Discounted security

• US 20020138382A1
• Filed: 01/25/2001
• Published: 09/26/2002
• Est. Priority Date: 01/25/2001
• Status: Abandoned Application

• Current Assignee: Morgan Guaranty Trust Co. of New York (Hong Kong) (JP Morgan Chase & Co)
• Original Assignee: Morgan Guaranty Trust Co. of New York (Hong Kong) (JP Morgan Chase & Co)
• Inventors: Seaman, David A.
• Application Number:
  US09/770,020
• Publication Number:
  US 20020138382A1
• Time in Patent Office: Days
• US Class Current: 705/36
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

An exchangeable security, tradable on a securities exchange is issued at a share price that is a discount from the share price of an underlying security or basket of underlying securities. At or prior to maturity of the exchangeable security, a holder of the exchangeable security may exchange a share of the exchangeable security for a share of the underlying security or basket of underlying securities. The exchangeable security may also include a linked payment that is redeemable for the full amount of the payment on maturity of the exchangeable security. Alternatively, the exchangeable security may be issued at the share price of the underlying security with the linked payment. The invention provides methods for issue, trade and redemption as well as systems for issue, trade and redemption of the security.

Claims

1. An exchangeable security that is tradable on a securities exchange, comprising:

an issue value of the exchangeable security that is a discounted price of an underlying security at a first time; and

an exchange right beginning at a second time, where under the exchange right, a holder of the exchangeable security may exchange a share of the exchangeable security for a share of the underlying security, the second time after the first time.

2. A security according to claim 1, further comprising a payment amount linked to the exchangeable security, the payment amount calculated before the second time.

3. A security according to claim 2, wherein the payment amount is equal to the amount of the discount of the underlying security.

4. A security according to claim 2, wherein the payment amount is more than or less than the amount of the discount of the underlying security.

5. A security according to claim 1, wherein the price of the underlying security is a market price of a share of the underlying security.

6. A security according to claim 1, wherein the price of the underlying security is a closing price of a share of the underlying security.

7. A security according to claim 1, wherein the underlying security is a basket of securities and the right to exchange a share of the exchangeable security for a share of the underlying security at the second time further comprises the right to exchange a share of the exchangeable security for the basket of securities.

8. A security according to claim 1, wherein the discounted price is a percentage of a share price of the underlying security.

9. A security according to claim 1, wherein the discounted price is a fixed amount less than a share price of the underlying security.

10. A security according to claim 1, wherein the second time is a defined period after the first time, the defined period selected from the group including one month, one quarter, semi-annual, single year and multiple years.

11. A security according to claim 1, wherein the second time is two years after the first time.

12. A security according to claim 1, wherein the right to exchange the exchangeable security for the underlying security further comprises the right to:

deliver a share of the exchangeable security; and

receive a share of the underlying security.

13. A security according to claim 1, wherein the right to exchange the exchangeable security for the underlying security further comprises the right to:

deliver a share of the exchangeable security; and

receive an amount representing the value of a share of the underlying security at the second time.

16. A security according to claim 15, wherein the price of the underlying security is a market price of a share of the underlying security.

17. A security according to claim 15, wherein the price of the underlying security is a closing price of a share of the underlying security.

18. A security according to claim 15, wherein the underlying security is a basket of securities and the right to exchange a share of the exchangeable security for a share of the underlying security at the second time further comprises the right to exchange a share of the exchangeable security for the basket of securities.

19. A security according to claim 15, wherein the second time is a defined period after the first time, the defined period selected from the group including one month, one quarter, semi-annual, single year and multiple years.

20. A security according to claim 15, wherein the second time is two years after the first time.

21. A security according to claim 15, wherein the right to exchange the exchangeable security for the underlying security further comprises the right to:

deliver a share of the exchangeable security; and

receive a share of the underlying security.

22. A security according to claim 15, wherein the right to exchange the exchangeable security for the underlying security further comprises the right to:

deliver a share of the exchangeable security; and

receive an amount representing the value of a share of the underlying security at the second time.

14. An exchangeable security that is tradable on a securities exchange, comprising:

an issue value of the exchangeable security that is a discounted price of an underlying security or basket of underlying securities at a first time; and

an exchange right beginning at a maturity date of the exchangeable security, where under the exchange right, a holder of the exchangeable security may exchange a share of the exchangeable security for a share of the underlying security, the maturity date after the first time.

15. An exchangeable security that is tradable on a securities exchange, comprising:

an issue value of the exchangeable security that is a price of an underlying security at a first time;

a payment amount linked to the exchangeable security; and

an exchange right beginning at a second time, where under the exchange right, a holder of the exchangeable security may exchange a share of the exchangeable security for a share of the underlying security and receive the linked payment amount, the second time after the first time.

23. An exchangeable security that is tradable on a securities exchange, comprising:

an issue value of the exchangeable security that is a price of an underlying security or basket of underlying securities at a first time;

a payment amount linked to the exchangeable security; and

an exchange right beginning at a maturity date of the exchangeable security, where under the exchange right, a holder of the exchangeable security may exchange a share of the exchangeable security for a share of the underlying security and receive the linked payment amount, the maturity date after the first time.