Systems and methods for implementing the structuring, pricing, quotation, and trading of financial instruments
First Claim
1. A financial instrument tradable between a buyer and a seller comprising:
- a tradable instrument having a characteristic that tracks an underlying benchmark with an identifiable value, the tradable instrument undergoing change with each change of the underlying benchmark, the underlying benchmark being one of;
a debt, equity, commodity, or currency instrument;
index containing a debt, equity, currency, or commodity instrument;
and derivative on a debt, equity, currency, or commodity instrument;
the tradable instrument requiring clearing of the tradable instrument between the buyer and seller through one of a commodities exchange, securities exchange, and an organization approved by the United States Government for clearing financial instruments and wherein the clearing of the tradable instrument is not contingent upon the delivery of the underlying benchmark; and
a net carrying charge charged to one of the buyer and the seller if the identifiable value of the underlying benchmark has increased in value and to the other of the buyer and seller if the identifiable value of the underlying benchmark has decreased in value.
3 Assignments
0 Petitions
Accused Products
Abstract
An exchange-traded financial instrument having a price that tracks an underlying benchmark, the underlying benchmark being a security or commodity that is itself traded. A contract for the financial instrument between a buyer and seller is not contingent upon the delivery of the underlying benchmark. A net carrying charge (credit or debit), defined as the difference between the investment yield of the underlying benchmark and a cost of financing ownership of the underlying benchmark using the generally accepted industry standard financing rate for that benchmark, is credited or debited, accrued, or built into the price of the derivative for both buyer and seller of the financial instrument, typically nightly. In one embodiment, the underlying benchmark is a U.S. Treasury security, and preferably a specific U.S. Treasury security such as the on the run (OTR) 10 Year Treasury note. Other single contract spread and ratio instruments are also disclosed.
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Citations
50 Claims
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1. A financial instrument tradable between a buyer and a seller comprising:
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a tradable instrument having a characteristic that tracks an underlying benchmark with an identifiable value, the tradable instrument undergoing change with each change of the underlying benchmark, the underlying benchmark being one of; a debt, equity, commodity, or currency instrument; index containing a debt, equity, currency, or commodity instrument; and derivative on a debt, equity, currency, or commodity instrument; the tradable instrument requiring clearing of the tradable instrument between the buyer and seller through one of a commodities exchange, securities exchange, and an organization approved by the United States Government for clearing financial instruments and wherein the clearing of the tradable instrument is not contingent upon the delivery of the underlying benchmark; and a net carrying charge charged to one of the buyer and the seller if the identifiable value of the underlying benchmark has increased in value and to the other of the buyer and seller if the identifiable value of the underlying benchmark has decreased in value. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15)
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16. An option on a financial instrument tradable between a buyer and a seller, the financial instrument comprising:
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a tradable tracking instrument that tracks an underlying benchmark with an identifiable value, the underlying benchmark being one of; a debt, equity, commodity, or currency instrument; index containing a debt, equity, currency, or commodity instrument; and derivative on a debt, equity, currency, or commodity instrument; the tracking instrument requiring clearing of the tracking instrument between the buyer and seller through one of a commodities exchange, securities exchange, and an organization approved by the United States Government for clearing financial instruments and wherein the clearing of the tracking instrument is not contingent upon the delivery of the underlying benchmark; and the tracking instrument being converted upon clearing whereby tracking ceases and a net carrying charge is charged to one of the buyer and the seller if the identifiable value of the underlying benchmark has increased in value and to the other of the buyer and seller if the identifiable value of the underlying benchmark has decreased in value.
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17. A method of trading a financial instrument between a buyer and a seller on one of a commodities exchange, securities exchange, electronic communication network (ECN), alternative trading system (ATS), and an organization approved by the United States Government for clearing financial instruments, the method comprising:
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providing a tradable instrument that has a characteristic that tracks an underlying benchmark with an identifiable value; clearing the tradable instrument wherein the clearing of the tradable instrument between the buyer and the seller is not contingent upon the delivery of the underlying benchmark, the underlying benchmark being one of; a debt, equity, commodity, or currency instrument; index containing a debt, equity, currency, or commodity instrument; and derivative on a debt, equity, currency, or commodity instrument; and applying a net carrying charge that is charged to one of the buyer and the seller if the identifiable value of the underlying benchmark increases in value and to the other of the buyer and seller if the identifiable value of the underlying benchmark decreases. - View Dependent Claims (18, 19, 20, 21, 22, 23, 24, 25, 26, 27)
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28. A method of trading an option on a financial instrument between a buyer and a seller on at least a commodities exchange, securities exchange, electronic communication network (ECN), alternative trading system (ATS), and an organization approved by the United States Government for clearing financial instruments, the method comprising:
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providing a tradable instrument that has a characteristic that tracks an underlying benchmark with an identifiable value, clearing the tradable instrument wherein the clearing of the tradable instrument between the buyer and the seller is not contingent upon the delivery of the underlying benchmark, the underlying benchmark being one of; a debt, equity, commodity, or currency instrument; index containing a debt, equity, currency, or commodity instrument; and derivative on a debt, equity, currency, or commodity instrument; and applying a net carrying charge that is charged to one of the buyer and the seller if the identifiable value of the underlying benchmark increases in value and to the other of the buyer and seller if the identifiable value of the underlying benchmark decreases.
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29. A financial instrument tradable between a buyer and a seller comprising:
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a tradable instrument having a characteristic that tracks an underlying benchmark with an identifiable value, the tradable instrument being transformed to cease tracking of the underlying benchmark and to track another benchmark upon the occurrence of one or more predetermined first exogenous events, the underlying benchmark being one of; a debt, equity, security, commodity, or currency instrument; index containing a debt, equity, currency, or commodity instrument; and derivative on a debt, equity, currency, or commodity instrument; the tradable instrument requiring clearing of the tradable instrument between the buyer and seller through at least one of a commodities exchange, securities exchange, or an organization approved by the United States Government for clearing financial instruments and wherein the clearing of the tradable instrument is not contingent upon the delivery of the underlying benchmark; and an option that can be exercised. - View Dependent Claims (30, 31, 32, 50)
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33. A method of trading a financial instrument tradable between a buyer and a seller on one of a commodities exchange, securities exchange, electronic communication network (ECN), alternative trading system (ATS), and an organization approved by the United States Government for clearing financial instruments, the method comprising:
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providing a tradable instrument whose price or return tracks an underlying benchmark with an identifiable value; clearing the tradable instrument whose price or return tracks an underlying benchmark with an identifiable value, wherein the clearing of the tradable instrument between the buyer and the seller is not contingent upon the delivery of the underlying benchmark and wherein the underlying benchmark can change to another underlying benchmark upon the occurrence of one or more predetermined first exogenous events, the underlying benchmark being one of; a debt, equity, commodity, or currency instrument; index containing a debt, equity, currency, or commodity instrument; and derivative on a debt, equity, currency, or commodity instrument; and offering an option that can be exercised. - View Dependent Claims (34, 35, 36, 37, 38, 39, 40, 41, 42)
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43. A method of trading an option on a financial instrument tradable between a buyer and a seller on one of a commodities exchange, securities exchange, electronic communication network (ECN), alternative trading system (ATS), and an organization approved by the United States Government for clearing financial instruments, the method comprising:
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providing an instrument whose price or return tracks an underlying benchmark with an identifiable value; clearing the instrument whose price or return tracks an underlying benchmark with an identifiable value, wherein the clearing of the instrument between the buyer and the seller is not contingent upon the delivery of the underlying benchmark and wherein the underlying benchmark can change to another underlying benchmark upon the occurrence of one or more predetermined first exogenous events, the underlying benchmark being at least one of; a debt, equity, commodity, or currency instrument; index containing a debt, equity, currency, or commodity instrument; and derivative on a debt, equity, currency, or commodity instrument; and offering an option that can be exercised upon the occurrence of one or more predetermined second exogenous events.
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44. A financial instrument tradable between a buyer and a seller comprising:
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a tradable futures instrument having a characteristic that tracks an underlying benchmark with an identifiable value, the underlying benchmark being at least one of; a debt, equity, commodity, or currency instrument; index containing a debt, equity, currency, or commodity instrument; and derivative on a debt, equity, currency, or commodity instrument; wherein a clearing of the tradable futures instrument between the buyer and seller is through at least one of a commodities exchange, securities exchange, and an organization approved by the United States Government for clearing financial instruments and wherein the clearing of the tradable futures instrument is not contingent upon the delivery of the underlying benchmark; and a net carrying charge that is charged to one of the buyer and the seller if the identifiable value of the underlying benchmark increases in value and to the other of the buyer and seller if the identifiable value of the underlying benchmark decreases in value. - View Dependent Claims (45, 46, 47, 48, 49)
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Specification