Method and apparatus for pricing a commodity

• US 20050114252A1
• Filed: 02/02/2001
• Published: 05/26/2005
• Est. Priority Date: 02/02/2001
• Status: Active Grant

• Current Assignee: Constellation Software Incorporated
• Original Assignee: E-Markets Incorporated (Constellation Software Incorporated)
• Inventors: Beurskens, Frank
• Granted Patent: US 7,200,572 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 30/0206 Price or cost determination based on market factors
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• 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

A method of pricing a commodity involving selecting a predetermined market factor, determining at a first time period a first market condition, and providing a formula capable of comparing a predetermined market factor to a market condition to determine the existence of a favorable pricing condition. The method prices a first portion of the commodity when the application of the formula to the predetermined market factor and the first market condition indicates the existence of a first favorable pricing condition. The method prices a second portion of the commodity when the application of the formula to the predetermined market factor and a second market condition indicates the existence of a second favorable pricing condition.

Claims

1. A method of pricing a commodity comprising:

(a) selecting a predetermined market factor selected from the group consisting of a predetermined time factor, a predetermined price factor, a predetermined trend factor, a predetermined market status factor, and a predetermined market control factor;

(b) determining at a first time period a first market condition selected from the group consisting of a first time condition, a first price condition, a first trend condition, a first market status condition, and a first market control condition;

(c) providing a formula capable of comparing said predetermined market factor to said first market condition to determine the existence of a favorable pricing condition for a first portion of the commodity;

(d) applying said formula to said predetermined market factor and said first market condition to determine the existence of a first favorable pricing condition;

(e) pricing a first portion of the commodity when said application of said formula to said predetermined market factor and said first market condition indicates the existence of said first favorable pricing condition;

(f) determining at a second time period a second market condition selected from the group consisting of a second time condition, a second price condition, a second trend condition, a second market status condition and a second market control condition;

(g) applying said formula to said predetermined market factor and said second market condition to determine the existence of a second favorable pricing condition; and

(h) pricing a second portion of the commodity when said application of said formula to said predetermined market factor and said second market condition indicates the existence of said second favorable pricing condition.

2. The method of pricing a commodity of Claim 1, further comprising receiving information from a supplier of the commodity information relating to a specific type and amount of the commodity which said supplier is willing to supply.

3. The method of pricing a commodity of claim 2, further comprising generating a contract for pricing of said specific type and amount of the commodity by said supplier.

4. The method of pricing a commodity of claim 2, further comprising generating a contract for the pricing of said specific type and amount of the commodity according to the formula.

5. The method of pricing a commodity of claim 2, wherein said information is received from said supplier across a global computer network.

6. The method of pricing a commodity of claim 2, further comprising automatically pricing said first portion of the commodity across a computer network when said application of said formula to said predetermined market factor and said first market condition indicates the existence of said first favorable pricing condition.

7. The method of pricing a commodity of claim 6, wherein said computer network is a global computer network.

8. The method of pricing a commodity of claim 1, further comprising:

(a) providing a computer with a database;

(b) storing said predetermined market factor and said formula on said database;

(c) determining at least ten time periods and related market conditions selected from the group consisting of a related time condition, a related price condition, a related trend condition, a related market status condition and a related market control condition;

(d) applying said computer to said predetermined market factor and said related market conditions to determine the existence of favorable pricing conditions; and

(e) pricing quantities of the commodity when said computer indicates the existence of said favorable pricing conditions.

9. The method of pricing a commodity of claim 1, wherein said predetermined market factor is a predetermined time factor, wherein said first market condition is a first time condition, wherein said second market condition is a second time condition, further comprising pricing a first quantity of the commodity when said first market condition is met, and pricing a second quantity of the commodity when said second market condition is met.

10. The method of pricing a commodity of claim 9, wherein said first time condition is a trading (day, and wherein said second time condition is the next consecutive trading day, and wherein said first quantity of the commodity is equal to said second quantity of the commodity.

11. The method of pricing a commodity of claim 9, wherein said first time condition is a trading day, and wherein said second time condition is the next consecutive trading day, and wherein said first quantity of the commodity is different than said second quantity of the commodity.

12. The method of pricing a commodity of claim 1, wherein said predetermined market factor is a predetermined trend factor comprising historical prices correlated with predetermined periods of time.

13. The method of pricing a commodity of claim 12, further comprising pricing a larger portion of the commodity during a first time period associated with historically higher prices, and a smaller portion of the commodity during a second time period associated with historically lower prices.

14. The method of pricing a commodity of claim 1, wherein said predetermined market factor is a predetermined trend factor comprising an algorithm capable of identifying market price trends.

15. The method of pricing a commodity of claim 14, wherein said algorithm is capable of identifying variances from said market price trends.

16. The method of pricing a commodity of claim 15, wherein said first favorable pricing condition is a variance from said market price trends greater than a predetermined amount.

17. The method of pricing a commodity of claim 15, wherein said first favorable pricing condition is a failure of an upward market price trend to continue to grow by a predetermined factor.

18. The method of pricing a commodity of claim 1, wherein said predetermined market factor is a predetermined market status factor related to the volatility of a market.

19. The method of pricing a commodity of claim 18, wherein said first favorable pricing condition is a condition wherein said volatility of said market exceeds a predetermined factor.

20. The method or pricing a commodity of claim 1, wherein said predetermined market factor is a predetermined market control factor related to a global climate in a predetermined geographic region at a predetermined time.

21. A method pricing a commodity comprising:

(a) providing a computer having a database;

(b) receiving from a supplier of the commodity information relating to a specific type and quantity of the commodity which said supplier is willing to supply;

(c) receiving from said supplier a selection of a predetermined market factor selected from the group consisting of a predetermined time factor, a predetermined price factor, a predetermined trend factor, a predetermined market status factor and a predetermined market control factor;

(d) determining at a plurality of time periods, related market conditions selected from the group consisting of a related time condition, a related price condition, a related market status condition and a related market control condition;

(e) providing a formula capable of comparing said predetermined market factor to said related market conditions to determine the existence of favorable pricing conditions for portions of the commodity;

(f) applying said formula to said predetermined market factor and said related market conditions to determine the existence of said favorable pricing conditions;

(g) automatically pricing said portions of the commodity when said application of said formula to said predetermined market factor and said related market conditions indicates the existence of said favorable pricing conditions.

23. The method of pricing a commodity of claim 23, wherein said information is received from said supplier over a global computer network.

22. The method of pricing a commodity of claim 23, wherein said information is received from said supplier over a computer network.

24. The method of pricing a commodity of claim 23, further comprising generating a contract for the pricing of said type and quantity of the commodity according to said predetermined market factor and said formula.

25. The method of pricing a commodity of claim 26, further comprising executing said contract with digital signatures.

26. The method of pricing a commodity of claim 23, wherein said time periods are at least five consecutive trading days of a commodity market.

27. The method of pricing a commodity of claim 23, further comprising pricing said portions of the commodity on at least five different days.

28. A system for contracting for the pricing of a commodity over a network comprising:

(a) a server;

(b) a remote terminal;

(c) a communication link between said server and said remote terminal;

(d) means coupled to said server for receiving from a supplier, across said communication link, information relating to a specific type and quantity of the commodity;

(e) a predetermined market factor selected from the group consisting of a predetermined time factor, a predetermined price factor, a predetermined trend factor, a predetermined market status factor and a predetermined market control factor;

(f) means for determining at a plurality of time related market conditions selected from the group consisting of a related time condition, a related price condition, a related market status condition and a predetermined market control condition;

(g) a formula capable of comparing said predetermined market factor to said related market conditions to determiner the existence of favorable pricing conditions for portions of the commodity;

(h) means for applying said formula to said predetermined market factor and said related market conditions to determine the existence of said favorable pricing conditions; and

(i) means for pricing said portions of the commodity when said application of said formula to said predetermined market factor and said related market conditions indicates the existence of said favorable pricing conditions.