not in a limiting sense.
It is also to be understood that the following claims are intended to cover all of the
generic and specific features of the invention herein described, and all statements of the scope
of the invention which, as a matter of language, might be said to fall therebetween.
21

WE CLAIM :
1. A system for managing transaction information, comprising:
a party file having a plurality of party records, each of said plurality of party records
having party information relating to one of a plurality of parties;
an account file having a plurality of account records, each of said plurality of account
records having account information relating to one of a plurality of accounts; each of said
plurality of account records including a link to at least one of said plurality of party records;
and
a transaction file having a plurality of transaction records, each of said plurality of
transaction records having transaction information relating to one of a plurality of
transactions; each of said plurality of transaction records including a link to one of said
plurality of account records.
2. The system of claim 1, wherein said plurality of parties includes at least one principal
party and each of said plurality of account records includes a link to one of said plurality of
party records having information relating to said at least one principal party.
3. The system of claim 2, wherein said plurality of parties includes at least one order
placer party and each of said plurality of account records includes a link to one of said
plurality of party records having information relating to said at least one order placer party.
4. The system of claim 3, wherein said plurality of parties includes at least one
salesperson party and each of said plurality of account records includes a link to one of said
plurality of party records having information relating to said at least one salesperson party.
5. The system of claim 4, wherein said plurality of parties includes at least one booking
company party and each of said plurality of account records includes a link to one of said
plurality of party records having information relating to said at least one booking company
party.
22

6. The system of claim 5, wherein said plurality of parties may include a guarantor party.
7. The system of claim 1, wherein at least one of said plurality of party records has a
hierarchical relationship field, a first of said plurality of party records having party
information relating to a first party and a second of said plurality of party records having
party information relating to a second party, said first party and said second party have a
hierarchical relationship, wherein said hierarchical relationship field of said first of said
plurality of party records and said hierarchical relationship field of said second of said
plurality of party records indicate said hierarchical relationship.
8. The system of claim 7, wherein said hierarchical relationship indicates that said first
party is a parent of said second party.
9. The system of claim 1, wherein at least one of said plurality of party records has a
party relationship field, a first of said plurality of party records having party information
relating to a first party and a second of said plurality of party records having party
information relating to a second party, said first party and said second party have a party
relationship, wherein said party relationship field of said first of said plurality of party
records and said party relationship field of said second of said plurality of party records
indicate said party relationship.
10. The system of claim 9, wherein said party relationship is a guarantor-guarantee
relationship.
11. A method for managing transactional information, comprising the steps of:
forming a party file having a plurality of party records, each of said plurality of party
records having party information relating to one of a plurality of parties;
forming an account file having a plurality of account records, each of said plurality of
account records having account information relating to one of a plurality of accounts;
23

linking each of said plurality of account records to at least one of said plurality of
party records;
forming a transaction file having a plurality of transaction records, each of said
plurality of transaction records having transaction information relating to one of a plurality of
transactions; and
linking each of said plurality of transaction records to one of said plurality of account
records.
12. The method of claim 11, wherein said plurality of parties includes at least one
principal party and said at least one of said plurality of party records has information relating
(
to said at least one principal party.
13. The method of claim 12, wherein said plurality of parties includes at least one order
placer party and said at least one of said plurality of party records has information relating to
said at least one order placer party.
14. The method of claim 13, wherein said plurality of parties includes at least one
salesperson party and said at least one of said plurality of party records has information
relating to said at least one salesperson party.
15. The method of claim 14, wherein said plurality of parties includes at least one
booking company party and said at least one of said plurality of party records has information
relating to said at least one booking company party.
16. The method of claim 15, wherein said plurality of parties includes at least one
guarantor party and the method further comprises the step of:
linking at least one of said plurality of account records to one of said plurality of party
records having information relating to said at least one guarantor party.
17. A method of determining the risk associated with a plurality of transactions stored in a
system, said system having a party file having a plurality of party records, each of said
24

plurality of party records having party information relating to one of a plurality of parties,
said system having an account file having a plurality of account records, each of said plurality
of account records having account information relating to one of a plurality of accounts; each
of said plurality of account records including a link to at least of said plurality of party
records, said system having a transaction file having a plurality of transaction records, each of
said plurality of transaction records having transaction information relating to one of a
plurality of transactions; each of said plurality of transaction records including a link to one
of said plurality of account records, the method comprising the steps of:
selecting a party from said plurality of parties;
identifying any parties related to said party;
retrieving from said account file those of said account records wherein said party or
said related parties is a principal;
identifying all transaction records linked to said those of said account records; and
determining an aggregate risk exposure for all transactions of said all transaction
records.
18. The method of claim 17, further comprising the steps of:
identifying all guarantors associated with said those of said account records;
identifying all guarantors of said party;
determining a total guarantee amount; and
wherein the determining step includes the steps of:
evaluating the aggregate risk exposure in view of the total guarantee amount.
19. The method of claim 17, wherein each of said plurality of party records have a
hierarchical relationship field for indicating the existence of a hierarchical relationship with
another of said plurality of party records, wherein said related parties are identified via said
hierarchical relationship field.
25

20. The method of claim 18, wherein each of said plurality of party records have a party
relationship field for indicating the existence of a party relationship with another of said
plurality of party records, and wherein said party relationship includes a guarantor-guarantee
relationship, wherein said all guarantors of said party are identified using via said party
relationship field.
21. A method using a computer for managing transactional information, comprising the
steps of:
forming a party file having a plurality of party records on said computer, each of said
plurality of party records having party information relating to one of a plurality of parties;
forming an account file having a plurality of account records on said computer, each
of said plurality of account records having account information relating to one of a plurality
of accounts;
linking each of said plurality of account records to at least one of said plurality of
party records;
forming a transaction file having a plurality of transaction records on said computer,
each of said plurality of transaction records having transaction information relating to one of
a plurality of transactions; and
linking each of said plurality of transaction records to one of said plurality of account
records.

There is disclosed for managing transaction information, comprising: a party file (3) having a plurality of party records, each of said plurality of party records having party information relating to one of a plurality of parties; an account file (5) having a plurality of account records, each of said plurality
of account records having account information relating to one of a plurality of accounts; each of said plurality of account records including a link to at least one of said plurality of party records; and a transaction file (7) having a plurality of transaction records, each of said
plurality of transaction records having transaction information relating to one of
a plurality of transactions; each of said plurality of transaction records including
a link to one of said plurality of account records.