Methods and apparatus relating to the formulation and trading of investment contracts

• US 6,622,130 B1
• Filed: 09/21/2000
• Issued: 09/16/2003
• Est. Priority Date: 07/07/1995
• Status: Expired due to Fees

• Current Assignee: Alice Corporation Pty Limited
• Original Assignee: Alice Corporation Pty Limited
• Inventors: Shepherd, Ian Kenneth
• Primary Examiner(s): ROSEN, NICHOLAS D
• Application Number:
  US09/667,423
• Time in Patent Office: 1,090 Days
• Field of Search: 705/35, 705/36, 705/37
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• 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

Methods and apparatus relating to the formulation and trading of investment contracts are described. An ordering party inputs contract data relating to a phenomenon. The phenomenon has a range of future outcomes and a future time of maturity. The contract data includes a set of probabilities of occurrence for each outcome within the range, and a consideration due a counterparty at or after the time of matching. At least one counterparty inputs registering data that includes a set of probabilities of occurrence for each outcome in the range. A data processing means prices and matches a contract for the phenomenon from the contract data and registering data. Pricing the contract includes applying at least one template of entitlement as a function of outcome to each counterparty'"'"'s set of probabilities to give one or more individual counter party prices that are each equal to the ordering party'"'"'s consideration, and applying the ordering party set of probabilities to each template of entitlement to derive an implied entitlement valuation. Matching the contract includes determining which counterparty will provide the best entitlement on maturity by comparing each entitlement with the consideration, and matching the contract with the counterparty having a template of entitlement for the best comparison.

Claims

1. A data processing system to enable the formulation of a multi-party investment contract, the system comprising:

input means by which an ordering party can input contract data relating to at least one phenomenon, each said phenomenon having a range of future outcomes and a future time of maturity, said contract data including a view as to each outcome in said range and a consideration due to a counterparty at or after a time of matching, and further by which at least one counterparty can input registering data including a view as to each outcome in said range; and

data processing means operable to price and match a contract for said phenomenon from said contract data and said registering data, the pricing including;

applying at least one template of entitlement as a function of outcome to each counterparty'"'"'s view to give one or more individual counterparty prices each equal to said consideration; and

applying said ordering party view to each said template of entitlement to derive one or more implied entitlement valuations;

the matching including;

determining which counterparty will provide the best entitlement on maturity by comparing each implied entitlement valuation with said consideration; and

matching the contract with that counterparty having a template of entitlement for the best said comparison.

2. A method for the formulation of a multi-party investment contract, the method comprising the steps of:

inputting ordering party contract data relating to at least one phenomenon, each said phenomenon having a range of future outcomes and a future time of maturity, said contract data including a view as to each outcome in said range and a consideration due to a counterparty at or after the time of matching;

inputting counterparty registering data including a view as to each outcome in said range; and

pricing and matching a contract for said phenomenon from said contract data and said registering data, said step of pricing, for each counterparty, including;

applying at least one template of entitlement as a function of outcome to said counterparty views to give one or more individual counterparty prices;

applying said ordering party view to each template of entitlement to derive at least one implied entitlement valuation; and

said step of matching including;

determining which counterparty will provide the best entitlement on maturity by comparing said at least one implied entitlement valuation with the consideration; and

matching the contract with said counterparty having a template of entitlement for the best said comparison.

3. A data processing system to enable the formulation of a multi-party investment contract, the system comprising:

input means by which an ordering party can input contract data relating to at least one phenomenon, each said phenomenon having a range of future outcomes and a future time of maturity, said contract data including a set of probabilities of occurrence for each outcome in said range, and further by which at least one counterparty can input registering data including a set of probabilities of occurrence for each outcome in said range; and

data processing means operable to price and match a contract for said phenomenon from said contract data and said registering data, the pricing including;

applying at least one template of entitlement as a function of outcome to give one or more individual counterparty prices each equal to said ordering party'"'"'s consideration; and

applying said set of probabilities associated with said ordering party to each said template of entitlement to derive an implied entitlement valuation;

the matching including;

determining which counterparty will provide the best entitlement on maturity from said implied entitlement valuation; and

matching said contract with that counterparty having a template of entitlement for the best said valuation.

4. A method for the formulation of a multi-party investment contract, the method comprising the steps of;

inputting ordering party contract data relating to at least one phenomenon, each said phenomenon having a range of future outcomes and a future time of maturity, said contract data including a set of probabilities of occurrence for each outcome in said range;

inputting counterparty registering data including a set of probabilities of occurrence for each outcome in said range; and

pricing and matching a contract for a said phenomenon from said contract data and said registering data, said step of pricing, for each counterparty, including;

applying at least one template of entitlement as a function of outcome to said set of probabilities associated with said counterparty to give one or more individual counterparty prices; and

applying said set of probabilities associated with said ordering party to each individual counterparty template of entitlement to derive at least one implied entitlement valuation;

said step of matching including;

determining which counterparty will provide the best entitlement on maturity from said at least one implied entitlement valuation relative to a given consideration; and

matching said contract with said counterparty having a template of entitlement for the best said valuation.

5. A data processing system to enable the formulation of a multi-party investment contract, the system comprising:

input means by which an ordering party can input contract data relating to at least one phenomenon, each said phenomenon having a range of future outcomes and a future time of maturity, said contract data including a set of probabilities of occurrence for each outcome in said range and a consideration due to a counterparty at or after the time of matching, and further by which at least one counterparty can input registering data including a set of probabilities of occurrence for each outcome in said range; and

data processing means operable to price and match a contract for said phenomenon from said contract data and said registering data, the pricing including;

applying at least one template of entitlement as a function of outcome over portions of said range of future outcomes to each counterparty'"'"'s set of probabilities to give one or more individual partial counterparty prices; and

applying said ordering party set of probabilities to each said template of entitlement to derive at least two partial implied entitlement valuations;

the matching including;

determining which two or more counterparties will provide the best entitlement on maturity by comparing a set of said at least two partial implied entitlement valuations with said consideration; and

matching said contract with that counterparty having a template of entitlement for the best said comparison.

6. A method for the formulation of multi-party investment contracts, the method comprising the steps of:

inputting ordering party contract data relating to at least one phenomenon, each said phenomenon having a range of future outcomes and a future time of maturity, said contract data including a set of probabilities of occurrence for each outcome in said range and a consideration due to a counterparty at or after the time of matching;

inputting counterparty registering data including a set of probabilities of occurrence for each outcome in said range; and

pricing and matching a contract for a said phenomenon from said contract data and said registering data, said step of pricing, for each counterparty, including;

applying at least one template of entitlement as a function of outcome over portions of said range of future outcomes to said set of probabilities associated with said counterparty to give one or more individual partial counterparty prices; and

applying said set of probabilities associated with said ordering party to each individual counterparty template of entitlement to derive a partial implied entitlement valuation;

said step of matching including;

determining which two or more counterparties will provide the best entitlement on maturity by comparing a set of partial implied entitlement valuations with said consideration; and

matching the contract with said counterparty having a template of entitlement for the best said comparison.