Methods and apparatus relating to the formulation and trading of risk management contracts
2 Assignments
0 Petitions
Accused Products
Abstract
Methods and apparatus which deal with the management of risk relating to specified, yet unknown, future events are disclosed. ‘Sponsor’ stakeholders specify a particular product relating to an event or phenomenon for which there is a range of possible future outcomes. ‘Ordering’ stakeholders then offer contracts relating to the predetermined phenomenon and corresponding range of outcomes. The offered contracts specify an entitlement or (pay-off) at the future time of maturity for each outcome, and a consideration (or premium) payable, in exchange, to a ‘counter-party’ stakeholder. Independently of the offered contracts, the ‘counter-party’ stakeholders input data as to their view of the likelihood of occurrence of each outcome in the predetermined range into the future, or specifically at the predetermined date of maturity. Each offered contract is priced by the processing units by calculating counter-party premiums from the registered data, and a match attempted by a comparison of the offered premium with the calculated premiums. Matched contracts can be further traded until maturity, and at-maturity processing handles the exchange of entitlement as between the matched parties to the contract.
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Citations
45 Claims
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1-25. -25. (canceled)
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26. A method of exchanging an obligation between parties, wherein an exchange obligation is administered by a supervisory institution, and wherein an account is maintained with an exchange institution, the method comprising:
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(a) maintaining a shadow record for a first party to be held independently by the supervisory institution from the exchange institution;
(b) for every transaction resulting in an exchange obligation, the supervisory institution electronically adjusting said shadow record, allowing only those transactions that do not result in a value of said shadow record being less than zero; and
(c) exchanging at least one transaction between the supervisory institution and the exchange institution at the end of a period of time in accordance with said adjustments made in step (b). - View Dependent Claims (27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39)
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40. A method of exchanging a payment obligation between a buyer and a seller, wherein the exchange of the payment obligation is administered by a supervisory institution, and wherein the buyer and seller maintain an account with a bank, the method comprising:
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(a) maintaining a shadow record for the buyer or the seller to be held independently by the supervisory institution from the bank;
(b) for every transaction resulting in a payment obligation, the supervisory institution electronically adjusting said shadow record, allowing only those payment transactions that do not result in a value of said shadow record being less than zero; and
(c) exchanging at least one account transaction between the supervisory institution and the bank at the end of a period of time in accordance with said adjustments made in step (b).
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41. A method of exchanging an obligation between parties, wherein an exchange obligation is administered by a supervisory institution, the method performed by the supervisory institution, comprising:
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maintaining a first account for a first party, independent from a second account maintained by a first exchange institution;
maintaining a third account for a second party, independent from a fourth account maintained by a second exchange institution;
electronically adjusting said first account and said third account in order to effect the exchange obligation between said first party and said second party after ensuring that said first party and said second party have adequate value in said first account and said third account, respectively; and
providing an instruction to said first exchange institution and said second exchange institution to adjust said second account and said fourth account in accordance with the adjustment of said first account and said third account. - View Dependent Claims (42, 43, 44, 45)
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Specification