USING DIGITAL SIGNATURES TO VALIDATE TRADING AND STREAMLINE SETTLEMENT OF FINANCIAL TRANSACTION WORKFLOW

One embodiment of the present invention provides a system that uses digital signatures in a novel configuration to perform validations to facilitate a trade. This system operates by receiving a quote related to the trade at a first computer system, wherein the quote includes permission information that facilitates determining permissions that have been granted to a quote maker. Upon receiving the quote, the system validates that the quote maker digitally signed the quote by using a public key of the quote maker to verify that the quote was signed by a corresponding private key belonging to the quote maker. The system also validates that the quote maker has permission to perform the trade by using a public key of a first security officer to verify that the permission information was signed by a corresponding private key belonging to the first security officer, thereby authorizing the quote maker to perform the trade. The system accepts the quote by signing the quote with a private key belonging to a quote receiver, and communicating a trade record, including the signed quote, to the quote maker. In one embodiment of the present invention, the system additionally validates the identity of the quote maker by using a public key of a certification authority to verify that a certificate containing the public key of the quote maker was signed by a corresponding private key belonging to the certification authority. Note that signing by the certification authority indicates that the certification authority has verified the identity of the quote maker.