DERIVATIVE PRODUCTS
First Claim
1. A computer-implemented method of processing and clearing an agreement for a derivative product, comprising:
- a) receiving an initial performance bond of a protection buyer of the derivative product, wherein the derivative product has a digital outcome and comprises a predetermined number of constituents;
b) updating a price of the derivative product through a mark-to-market process using a computer;
c) for each of the predetermined number of constituents that experience a predetermined triggering event before an expiration date, applying a percentage of a final settlement price of the agreement; and
d) terminating the agreement.
1 Assignment
0 Petitions
Accused Products
Abstract
Methods, systems and apparatuses are described for processing and clearing derivatives products with a digital outcome and a plurality of constituents. A computer system configured to process and clear derivative products can accept initial and adjusted performance bonds from buyers and sellers, and adjust the market price of the derivative product at intervals. The market price may be adjusted on a mark-to-market basis and through analysis of other information, e.g., a change in credit rating of reference entities of the derivative product. As a result of price adjustments, cash flow may be generated between buyers and sellers (e.g., credit and debit to accounts). The derivative product may pay a percentage of a predetermined final settlement amount upon the triggering of a predetermined event in each of the constituents of the derivative product. However, upon expiration of the derivative product, the derivative'"'"'s market price is settled to zero and the agreement is terminated.
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Citations
25 Claims
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1. A computer-implemented method of processing and clearing an agreement for a derivative product, comprising:
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a) receiving an initial performance bond of a protection buyer of the derivative product, wherein the derivative product has a digital outcome and comprises a predetermined number of constituents; b) updating a price of the derivative product through a mark-to-market process using a computer; c) for each of the predetermined number of constituents that experience a predetermined triggering event before an expiration date, applying a percentage of a final settlement price of the agreement; and d) terminating the agreement. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20)
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21. A computer-readable medium containing computer-executable instructions for performing a method comprising:
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a) receiving an initial performance bond of a protection buyer of a derivative product, wherein the derivative product has a digital outcome and comprises a predetermined number of constituents; b) receiving an adjusted performance bond of a protection buyer of the derivative product; c) updating a price of the derivative product at an interval through a mark-to-market process; d) for each of the predetermined number of constituents that experience a predetermined triggering event before an expiration date, applying a percentage of a final settlement price of the derivative product; and e) terminating the derivative product at the earlier of;
the expiration date, or an occurrence of the predetermined triggering event for all constituents in the derivative product. - View Dependent Claims (22)
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23. A method for purchasing an exchange traded derivative product using a computer system, comprising:
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a) submitting an initial performance bond for the derivative product for receipt by a computer system that processes and clears an agreement for the derivative product, wherein the derivative product has a digital outcome and a price, and wherein the computer system updates the price of the derivative product at an interval through a mark-to-market process; and b) if a predetermined triggering event occurs for any of the predetermined number of constituents before an expiration date, then requiring sufficient payment to cover an appropriate percentage of the final settlement price of the derivative product; and c) if no predetermined triggering event occurs before the expiration date, then terminating the agreement at a zero final settlement price. - View Dependent Claims (24, 25)
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Specification