METHOD AND SYSTEM FOR INTERACTIVE INITIAL OFFERING OF MULTI-CLASS FINANCIAL INSTRUMENTS

• US 20080097895A1
• Filed: 12/19/2007
• Published: 04/24/2008
• Est. Priority Date: 02/09/2000
• Status: Abandoned Application

• Current Assignee: Douglas T. Chorna, Srikanth Sankaran
• Original Assignee: Douglas T. Chorna, Srikanth Sankaran
• Inventors: Chorna, Douglas, Sankaran, Srikanth
• Application Number:
  US11/960,397
• Publication Number:
  US 20080097895A1
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• 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 and system for underwriter offering of multi-class instruments including a central processing unit (CPU), a program memory, a structure database and an investor database. The structure database stores a structure representative of a plurality of classes of a multi-class instrument, and the system operates to (i) inform investors of class information related, respectively, to each class of the multiclass instrument, (ii) receive bid information from investors, (iii) modify the structure database in response to the bid information and subsequently inform investors with updated class information; and once it is determined that the underwriter can profitably underwrite the transaction, (iv) notify the underwriter of an amount of collateral to purchase to cover accepted bids.

Claims

1. A multi-class instrument having two or more classes with at least two of the classes being different from each other, the multi-class instrument comprising:

a first class of the two or more classes including a return tied to a specified quantity and collateralized by a first class underlying collateral; and

a second class of the two or more classes for guaranteeing a minimum level of return to the first class and collateralized by a second class underlying collateral;

wherein the first class is different from the second class and the first class underlying collateral is different from the second class underlying collateral.

2. The multi-class instrument of claim 1, wherein the first class underlying collateral includes one or more forms of collateral and the second class includes one or more forms of collateral, none of the one or more forms of collateral of the first class underlying collateral is the same as any of the one or more forms of second class underlying collateral.

3. The multi-class instrument of claim 1, wherein the first class underlying collateral does not include debt, equity, or a subordinate position in the second class underlying collateral.

4. The multi-class instrument of claim 1, wherein the second class underlying collateral is treasury collateral.

5. The multi-class instrument of claim 1, wherein the return of the first class is tied to at least one of a prepayment rate, currency, exchange rate, interest rate spread level, default rate, price level, specified security return rate, commodity return rate, swap return rate, and reference index.

6. The multi-class instrument of claim 1, wherein the value of the first class is tied to at least one of the face value, notional value, and fixed amount of the second class.

7. The multi-class instrument of claim 1, wherein a return of the second class is used to guarantee a minimum level of return to the first class.

8. The multi-class instrument of claim 7, wherein the return of the second class is tied to at least one of interest, principal, and return on assets of the second class.

9. The multi-class instrument of claim 8, wherein the assets of the second class comprise at least one of securities, treasury securities, agency securities, corporate securities, equity securities, swaps, commodities, real estate, instruments traded on organized securities exchanges, and instruments traded on organized commodities exchanges.

10. The multi-class instrument of claim 1 comprising at least one of a security, swap, option, forward, and futures instrument.

11. The multi-class instrument of claim 1, wherein the first and second classes are separately saleable from each other.

12. The multi-class instrument of claim 1, wherein the first class pays at least one of a upfront fee, ongoing fee, share of return, and compensation to the second class.

13. The multi-class instrument of claim 1, wherein the second class pays at least one of a upfront fee, ongoing fee, share of return, and compensation to the first class.

14. The multi-class instrument of claim 1 traded on an electronic trading system.

15. The multi-class instrument of claim 1 wherein the measure used to indicate the value of the first class can be represented as a price, yield, spread, or volatility and can be different than the measure used to indicate value of the second class.

16. The multi-class instrument of claim 1 wherein the first class underlying collateral can be exchanged for the second class underlying collateral.

17. The multi-class instrument of claim 16 wherein the first class underlying collateral is exchanged at the discretion of a holder of the first class.

18. The multi-class instrument of claim 1 wherein the second class underlying collateral can be exchanged for the first class underlying collateral.

19. The multi-class instrument of claim 18 wherein the collateral is exchanged at the discretion of a holder of the second class.

20. A multi-class instrument traded on an electronic trading system, the multi-class instrument having two or more classes with at least two of the classes being different from each other, the multi-class instrument comprising:

a first class of the two or more classes including a return tied to a specified quantity and collateralized by a first class underlying collateral including one or more forms of collateral; and

a second class of the two or more classes for guaranteeing a minimum level of return to the first class and collateralized by a second class underlying collateral including one or more forms of collateral;

wherein none of the one or more forms of collateral of the first class underlying collateral is the same as any of the one or more forms of second class underlying collateral.

21. The multi-class instrument of claim 20, wherein the first class underlying collateral does not include debt, equity, or a subordinate position in the second class underlying collateral.

22. The multi-class instrument of claim 20, wherein the second class underlying collateral is treasury collateral.

23. The multi-class instrument of claim 20, wherein the return of the first class is tied to at least one of a prepayment rate, currency, exchange rate, interest rate spread level, default rate, price level, specified security return rate, commodity return rate, swap return rate, and reference index.

24. The multi-class instrument of claim 20, wherein the value of the first class is tied to at least one of the face value, notional value, and fixed amount of the second class.

25. The multi-class instrument of claim 20, wherein a return of the second class is used to guarantee a minimum level of return to the first class.

26. The multi-class instrument of claim 25, wherein the return of the second class is tied to at least one of interest, principal, and return on assets of the second class.

27. The multi-class instrument of claim 26, wherein the assets of the second class comprise at least one of securities, treasury securities, agency securities, corporate securities, equity securities, swaps, commodities, instruments traded on organized securities exchanges, and instruments traded on organized commodities exchanges.

28. The multi-class instrument of claim 20 wherein the first class underlying collateral can be exchanged for the second class underlying collateral.

29. The multi-class instrument of claim 28 wherein the first class underlying collateral is exchanged at the discretion of a holder of the first class.

30. The multi-class instrument of claim 20 wherein the second class underlying collateral can be exchanged for the first class underlying collateral.

31. The multi-class instrument of claim 30 wherein the second collateral is exchanged at the discretion of a holder of the second class.