CA2998073A1 - A dvp settlement method based on blockchain technology - Google Patents
A dvp settlement method based on blockchain technology Download PDFInfo
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- CA2998073A1 CA2998073A1 CA2998073A CA2998073A CA2998073A1 CA 2998073 A1 CA2998073 A1 CA 2998073A1 CA 2998073 A CA2998073 A CA 2998073A CA 2998073 A CA2998073 A CA 2998073A CA 2998073 A1 CA2998073 A1 CA 2998073A1
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- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
- G06Q20/00—Payment architectures, schemes or protocols
- G06Q20/04—Payment circuits
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- G06Q20/065—Private payment circuits, e.g. involving electronic currency used among participants of a common payment scheme using e-cash
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- G06Q20/02—Payment architectures, schemes or protocols involving a neutral party, e.g. certification authority, notary or trusted third party [TTP]
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- G—PHYSICS
- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
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- G06Q20/04—Payment circuits
- G06Q20/06—Private payment circuits, e.g. involving electronic currency used among participants of a common payment scheme
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- G06—COMPUTING; CALCULATING OR COUNTING
- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
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- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
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- G06Q—INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR
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Abstract
The present invention discloses a method of delivery versus payment (DVP) settlement based on blockchain technology. When two parties intend to trade securities, both parties check whether the balance of asset is enough to carry out the transaction in their respective asset blockchain ABC; and if so execute the trade in a trading blockchain, and simultaneously broadcast the trade information to the asset blockchain to complete settlement and clearing. The disclosed invention improves the timeliness and reliability of settlement and clearing of securities trading.
Description
A DVP Settlement Method Based on Blockchain Technology Technical Field [0001]
The present application relates generally to blockchain, and in particular to a delivery versus payment (DVP) settlement method based on blockchain technology.
Background Art
The present application relates generally to blockchain, and in particular to a delivery versus payment (DVP) settlement method based on blockchain technology.
Background Art
[0002]
Delivery versus payment (DVP) is a common form of settlement for securities.
DVP
refers to a settlement procedure in which during a securities trade, the transfer of security from a seller to a buyer occurs at the same time as the transfer of the associated payment from the buyer to the seller, on the settlement date specified by both parties.
Delivery versus payment (DVP) is a common form of settlement for securities.
DVP
refers to a settlement procedure in which during a securities trade, the transfer of security from a seller to a buyer occurs at the same time as the transfer of the associated payment from the buyer to the seller, on the settlement date specified by both parties.
[0003]
Prior settlement methods used in the securities market such as Delivery Versus Free or Payment in Advance, either failed to implement the simultaneous delivery of funds and securities, placed the two parties in an unequal position, caused settlements to occur slowly, or otherwise caused other problems. The DVP approach greatly improves the settlement procedure, so that efficiency can be significantly enhanced.
Prior settlement methods used in the securities market such as Delivery Versus Free or Payment in Advance, either failed to implement the simultaneous delivery of funds and securities, placed the two parties in an unequal position, caused settlements to occur slowly, or otherwise caused other problems. The DVP approach greatly improves the settlement procedure, so that efficiency can be significantly enhanced.
[0004]
Securities trading, buyout repo and pledged repo can be settled using DVP
settlements. In many international capital markets, DVP settlement has long been an accepted standard practice, providing an efficient settlement method that helps prevent settlement risks and related disputes.
Securities trading, buyout repo and pledged repo can be settled using DVP
settlements. In many international capital markets, DVP settlement has long been an accepted standard practice, providing an efficient settlement method that helps prevent settlement risks and related disputes.
[0005]
Blockchain is essentially a decentralized database of accounts that records all transactions. A blockchain is a series of blocks that are generated using cryptographic techniques. Each block contains information regarding a transaction on the bitcoin network, including data that can be used to verify the validity of the information thereby exhibiting anti-counterfeit characteristics, and to generate the next block. Blockchain is the underlying technology that enables crypto-currencies such as Bitcoin.
LEGAL_28799603 1 - I -=.
Blockchain is essentially a decentralized database of accounts that records all transactions. A blockchain is a series of blocks that are generated using cryptographic techniques. Each block contains information regarding a transaction on the bitcoin network, including data that can be used to verify the validity of the information thereby exhibiting anti-counterfeit characteristics, and to generate the next block. Blockchain is the underlying technology that enables crypto-currencies such as Bitcoin.
LEGAL_28799603 1 - I -=.
[0006]
Although both Bitcoin and DVP have advantages, platforms that combine the benefits associated with both frameworks have not been available. Accordingly, it is desirable to provide a system that combines at least some of the advantages of DVP and blockchains.
Summary of Invention
Although both Bitcoin and DVP have advantages, platforms that combine the benefits associated with both frameworks have not been available. Accordingly, it is desirable to provide a system that combines at least some of the advantages of DVP and blockchains.
Summary of Invention
[0007]
In accordance with one aspect of the present invention, there is provided a method of delivery-versus-payment (DVP) settlement of a securities transaction between two parties A and B, based on a blockchain system. The blockchain system includes an asset blockchain (ABC) and a trading blockchain (TBC). The method includes (a) checking whether the balance of asset of each of the two parties is enough on their respective asset blockchain; (b) executing the trade on the trading blockchain; and (c) simultaneously broadcasting to the asset blockchain, thereby completing the DVP settlement.
Brief Description of Drawings
In accordance with one aspect of the present invention, there is provided a method of delivery-versus-payment (DVP) settlement of a securities transaction between two parties A and B, based on a blockchain system. The blockchain system includes an asset blockchain (ABC) and a trading blockchain (TBC). The method includes (a) checking whether the balance of asset of each of the two parties is enough on their respective asset blockchain; (b) executing the trade on the trading blockchain; and (c) simultaneously broadcasting to the asset blockchain, thereby completing the DVP settlement.
Brief Description of Drawings
[0008]
In the figure, which illustrates by way of example only, an embodiment of the present invention, FIG. 1 is a schematic block diagram illustrating a blockchain based method of DVP settlement, in accordance with one exemplary embodiment.
Description of Embodiments
In the figure, which illustrates by way of example only, an embodiment of the present invention, FIG. 1 is a schematic block diagram illustrating a blockchain based method of DVP settlement, in accordance with one exemplary embodiment.
Description of Embodiments
[0009]
The technical problem to be solved by this invention is to provide a DVP
settlement system and method based on blockchain technology, which improves the timeliness and reliability of settlement and clearing of trades in securities.
The technical problem to be solved by this invention is to provide a DVP
settlement system and method based on blockchain technology, which improves the timeliness and reliability of settlement and clearing of trades in securities.
[0010]
In one aspect, embodiments of the present invention provide a DVP settlement system and method based on blockchain technology.
In one aspect, embodiments of the present invention provide a DVP settlement system and method based on blockchain technology.
[0011]
An exemplary blockchain system, used in the present invention, includes a plurality of nodes and at least two separate blockchains. The two blockchains are a trading blockchain (TBC) for processing trade transaction information, an asset blockchain (ABC) is used to maintain asset account information. The TBC is used to store trade transaction data, while the LEGAL_28799603 1 - 2 -ABC is used to maintain asset account information. The TBC reads and writes, said account information, from and to the ABC respectively.
An exemplary blockchain system, used in the present invention, includes a plurality of nodes and at least two separate blockchains. The two blockchains are a trading blockchain (TBC) for processing trade transaction information, an asset blockchain (ABC) is used to maintain asset account information. The TBC is used to store trade transaction data, while the LEGAL_28799603 1 - 2 -ABC is used to maintain asset account information. The TBC reads and writes, said account information, from and to the ABC respectively.
[0012] When two parties, named A and B, intend to trade securities with one another using an exemplary blockchain system, the parties first need to obtain the asset balance from their respective asset blockchain ABC. The parties then check whether the asset balance is sufficient for the proposed transaction. If the balances are sufficient, the parties then trade on the trading blockchain TBC, simultaneously broadcast data related to the transaction to the asset blockchain ABC, and finally complete settlement and clearing.
[0013] In one exemplary embodiment, before the transaction is commenced, the trading blockchain or TBC needs to perform the following steps:
[0014] Step 1.1 on ABC, freeze the accounts of A and B (account A and account B
respectively) which are involved in or concerned with the transaction. The nodes of the ABC will vote and the ABC will build blocks to ensure the freezing of the assets in the concerned accounts of party A and party B (account A and account B respectively) on ABC.
respectively) which are involved in or concerned with the transaction. The nodes of the ABC will vote and the ABC will build blocks to ensure the freezing of the assets in the concerned accounts of party A and party B (account A and account B respectively) on ABC.
[0015] Step 1.2 copy the frozen assets of the transaction parties A and B, to the TBC by using the blockchain encryption method;
[0016] Step 1.3 the TBC will vote on the asset data of A and B sent by the ABC to all the nodes of TBC, and build blocks to record that the asset that received by TBC;
100171 The trading blockchain TBC further performs the following steps during the transaction:
[0018] Step 2.1 Party A and party B, each conducts the transaction on the TBC;
[0019] Step 2.2 the TBC performs transaction voting and builds blocks for the transaction between parties A and B, and guarantees the transaction is completed and recorded on the TBC;
[0020] After the transaction is completed, the following steps are performed:
LEGAL_28799603 1 - 3 -[0021] Step 3.1 TBC uses blockchain encryption to back up the updated asset data to the ABC, for both account A and account B;
[0022] Step 3.2 the ABC votes and builds blocks for the updated asset data of A and B
copied from TBC, to ensure that the updated asset data of A and B are recorded on ABC; and [0023] Step 3.3 Un-freeze account A and account B on ABC.
[0024] Further, after the transaction is completed, the exemplary method further includes the following steps:
[0025] Step 3.4 on TBC, the transaction data of A and B is marked as "Expired", indicating that the data is no longer available for trading. The TBC builds a block to ensure that "outdated"
assets are recorded on TBC and can no longer be traded.
[0026] Step 3.5 Periodically review the TBC of "expired blocks", blocks that have expired for a long time do not need to be saved online and can be stored elsewhere according to the rules to make room for other online transactions to be processed at high speed.
[0027] In some embodiments, a Registration Center ABC is included in the system. The Registration Center ABC is the supervisory authority and when the settlement clears, the Registration Center ABC is notified.
[0028] In some embodiments, a Central Bank ABC can also be incorporated.
The Central Bank ABC is for regulatory body. When the settlement clears, both the Registration Center ABC and the Central Bank ABC are notified.
[0029] In some other embodiments, on the asset blockchain or ABC, one account includes a general ledger and a few sub-ledgers, whereby each sub-ledger can be used only for transactions on one TBC, and each of the sub-ledger has a lock. The lock can be encrypted, so that only the associated TBC can unlock its sub-ledger. An account can involve multiple transactions on multiple TBCs.
LEGAL_28799603 1 - 4 -[0030]
As noted above, embodiments of the present invention implement a DVP
settlement procedure based on blockchain technology. Embodiment of the present invention utilize TBC
and/or ABC and associated algorithms to achieve timely and reliable settlement of trading activities.
[0031]
To better understand some aspects of exemplary embodiments of the present invention presented above, and to better compare embodiments this invention to other conventional plans, a simple example is provided below.
As noted above, TBC stands for Trading Blockchain and is similar to a trading center. Transactions for all investors are completed on the TBC.
[0033]
ABC stands for Asset Blockchain and is similar to a bank's investment accounts. The ABC saves asset position information of all investors.
[0034]
"Position" is a commonly used term in the financial industry, often used in financial, securities, stocks, futures trading. Position refers to the number of funds owned or borrowed by investors.
Either or both of the parties, A and B, can be banks or investors or other organizations or entities.
As noted above, in one embodiment of the present invention, a DVP settlement method based on blockchain technology involves a Registration Center ABC and a Central Bank ABC and allows two parties A, B to trade securities. Both parties need to check the asset position from their respective asset blockchain ABC to ensure that it is satisfactory, and then proceed to trade on the TBC, and broadcast to ABC at the same time. At completion of the settlement, Registration Center ABC and Central Bank ABC will be notified.
[0037]
FIG. 1 is a schematic diagram illustrating a blockchain based method of DVP
settlement, in accordance with one embodiment of the present invention. The status of account 102 for the first party (i.e., for investor A or party A) shows 1000 units of bond-1 and money in LEGAL_28799603 1 - 5 -the amount of 20.000 yuan. The status of account 104 for the second party (i.e., for investor B or party B) shows cash in the amount of 100,000. FIG. 1 further depicts a TBC
Exchange 104, a Registration Center 106 and a Central Bank 108.
100381 The status of accounts prior to trading, as illustrated in FIG. 1, is summarized as follows:
[0039] Investor A: Bond-1: 1000; Funds: 20,000 yuan.
[0040] Investor B: Funds: 100,000 yuan [0041] Investors A, B need to trade:
[0042] Investor A needs to sell bonds: Number of bond-1: 600, price: 100 yuan/piece [0043] Investor B needs to buy bonds: Number of bond-1: 600, price: 100 yuan/piece [0044] Investors A and B check the asset positions of the asset blockchain ABC to ensure that a sufficient amount of money or bonds exist in the respective accounts before executing the transaction on the trading blockchain TBC. At the same time, the transaction information is broadcast to the asset blockchain ABC, to complete the settlement. When the settlement is completed, the Registration Center ABC is notified ¨ i.e., receives notification that the number of bond-1 A sells to B is 600 at the price: 100/piece. The Central Bank ABC also receives notification that B needs to pay 60,000 to A, for the purchase of bonds.
[0045] The status of accounts after the trading settlement is completed is as follows:
[0046] Investor A: Bond-1: 400; Funds: 80,000 yuan [0047] Investor B: Bond-1: 600; Funds: 40,000 yuan [0048] A blockchain-based DVP settlement method as described below. Before the transaction, trading blockchain TBC needs to perform the following steps:
LEGAL_28799603 1 - 6 -[0049] Step 1.1 on ABC, Freeze the accounts A and B which involved in the transaction.
ABC will vote and build blocks to ensure the freezing of the assets of A and B
on ABC.
[0050] Step 1.2 Copy the frozen assets of the transaction parties A and B
to TBC by using the blockchain encryption method.
[0051] Step 1.3 TBC will vote on the asset data of A and B sent by ABC to all the nodes of TBC, and build blocks to record that the asset comes to TBC.
[0052] Further, trading blockchain TBC performs the following steps during the transaction:
[0053] Step 2.1 Both parties A and B conduct the transaction on the TBC;
[0054] Step 2.2 The TBC processes transaction voting and builds blocks for the transaction between A and B, guarantees the transaction is completed and recorded on the TBC.
[0055] After the transaction is completed, the following steps are performed:
[0056] Step 3.1 The TBC uses blockchain encryption to back up the updated asset data to ABC, for both account A and account B;
[0057] Step 3.2 The ABC votes and builds blocks for the updated asset data of A and B
copied from TBC, to ensure that the updated asset data of A and B are recorded on ABC;
[0058] Step 3.3 Un-freeze the accounts A and B on ABC.
[0059] Further, after the transaction is completed, the method further includes the following steps:
[0060] Step 3.4 on TBC, the Transaction data of A and B is marked as "Expired", indicating that the data is no longer available for trading. The TBC builds a block to ensure that "outdated"
assets are recorded on TBC and can no longer be traded.
LEGAL_28799603 1 - 7 -[0061] Step 3.5 periodically review the TBC of "expired blocks", blocks that have expired for a long time do not need to be saved online and can be stored elsewhere according to the rules to make room for other online transactions to be processed at high speed.
[0062] Trading Blockchain TBC Operations [0063] The TBC is only the channel or place or platform, used for trading and settlement in this embodiment. However it does not save the account information of both parties. The TBC
uses the following method to process trades.
[0064] If both parties A and B are banks, i.e., Bank A and Bank B, then we may assume without loss of generality that only two banks A and B are participating in TBC.
(00651 1) Bank A will freeze the assets sent to the TBC, and uses blockchain encryption to copy the asset data of the account involved in the trade from ABC to TBC. Bank A will send the data from all ABC nodes to all TBC nodes and then voting on the block will occur. The TBC
builds the block and if the vote passes, ensures that the assets involved are recorded on TBC.
[0066] 2) In the meantime, Bank B also does the same. The TBC votes and builds the block for the data that B sends to all nodes of TBC to ensure that the assets involved are recorded on TBC.
[0067] 3) Bank A and Bank B guarantee that the data uploaded is accurate.
If any subsequent agencies such as a central bank or exchanges join, then the number of nodes increases, which will further increase the security of the underlying data.
Bank A and Bank B
trade on the TBC, and directly settle. The transaction results are stored on the TBC. The TBC
nodes vote to build blocks, and the settlement is recorded;
[0068] 4) After the transaction is completed on TBC, TBC uses the method of blockchain encryption to copy the transaction data to the ABC ledger of Bank A, and all the nodes on TBC
send the data to all the nodes on the ABC of Bank A, and then ABC votes to build the block.
This will ensure that the copied data is correct. Similarly, TBC copies the transaction data to the ABC ledger of Bank B.
100691 5) After each ABC ledger of A and B has been correctly updated. The data on TBC
will be marked as "Expired", indicating that the data is no longer available for trading, TBC vote to build blocks, to ensure that the relevant data expired. Therefore, the TBC
data has a timed lifespan, so that "TBC" is also called a "timed blockchain". Records stored on TBC are permanent and, by virtue of its implementation as a blockchain, cannot be changed, but the data is tradable only for a period of time as the transactions can be complex and require multiple transactions.
[0070] 6) Data expired on TBC is still valid verification data. The data stored on TBC is also encrypted, so that only the participating banks or units can see the data.
[0071] Such a design requires membership network permissions to restrict access to the blockchain database. This customized access means that after the transaction, the bank can control the access rights to the blockchain, while the data of clients can only be seen by the relevant parties and regulators.
100721 TBC Design Advantages [0073] 1) Optimization: if a TBC block has expired for a long time, there is no need to save it online. The TBC only needs to save the most active blocks. For example, during a periodic (e.g., monthly) clean up, inactive TBC blocks that expired for more than one month can be stored elsewhere to make room for other online transactions to be processed at higher speed.
[0074] In addition, each type of transaction has its own TBC ¨ for example, one TBC for short-term activities such as various types of retail, and another for long-term activities such as smart contracts, to optimize data storage and performance. In addition, older blocks can be processed in the background, indexed, and reorganized and saved to back-end databases for faster data analysis or querying. The TBC needs to cross verify that its data is consistent with its associated ABC data, and indexing will speed up this process.
LEGAL 28799603.1 - 9 -1011352-256556-KB'll [0075]
2) Regulation Enforcement: regulators participate in a TBC as a node and they can inspect the data and, upon request, they will have the right to vote. For example, for high value transactions, regulators have the right to stop trading if there is a suspicion of a transaction.
Regulatory examination can be at any time during the transaction, such as before the transaction, during the transaction, or after the transaction.
[0076]
3) Confidentiality: This design will ensure that only authorized participants see the data that needs to be seen when needed. This design is consistent with Windhover's privacy principles whereby individuals can maintain their privacy while regulators can legitimately review and enforce compliance.
[0077]
4) Message: In addition to normal blockchain operations, prior to a transaction the TBC needs to copy data from the ABC, and replicate data back to ABC after the transaction.
These messages can be stored in these blockchains, and if needed, this blockchain message data can be used for analysis and recovery.
[0078]
5) Scalability and Locking: Potentially, any financial institution (ABC) can initiate a TBC and share their transactions so that multiple exchanges can be formed. In this case, the speed of the transaction will improve, dividing the transactional workload between multiple exchanges associated with multiple trading venues.
[0079]
6) Locking: In the case of multiple trading places, a locking mechanism is needed to ensure the integrity of the transaction. For example, if Bank A participates in two trading places, TBC1 and TBC2, Bank A participates in both types of asset transactions at both locations, resulting in double spending. This problem can be solved by implementing a lock on the specific account on ABC of Bank A, and the amount of the assets to be traded will be locked. The lock will be released when the result of the relevant TBC is returned to Bank A's ABC.
[0080]
Therefore, the ABC has at least two components: a general ledger and a sub-ledger (or risky asset account). An account can have one general ledger, and multiple sub-ledgers. Each sub-ledger can only be used for transactions on one TBC, and each sub-ledger has a lock. The LEGAL_28799603 1 - 10 -1011152-256556-K11/T r lock can be encrypted so that only the relevant TBC can release the lock. An account can involve multiple transactions in multiple trading venues.
[0081] Asset blockchain (ABC) operations [0082] ABC stores financial institution account information or household account information. For example, multiple branch banks and third-party agents can form an ABC. On ABC, account information is shared. In this way, bank staff will have difficulty tampering with account information. ABC can have multiple designs, for example account information can be stored in a hashed 0(1) search, or in a Merkle Patricia Tree for easy access to the latest data.
[0083] In addition to copy, lock and unlock operations, ABC also provides scalability.
Financial institutions can optimize their support through powerful machine differentiation by putting the most active accounts on a particular blockchain.
100841 A bank can create a high-speed ABC for new accounts, with the original ABC
referencing the old account data, in order to maintain the integrity of account history. In addition, to preserve high-speed blockchain processing, when the blockchain processing size exceeds a predetermined limit, it will be split into multiple sub-ABCs that are hosted on different machines to maintain a balanced workload.
[0085] At the completion of the blockchain transaction, that is, the completion of settlement and clearing, it only needs to notify the relevant authorities (e.g., registry and bank) of the result and updates. In order to interface with the existing system, the data also need to be saved to legacy databases.
[0086] The above described embodiment is only an exemplary of implementation and in no way limiting. A person of skill in the art will readily appreciate that improvements upon the embodiment described are possible.
[0087] Having thus described, by way of example only, embodiments of the present invention, it is to be understood that the invention as defined by the appended claims is not to be LEGAL_28799603 1 - 11 -limited by particular details set forth in the above description of exemplary embodiments as many variations and permutations are possible without departing from the scope of the claims.
LEGAL_28799603 1 - 12 -
100171 The trading blockchain TBC further performs the following steps during the transaction:
[0018] Step 2.1 Party A and party B, each conducts the transaction on the TBC;
[0019] Step 2.2 the TBC performs transaction voting and builds blocks for the transaction between parties A and B, and guarantees the transaction is completed and recorded on the TBC;
[0020] After the transaction is completed, the following steps are performed:
LEGAL_28799603 1 - 3 -[0021] Step 3.1 TBC uses blockchain encryption to back up the updated asset data to the ABC, for both account A and account B;
[0022] Step 3.2 the ABC votes and builds blocks for the updated asset data of A and B
copied from TBC, to ensure that the updated asset data of A and B are recorded on ABC; and [0023] Step 3.3 Un-freeze account A and account B on ABC.
[0024] Further, after the transaction is completed, the exemplary method further includes the following steps:
[0025] Step 3.4 on TBC, the transaction data of A and B is marked as "Expired", indicating that the data is no longer available for trading. The TBC builds a block to ensure that "outdated"
assets are recorded on TBC and can no longer be traded.
[0026] Step 3.5 Periodically review the TBC of "expired blocks", blocks that have expired for a long time do not need to be saved online and can be stored elsewhere according to the rules to make room for other online transactions to be processed at high speed.
[0027] In some embodiments, a Registration Center ABC is included in the system. The Registration Center ABC is the supervisory authority and when the settlement clears, the Registration Center ABC is notified.
[0028] In some embodiments, a Central Bank ABC can also be incorporated.
The Central Bank ABC is for regulatory body. When the settlement clears, both the Registration Center ABC and the Central Bank ABC are notified.
[0029] In some other embodiments, on the asset blockchain or ABC, one account includes a general ledger and a few sub-ledgers, whereby each sub-ledger can be used only for transactions on one TBC, and each of the sub-ledger has a lock. The lock can be encrypted, so that only the associated TBC can unlock its sub-ledger. An account can involve multiple transactions on multiple TBCs.
LEGAL_28799603 1 - 4 -[0030]
As noted above, embodiments of the present invention implement a DVP
settlement procedure based on blockchain technology. Embodiment of the present invention utilize TBC
and/or ABC and associated algorithms to achieve timely and reliable settlement of trading activities.
[0031]
To better understand some aspects of exemplary embodiments of the present invention presented above, and to better compare embodiments this invention to other conventional plans, a simple example is provided below.
As noted above, TBC stands for Trading Blockchain and is similar to a trading center. Transactions for all investors are completed on the TBC.
[0033]
ABC stands for Asset Blockchain and is similar to a bank's investment accounts. The ABC saves asset position information of all investors.
[0034]
"Position" is a commonly used term in the financial industry, often used in financial, securities, stocks, futures trading. Position refers to the number of funds owned or borrowed by investors.
Either or both of the parties, A and B, can be banks or investors or other organizations or entities.
As noted above, in one embodiment of the present invention, a DVP settlement method based on blockchain technology involves a Registration Center ABC and a Central Bank ABC and allows two parties A, B to trade securities. Both parties need to check the asset position from their respective asset blockchain ABC to ensure that it is satisfactory, and then proceed to trade on the TBC, and broadcast to ABC at the same time. At completion of the settlement, Registration Center ABC and Central Bank ABC will be notified.
[0037]
FIG. 1 is a schematic diagram illustrating a blockchain based method of DVP
settlement, in accordance with one embodiment of the present invention. The status of account 102 for the first party (i.e., for investor A or party A) shows 1000 units of bond-1 and money in LEGAL_28799603 1 - 5 -the amount of 20.000 yuan. The status of account 104 for the second party (i.e., for investor B or party B) shows cash in the amount of 100,000. FIG. 1 further depicts a TBC
Exchange 104, a Registration Center 106 and a Central Bank 108.
100381 The status of accounts prior to trading, as illustrated in FIG. 1, is summarized as follows:
[0039] Investor A: Bond-1: 1000; Funds: 20,000 yuan.
[0040] Investor B: Funds: 100,000 yuan [0041] Investors A, B need to trade:
[0042] Investor A needs to sell bonds: Number of bond-1: 600, price: 100 yuan/piece [0043] Investor B needs to buy bonds: Number of bond-1: 600, price: 100 yuan/piece [0044] Investors A and B check the asset positions of the asset blockchain ABC to ensure that a sufficient amount of money or bonds exist in the respective accounts before executing the transaction on the trading blockchain TBC. At the same time, the transaction information is broadcast to the asset blockchain ABC, to complete the settlement. When the settlement is completed, the Registration Center ABC is notified ¨ i.e., receives notification that the number of bond-1 A sells to B is 600 at the price: 100/piece. The Central Bank ABC also receives notification that B needs to pay 60,000 to A, for the purchase of bonds.
[0045] The status of accounts after the trading settlement is completed is as follows:
[0046] Investor A: Bond-1: 400; Funds: 80,000 yuan [0047] Investor B: Bond-1: 600; Funds: 40,000 yuan [0048] A blockchain-based DVP settlement method as described below. Before the transaction, trading blockchain TBC needs to perform the following steps:
LEGAL_28799603 1 - 6 -[0049] Step 1.1 on ABC, Freeze the accounts A and B which involved in the transaction.
ABC will vote and build blocks to ensure the freezing of the assets of A and B
on ABC.
[0050] Step 1.2 Copy the frozen assets of the transaction parties A and B
to TBC by using the blockchain encryption method.
[0051] Step 1.3 TBC will vote on the asset data of A and B sent by ABC to all the nodes of TBC, and build blocks to record that the asset comes to TBC.
[0052] Further, trading blockchain TBC performs the following steps during the transaction:
[0053] Step 2.1 Both parties A and B conduct the transaction on the TBC;
[0054] Step 2.2 The TBC processes transaction voting and builds blocks for the transaction between A and B, guarantees the transaction is completed and recorded on the TBC.
[0055] After the transaction is completed, the following steps are performed:
[0056] Step 3.1 The TBC uses blockchain encryption to back up the updated asset data to ABC, for both account A and account B;
[0057] Step 3.2 The ABC votes and builds blocks for the updated asset data of A and B
copied from TBC, to ensure that the updated asset data of A and B are recorded on ABC;
[0058] Step 3.3 Un-freeze the accounts A and B on ABC.
[0059] Further, after the transaction is completed, the method further includes the following steps:
[0060] Step 3.4 on TBC, the Transaction data of A and B is marked as "Expired", indicating that the data is no longer available for trading. The TBC builds a block to ensure that "outdated"
assets are recorded on TBC and can no longer be traded.
LEGAL_28799603 1 - 7 -[0061] Step 3.5 periodically review the TBC of "expired blocks", blocks that have expired for a long time do not need to be saved online and can be stored elsewhere according to the rules to make room for other online transactions to be processed at high speed.
[0062] Trading Blockchain TBC Operations [0063] The TBC is only the channel or place or platform, used for trading and settlement in this embodiment. However it does not save the account information of both parties. The TBC
uses the following method to process trades.
[0064] If both parties A and B are banks, i.e., Bank A and Bank B, then we may assume without loss of generality that only two banks A and B are participating in TBC.
(00651 1) Bank A will freeze the assets sent to the TBC, and uses blockchain encryption to copy the asset data of the account involved in the trade from ABC to TBC. Bank A will send the data from all ABC nodes to all TBC nodes and then voting on the block will occur. The TBC
builds the block and if the vote passes, ensures that the assets involved are recorded on TBC.
[0066] 2) In the meantime, Bank B also does the same. The TBC votes and builds the block for the data that B sends to all nodes of TBC to ensure that the assets involved are recorded on TBC.
[0067] 3) Bank A and Bank B guarantee that the data uploaded is accurate.
If any subsequent agencies such as a central bank or exchanges join, then the number of nodes increases, which will further increase the security of the underlying data.
Bank A and Bank B
trade on the TBC, and directly settle. The transaction results are stored on the TBC. The TBC
nodes vote to build blocks, and the settlement is recorded;
[0068] 4) After the transaction is completed on TBC, TBC uses the method of blockchain encryption to copy the transaction data to the ABC ledger of Bank A, and all the nodes on TBC
send the data to all the nodes on the ABC of Bank A, and then ABC votes to build the block.
This will ensure that the copied data is correct. Similarly, TBC copies the transaction data to the ABC ledger of Bank B.
100691 5) After each ABC ledger of A and B has been correctly updated. The data on TBC
will be marked as "Expired", indicating that the data is no longer available for trading, TBC vote to build blocks, to ensure that the relevant data expired. Therefore, the TBC
data has a timed lifespan, so that "TBC" is also called a "timed blockchain". Records stored on TBC are permanent and, by virtue of its implementation as a blockchain, cannot be changed, but the data is tradable only for a period of time as the transactions can be complex and require multiple transactions.
[0070] 6) Data expired on TBC is still valid verification data. The data stored on TBC is also encrypted, so that only the participating banks or units can see the data.
[0071] Such a design requires membership network permissions to restrict access to the blockchain database. This customized access means that after the transaction, the bank can control the access rights to the blockchain, while the data of clients can only be seen by the relevant parties and regulators.
100721 TBC Design Advantages [0073] 1) Optimization: if a TBC block has expired for a long time, there is no need to save it online. The TBC only needs to save the most active blocks. For example, during a periodic (e.g., monthly) clean up, inactive TBC blocks that expired for more than one month can be stored elsewhere to make room for other online transactions to be processed at higher speed.
[0074] In addition, each type of transaction has its own TBC ¨ for example, one TBC for short-term activities such as various types of retail, and another for long-term activities such as smart contracts, to optimize data storage and performance. In addition, older blocks can be processed in the background, indexed, and reorganized and saved to back-end databases for faster data analysis or querying. The TBC needs to cross verify that its data is consistent with its associated ABC data, and indexing will speed up this process.
LEGAL 28799603.1 - 9 -1011352-256556-KB'll [0075]
2) Regulation Enforcement: regulators participate in a TBC as a node and they can inspect the data and, upon request, they will have the right to vote. For example, for high value transactions, regulators have the right to stop trading if there is a suspicion of a transaction.
Regulatory examination can be at any time during the transaction, such as before the transaction, during the transaction, or after the transaction.
[0076]
3) Confidentiality: This design will ensure that only authorized participants see the data that needs to be seen when needed. This design is consistent with Windhover's privacy principles whereby individuals can maintain their privacy while regulators can legitimately review and enforce compliance.
[0077]
4) Message: In addition to normal blockchain operations, prior to a transaction the TBC needs to copy data from the ABC, and replicate data back to ABC after the transaction.
These messages can be stored in these blockchains, and if needed, this blockchain message data can be used for analysis and recovery.
[0078]
5) Scalability and Locking: Potentially, any financial institution (ABC) can initiate a TBC and share their transactions so that multiple exchanges can be formed. In this case, the speed of the transaction will improve, dividing the transactional workload between multiple exchanges associated with multiple trading venues.
[0079]
6) Locking: In the case of multiple trading places, a locking mechanism is needed to ensure the integrity of the transaction. For example, if Bank A participates in two trading places, TBC1 and TBC2, Bank A participates in both types of asset transactions at both locations, resulting in double spending. This problem can be solved by implementing a lock on the specific account on ABC of Bank A, and the amount of the assets to be traded will be locked. The lock will be released when the result of the relevant TBC is returned to Bank A's ABC.
[0080]
Therefore, the ABC has at least two components: a general ledger and a sub-ledger (or risky asset account). An account can have one general ledger, and multiple sub-ledgers. Each sub-ledger can only be used for transactions on one TBC, and each sub-ledger has a lock. The LEGAL_28799603 1 - 10 -1011152-256556-K11/T r lock can be encrypted so that only the relevant TBC can release the lock. An account can involve multiple transactions in multiple trading venues.
[0081] Asset blockchain (ABC) operations [0082] ABC stores financial institution account information or household account information. For example, multiple branch banks and third-party agents can form an ABC. On ABC, account information is shared. In this way, bank staff will have difficulty tampering with account information. ABC can have multiple designs, for example account information can be stored in a hashed 0(1) search, or in a Merkle Patricia Tree for easy access to the latest data.
[0083] In addition to copy, lock and unlock operations, ABC also provides scalability.
Financial institutions can optimize their support through powerful machine differentiation by putting the most active accounts on a particular blockchain.
100841 A bank can create a high-speed ABC for new accounts, with the original ABC
referencing the old account data, in order to maintain the integrity of account history. In addition, to preserve high-speed blockchain processing, when the blockchain processing size exceeds a predetermined limit, it will be split into multiple sub-ABCs that are hosted on different machines to maintain a balanced workload.
[0085] At the completion of the blockchain transaction, that is, the completion of settlement and clearing, it only needs to notify the relevant authorities (e.g., registry and bank) of the result and updates. In order to interface with the existing system, the data also need to be saved to legacy databases.
[0086] The above described embodiment is only an exemplary of implementation and in no way limiting. A person of skill in the art will readily appreciate that improvements upon the embodiment described are possible.
[0087] Having thus described, by way of example only, embodiments of the present invention, it is to be understood that the invention as defined by the appended claims is not to be LEGAL_28799603 1 - 11 -limited by particular details set forth in the above description of exemplary embodiments as many variations and permutations are possible without departing from the scope of the claims.
LEGAL_28799603 1 - 12 -
Claims (8)
1. A method of delivery-versus-payment (DVP) settlement of a securities transaction between two parties A and B, based on a blockchain system, the blockchain system comprising an asset blockchain (ABC) and a trading blockchain (TBC), the method comprising:
a) checking whether the balance of asset of each of the two parties is sufficient on their respective asset blockchain, to carry out the transaction;
b) executing the trade on the trading blockchain; and c) simultaneously broadcasting information on the trade, to the asset blockchain, thereby completing the DVP settlement.
a) checking whether the balance of asset of each of the two parties is sufficient on their respective asset blockchain, to carry out the transaction;
b) executing the trade on the trading blockchain; and c) simultaneously broadcasting information on the trade, to the asset blockchain, thereby completing the DVP settlement.
2. The method of claim 1, further comprising, before said executing the trade on the transaction blockchain:
a) freezing asset accounts of A and B on the ABC to be transferred to the TBC, nodes of the ABC voting and building blocks to ensure the freezing;
b) copying assets on the frozen accounts involved in the trade from the ABC to the TBC
using blockchain encryption; and c) on the TBC, voting on the data that ABC sends to all nodes of the TBC for A
and B, thereby ensuring that the assets are received in the TBC.
a) freezing asset accounts of A and B on the ABC to be transferred to the TBC, nodes of the ABC voting and building blocks to ensure the freezing;
b) copying assets on the frozen accounts involved in the trade from the ABC to the TBC
using blockchain encryption; and c) on the TBC, voting on the data that ABC sends to all nodes of the TBC for A
and B, thereby ensuring that the assets are received in the TBC.
3. The method of claim 2, wherein said, executing the trade. comprises:
a) A and B conducting transactions on the TBC;
b) the TBC conducting transaction voting and building of blocks for the transaction between A and B, and guaranteeing that the transaction is completed and recorded on the TBC.
a) A and B conducting transactions on the TBC;
b) the TBC conducting transaction voting and building of blocks for the transaction between A and B, and guaranteeing that the transaction is completed and recorded on the TBC.
4. The method of claim 3, further comprising:
after completion of said trade:
a) using encryption to back up transaction data on the TBC onto ledgers of A
and B on the ABC;
b) copying the transaction from the TBC to the ABC, voting and building a block to ensure that the transaction data is recorded on ABC; and c) unfreezing the assets accounts of A and B on the ABC.
after completion of said trade:
a) using encryption to back up transaction data on the TBC onto ledgers of A
and B on the ABC;
b) copying the transaction from the TBC to the ABC, voting and building a block to ensure that the transaction data is recorded on ABC; and c) unfreezing the assets accounts of A and B on the ABC.
5. The method of claim 4, wherein after the transaction is completed, the method further comprises the:
a) marking the transaction data on TBC as "Expired" to indicate that the data is no longer available for trading and building expired blocks on the TBC to record outdated assets that can no longer be traded; and b) periodically cleaning up the TBC by storing the expired blocks elsewhere to make room for other online transactions, so that other transactions are processed faster.
a) marking the transaction data on TBC as "Expired" to indicate that the data is no longer available for trading and building expired blocks on the TBC to record outdated assets that can no longer be traded; and b) periodically cleaning up the TBC by storing the expired blocks elsewhere to make room for other online transactions, so that other transactions are processed faster.
6.
The method of claims 1 to 5, wherein the blockchain system further comprises a Registration Center ABC, and the Registration Center ABC acts as a supervisory authority;
and wherein when the settlement and clearing is completed, the Registration Center ABC is notified.
The method of claims 1 to 5, wherein the blockchain system further comprises a Registration Center ABC, and the Registration Center ABC acts as a supervisory authority;
and wherein when the settlement and clearing is completed, the Registration Center ABC is notified.
7. The method of claim 6, wherein the blockchain system further comprises a Central Bank ABC that acts as a regulatory agency; and wherein when the settlement and clearing is completed, the Registration Center ABC and the Central Bank ABC are notified.
8. The method of any one of the claims 1 to 5, wherein an account on the ABC
comprises a general ledger and one or inore sub-ledgers, and each of the sub-ledgers can only be used for transactions on one TBC, each sub-ledger has an associated lock capable of being encrypted, so that only an associated TBC can unlock the lock and access the associated sub-ledger, and wherein the account can be involved in multiple transactions on multiple TBCs.
comprises a general ledger and one or inore sub-ledgers, and each of the sub-ledgers can only be used for transactions on one TBC, each sub-ledger has an associated lock capable of being encrypted, so that only an associated TBC can unlock the lock and access the associated sub-ledger, and wherein the account can be involved in multiple transactions on multiple TBCs.
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|---|---|---|---|
| CA2998073A CA2998073A1 (en) | 2018-03-14 | 2018-03-14 | A dvp settlement method based on blockchain technology |
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| Application Number | Priority Date | Filing Date | Title |
|---|---|---|---|
| CA2998073A CA2998073A1 (en) | 2018-03-14 | 2018-03-14 | A dvp settlement method based on blockchain technology |
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Cited By (1)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| CN112488684A (en) * | 2020-12-14 | 2021-03-12 | 中钞信用卡产业发展有限公司杭州区块链技术研究院 | Block chain asset security deal method and system based on legal digital currency |
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2018
- 2018-03-14 CA CA2998073A patent/CA2998073A1/en not_active Abandoned
Cited By (1)
| Publication number | Priority date | Publication date | Assignee | Title |
|---|---|---|---|---|
| CN112488684A (en) * | 2020-12-14 | 2021-03-12 | 中钞信用卡产业发展有限公司杭州区块链技术研究院 | Block chain asset security deal method and system based on legal digital currency |
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