Counterparty credit risk system
First Claim
1. A method for managing, on a pooled basis, the credit risk coverage of contract performance by contracting parties, comprising:
- for each contracting party, establishing an aggregate maximum credit risk coverage for all contracts by that contracting party;
defining pools into which contracts from various contracting parties may be aggregated and defining a credit risk coverage limit for each of the pools;
when a contract is entered into, calculating the credit risk coverage associated with that contract for each contracting party and determining whether that credit risk coverage plus the risk coverage associated with all other existing contracts of that contracting party are within the maximum credit risk coverage for that contracting party; and
using the determination, deciding whether to accept the contract in the pool.
1 Assignment
0 Petitions
Accused Products
Abstract
A method for managing, on a pooled basis, the credit risk coverage of contract performance by contracting parties. An aggregate maximum credit risk coverage for all contracts by each contracting party is established. Pools are defined into which contracts from various contracting parties may be aggregated. A credit risk coverage limit is defined for each of the pools. When a contract is entered into the credit risk coverage associated with that contract for each contracting party is calculated and it is determined whether that credit risk coverage plus the risk coverage associated with all other existing contracts of that contracting party are within the maximum credit risk coverage for that contracting party. That determination is then used to decide whether to accept the contract in the pool. The invention is particularly suited to the use with products and services which are illiquid or difficult to inventory, such as electrical power, forestry products and chemical products. The invention is also directed to a delivery logistics system and receivables funding system.
A method for managing, on a pooled basis, the credit risk coverage of contract performance by contracting parties. An aggregate maximum credit risk coverage for all contracts by each contracting party is established. Pools are defined into which contracts from various contracting parties may be aggregated. A credit risk coverage limit is defined for each of the pools. When a contract is entered into the credit risk coverage associated with that contract for each contracting party is calculated and it is determined whether that credit risk coverage plus the risk coverage associated with all other existing contracts of that contracting party are within the maximum credit risk coverage for that contracting party. That determination is then used to decide whether to accept the contract in the pool. The invention is particularly suited to the use with products and services which are illiquid or difficult to inventory, such as electrical power, forestry products and chemical products. The invention is also directed to a delivery logistics system and receivables funding system.
-
Citations
36 Claims
-
1. A method for managing, on a pooled basis, the credit risk coverage of contract performance by contracting parties, comprising:
-
for each contracting party, establishing an aggregate maximum credit risk coverage for all contracts by that contracting party;
defining pools into which contracts from various contracting parties may be aggregated and defining a credit risk coverage limit for each of the pools;
when a contract is entered into, calculating the credit risk coverage associated with that contract for each contracting party and determining whether that credit risk coverage plus the risk coverage associated with all other existing contracts of that contracting party are within the maximum credit risk coverage for that contracting party; and
using the determination, deciding whether to accept the contract in the pool. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28)
-
-
29. A delivery optimization system for trading a plurality of contracts for the purchase and sale of a product or service entered into between purchasers and sellers having a contract price, delivery period and delivery node traded on an electronic marketplace, virtual marketplace or established commodity exchange, comprising:
-
recording the actual source and delivery locations of the seller and purchaser holders of the contracts, grouping contracts by product, delivery node and delivery date; and
matching buyers with sellers of contracts, prior to the time of delivery to reduce overall shipping cost. - View Dependent Claims (30, 31)
-
-
32. A trading system for products and services, comprising:
-
a contract for a specified product or service including quantity, quality specification, delivery location and delivery period;
a market participant qualification mechanism which establishes a credit risk coverage limit for each approved market participant;
a counter-party risk assurance system which provides each market participant with a specified degree of protection against counter-party risks in connection with purchase and sale contracts entered into by each market participant;
at least one trading mechanism for creating a market in contracts for the purchase and sale of one or more products and services by market participants; and
an administrative system for tracking the trading mechanism, counter-party risk assurance system, market participants and paired contracts for the purchase and sale of a product or service. - View Dependent Claims (33, 34, 35, 36)
-
Specification