Digital computer system and methods for managing a synthetic index fund

• US 7,062,459 B1
• Filed: 03/29/1999
• Issued: 06/13/2006
• Est. Priority Date: 03/29/1999
• Status: Expired due to Term

• Current Assignee: TASK Management Incorporated
• Original Assignee: New Market Solutions LLC
• Inventors: Herbst, Anthony F., Perg, Wayne F.
• Primary Examiner(s): Retta, Yehdega
• Application Number:
  US09/280,244
• Time in Patent Office: 2,633 Days
• Field of Search: 705/36, 705/37
• 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 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/12 Accounting
• CPC Class Codes: G06Q 40/123 Tax preparation or submission

Abstract

A computer-aided method for implementing at least one synthetic stock investment fund. The method includes providing a digital electrical computer apparatus including a digital computer having a processor, the processor electrically connected to a memory device for storing and retrieving machine-readable signals, to an input device for converting information into input electrical data, and to an output device for converting output electrical data into print, the processor programmed to control the apparatus to receive the input data and to produce the output data by steps including: forming a synthetic index investment fund owned by an entity, the synthetic index investment fund forming including entering data representing an amount of an interest-bearing asset and entering data representing an amount of a stock-related instrument defined by a mathematical relationship to the interest-bearing asset; and balancing the amount of the interest-bearing asset and the amount of the stock-related instrument to maintain the mathematical relationship in response to input market price data corresponding to at least one member of the group consisting of the interest-bearing asset and the stock-related instrument; calculating respective unit values for shares in the fund in response to the input market price data; inputting trade data to facilitate trading shares in the fund; accounting for the trading, for changes in the market price data for the interest-bearing asset, and for the amount of the stock-related instrument, and for transactions involving the interest-bearing asset and transactions involving the stock-related asset; and generating share price data and holding data as the output for investor reporting.

Claims

1. A computer-aided method for implementing a synthetic investment fund, having at least two different kinds of shares, the method including the step of:

forming the synthetic investment fund with a digital computer by entering data representing said at least two kinds of shares including an amount of an interest-bearing asset and an amount of a stock-related instrument, said amounts related by a mathematical relationship; and

balancing, for each respective said kind of share, the amount of the interest-bearing asset and the amount of the stock-related instrument to maintain the mathematical relationship in response to input market price data corresponding respectively to the interest-bearing asset and to the stock-related instrument;

calculating, for each respertive said kind of share, unit values for said shares in the fund in response to the input market price data;

inputting, for each respective said kind of share, trade data to facilitate investors trading the shares in the fund;

accounting, for each respective said kind of share, for the trading, for changes in the market price data for the interest-bearing asset, and for the amount of the stock-related instrument, and for transactions involving the interest-bearing asset and transactions involving the stock-related asset; and

generating, for each respective said kind of share, price data and holding data as output for reporting to said investors.

2. The method of claim 1, wherein the step of forming is carried out with the kinds reflecting a difference in type of interest-bearing asset.

3. The method of claim 1, wherein the step of forming is carried out with the kinds reflecting a difference in type of stock-related asset.

4. The method of claim 1, wherein the step of forming is carried out with the kinds reflecting a difference in the mathematical relationship for each of the kinds.

5. The method of claim 1, wherein the step of forming is carried out with customizable kinds of shares, the customizable kinds of shares defined from at least one member of a group consisting of the amount of the interest-bearing asset, the amount of the stock-related asset, and the mathematical relationship.

6. The method of claim 1, wherein the step of accounting for trading includes the steps of:

retrieving, for each respective said kind of share, holdings prior to a purchase of the shares; and

generating, for each respective said kind of share, output representing the holdings adjusted for the purchase of the shares.

7. The method of claim 1, wherein the step of balancing is, for at least one of said kinds of shares, triggered periodically.

8. The method of claim 1, wherein the step of balancing is carried out with a non-United States debt instrument as the interest-bearing asset.

9. The method of claim 1, wherein the step of balancing is carried out with a government debt instrument as the interest-bearing asset.

10. The method of claim 1, wherein the step of balancing is carried out with a non-United States stock-related instrument as the stock-related instrument.

11. The method of claim 1, wherein the step of balancing is carried out with at least one member of the group consisting of a stock option and a stock index option as the stock-related instrument.

12. The method of claim 1, wherein the step of balancing is carried out with a stock index future as the stock-related instrument.

13. The method of claim 1, wherein the step of balancing is carried out with a swap as the interest-bearing asset.

14. The method of claim 1, further including the step of adjusting with said computer, for at least one of said kinds of shares, the mathematical relationship in response to changed market conditions.

15. The method of claim 1, wherein the step of accounting includes calculating margin requirements and allocating funds for margin calls for at least one of said kinds of shares.

16. The method of claim 1, further including the step of calculating, for at least one of said kinds of shares, an amount of liquid funds to hold in reserve for margin calls.

17. The method of claim 1, wherein the step of balancing includes, for at least one of said kinds of shares, adjusting futures contract holdings to reflect net changes in holdings of said kind of shares.

18. The method of claim 1, wherein the step of forming is carried out with at least some of said data representing foreign currency.

19. The method of claim 1, further including the step of managing, for at least one of said kinds of shares, short positions with said computer.

20. The method of claim 19, further including the step of managing, for at least one of said kinds of shares, long positions.

21. The method of claim 20, wherein the steps of managing include calculating, with said computer, for at least one of said kinds of shares, margin requirements on combined long and short positions.

22. The method of claim 7, wherein the step of balancing, for at least one of said kinds of shares, is carried out with a constant weighted-average maturity for the stock-related instrument.

23. The process of claim 1, further including:

inputting some of said output from said digital computer into a trading computer, said output including at least one of a group consisting of purchase orders and sell orders for at least one from a group consisting of an interest-bearing asset and a stock-related instrument;

computing a price for the asset; and

generating output including trade confirmation documentation, including the price, for any trade of the asset.

24. The process of claim 1, further including:

inputting some of said output from said digital computer into a broker'"'"'s computer, said output including at least one of a group consisting of respective purchase orders and sell orders for investments including at least one from a group consisting of interest-bearing assets and a stock related instruments; and

responsive to a communication from the brokers computer, generating output including trade confirmation documentation, including a price, for a trade of the asset.

25. The process of claim 1, further including:

inputting a definition to said digital computer from a share owner'"'"'s computer, said definition being a definition for at least one of said kinds of share, the definition including at least one from a group consisting of interest-bearing asset, the stock-related instrument and the mathematical relationship between the two;

inputting to said digital computer from a share owner'"'"'s computer at least one from a group consisting of an amount of said kind of share and a price for said kind of share; and

generating output including at least one from the group consisting of said kind of share and a price for said kind of share.

26. The process of claim 1, further including:

inputting some of said output as reporting input data from said digital computer into a reporting computer;

generating a reformatted version of the reporting input data;

communicating, by digital means, a transmission of the reformatted version of the reporting input data; and

generating output at a recipient receiver device, the output including the reformatted version of the reporting input data.

27. The process of claim 3, further including:

inputting some of said output as reporting input data from said digital computer into a reporting computer;

generating a reformatted version of the reporting input data;

communicating, by digital means, a transmission of the reformatted version of the reporting input data; and

generating output at a recipient receiver device, the output including the reformatted version of the reporting input data.

28. A computer-aided method for implementing at least one synthetic stock investment fund, the method including the steps of:

providing a digital electrical computer apparatus including a digital computer having a processor, the processor electrically connected to a memory device for storing and retrieving machine-readable signals, to an input device for converting information into input electrical data, and to an output device for converting output electrical data into print, the processor the processor operating a program controlling the apparatus in implementing at least one synthetic stock investment fund by steps including;

forming a synthetic stock investment fund, the synthetic stock fund forming carried out by steps including data including at least two kinds of interests and, for each of the respective kinds of interests, at least one from a group consisting of an amount of a stock-related asset, an amount of an interest-bearing asset and a mathematical relationship;

inputting market price data corresponding to at least one from the group consisting of the stock-related asset and the interest-bearing asset;

calculating values for each kind of interest in the fund in response to the input market data;

in putting trade data;

accounting for the trading, for changes in the market price data for at least one from the group consisting of the stock-related asset and the interest-bearing asset, and for transactions involving at least one from the group consisting of the stock-related asset and the interest-bearing asset; and

generating interest price data and holding data as the output for investor reporting.

29. The method of claim 28, wherein the step of accounting for trading includes the steps of:

retrieving investor holdings prior to the trade; and

,

generating output representing the investor holdings adjusted for the trade.

30. The method of claim 29, wherein the step of forming includes different kinds of interest with different stock-related assets.

31. The method of claim 29, wherein the step of forming includes different kinds of interests with different interest-bearing assets.

32. The method of claim 29, wherein the step of forming includes different kinds of interests with different mathematical relationships.

33. The method of claim 29, wherein the step of forming includes the investor custom-creating his or her own variety of interest.

34. The method of claim 33, wherein the investor varies the nature of this custom interest over time.

35. The method of claim 29, wherein the step of forming includes a kind of interest managed by a professional manager.

36. The method of claim 29, wherein the step of inputting trade data includes inputting orders for fractional units.

37. The method of claim 29, wherein the step of inputting trade data includes calculating aggregated orders for stock-related assets.

38. The process of claim 29, further including:

providing an interest owner'"'"'s digital electrical computer apparatus including an interest owner'"'"'s digital computer having an interest owner'"'"'s processor, the interest owner'"'"'s processor electrically connected to an interest owner'"'"'s memory device for storing and retrieving machine-readable signals, to an interest owner'"'"'s input device for receiving interest owner'"'"'s input data and converting the interest owner'"'"'s input data into interest owner'"'"'s input electrical data, and to a interest owner'"'"'s output having a interest owner'"'"'s visual presentation, the interest owner'"'"'s processor being controlled by a interest owner'"'"'s program to form interest owner'"'"'s circuitry in the interest owner'"'"'s processor for controlling the interest owner'"'"'s apparatus to receive the interest owner'"'"'s input data and to produce the interest owner'"'"'s output data;

inputting, as a portion of the interest owner'"'"'s input data, a specification for each kind of interest to be purchased;

inputting, as a further portion of the interest owner'"'"'s input data, a purchase amount for each respective kind of interest; and

generating output including purchase orders for each respective kind of interest.