Financial activity based on natural events

• US 7,693,766 B2
• Filed: 12/20/2005
• Issued: 04/06/2010
• Est. Priority Date: 12/21/2004
• Status: Active Grant

• Current Assignee: Weather RISK Solutions LLC
• Original Assignee: Weather RISK Solutions LLC
• Inventors: Horowitz, Kenneth A.
• Primary Examiner(s): Kramer; James
• Assistant Examiner(s): Khattar; Rajesh
• Application Number:
  US11/312,662
• Publication Number:
  US 20060155627A1
• Time in Patent Office: 1,568 Days
• Field of Search: 705 35- 45
• US Class Current: 705/35
• CPC Class Codes: G06Q 10/04 Forecasting or optimisation specially adapted for administrative or management purposes, e.g. linear programming or "cutting stock problem" market predictions or forecasting for commercial activities G06Q30/0202
• 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 40/06 Asset management; Financial planning or analysis

Abstract

A financial activity network includes a central managing system connected to a plurality of participant terminals. Rules governing operation of the financial activity are stored for future reference. A participant provides investment information such as a map location for the predicted strike by the natural event and, optionally, one or more secondary parameters relating to the natural event, such as the time interval between the time of investment and the time of an event strike and/or the severity of the event strike according to an established scale. In one example, an external objective independent information source is consulted, with the external objective independent information source providing monitoring, interpretation and derived determination of parameters pertaining to the natural event. Methods and articles of manufacture are also disclosed.

Claims

1. A computerized method of price setting throughout a substantially continuous ongoing natural process starting with a reported precursor activity and culminating in a future naturally occurring event, for the purchase of positions predicting the eventual outcome of the future naturally occurring event at a particular geographic area comprising:

providing a database containing a) historical precursor data collected from at least one historical precursor activity leading to an historical naturally occurring event at a particular geographic area of at least one of the coastal and the inland type, and b) a first purchase price to purchase a position predicting an eventual outcome of the future naturally occurring event at a particular geographic area of at least one of the coastal and the inland type, that is based at least in part upon a calculated probability predicting an outcome of the historical precursor activity as the future naturally occurring event;

electronically making the first purchase price available to prospective purchasers at a communication port, prior to an announcement of the reported precursor activity;

electronically receiving notification of the reported precursor activity from an external and verifiable notification source;

responsive to receiving notification of the reported precursor activity, and throughout an ongoing duration of the reported precursor activity, making available to prospective purchasers via the communication port, a series of secondary purchase prices to purchase positions predicting the eventual outcome of the future naturally occurring event, with an initial secondary purchase price in the series based at least in pan on the first purchase price, and with subsequent secondary purchase prices in the series based on an ongoing market activity to purchase positions in the series, along with at least temporarily storing the initial secondary purchase price and the subsequent secondary purchase prices;

monitoring, and making available to prospective purchasers via the communication port, throughout the duration of the reported precursor activity, the series of secondary purchase prices previously made available to prospective purchasers, along with ongoing electronically calculated probabilities of occurrence of the future natural event based on data collected from the reported precursor activity, to serve as a basis for future prices in the series of secondary purchase prices.

2. The method of claim 1 further comprising electronically offering to prospective purchasers, prior to an announcement of the reported precursor activity, an initial series of purchase prices, at least one of which is the first purchase price, to purchase positions predicting the eventual outcome of the future naturally occurring event.

3. The method of claim 2 wherein the initial secondary purchase price is based at least in part on the price offered at the conclusion of the initial series of purchase prices.

4. The method of claim 1 further comprising:

electronically assigning a value to positions purchased;

obtaining the outcome of the future naturally occurring event; and

assigning a portion of the value to positions predicting the determined outcome of the future naturally occurring event.

5. The method according to claim 1 wherein the purchase prices of the series of secondary purchase prices are continuously changing and are electronically updated on an ongoing basis.

6. The method according to claim 5 further comprising electronically receiving from an external source, an ongoing series of natural event data concerning the ongoing precursor activity, and wherein the purchase prices of the series of secondary purchase prices are based at least in part upon the ongoing series of natural event data.

7. The method according to claim 5 further comprising electronically receiving from an external source an ongoing series of natural event data concerning the precursor activity, electronically determining an ongoing series of probabilities of occurrence of the natural event based upon the ongoing series of natural event data, and wherein the purchases prices of the series of secondary purchase prices are based at least in part upon the ongoing series of probabilities of occurrence.

8. The method according to claim 1 further comprising electronically displaying to prospective purchasers the secondary purchase prices previously offered in the series, to serve as a basis for market activity of future purchases in the series.

9. The method according to claim 1 further comprising the step of defining a plurality of different geographical regions and wherein the positions are offered for different geographical regions.

10. The method according to claim 9 wherein, once a position is offered for a given geographic region, price for that geographical region is increased.

11. The method according to claim 1 wherein the first purchase price is a minimum price offered.

12. The method according to claim 1 wherein the purchase prices of the series of secondary purchase prices are changed and electronically updated form time to time.

13. The method according to claim 1 wherein the first purchase price comprises one of a series of ongoing primary purchase prices to purchase positions predicting the eventual outcome of the naturally occurring event.

14. The method according to claim 1 wherein the positions are embodied in derivative securities interests.

15. The method according to claim 1 wherein the ongoing secondary purchase prices are offered in at least one auction having a reserve price proportional to at least one conditional probability that the event offered will occur.

16. The method according to claim 1 wherein the secondary purchase prices we updated and offered to prospective purchasers on a substantially real time basis.

17. A computerized system of price setting throughout a substantially continuous ongoing natural process that starts with a reported precursor activity and culminates in a future naturally occurring event at a particular geographic area, for the purchase of positions predicting the eventual outcome of the future naturally occurring event, comprising:

a database containing historical precursor data collected from at least one historical precursor activity leading to an historical future naturally occurring event at a particular geographic area of at least one of the coastal and the inland type;

pricing data for electronically calculating and storing a first purchase price to purchase a position predicting the eventual outcome of the future naturally occurring event at a particular geographic area of at least one of the coastal and the inland type, the first purchase price being based at least in part upon a calculated probability predicting an outcome of the historical precursor data as the future naturally occurring event;

a communication port for performing at least one of;

a) electronically making a purchase price available to prospective purchasers, b) receiving a commitment from a prospective purchaser to purchase a position predicting an eventual outcome of the future naturally occurring event and c) electronically receiving notification of the reported precursor activity from a notification source that is external and verifiable, and thereafter making the notification of the reported precursor activity available to prospective purchasers via the communication port;

a current pricing data storage electronically making available to prospective purchasers via the communication port, throughout an ongoing duration of the reported precursor activity, a series of secondary purchase prices to purchase positions predicting the eventual outcome of the future naturally occurring event, with an initial secondary purchase price in the series based at least in part on the first purchase price, and with subsequent secondary purchase prices in the series based on an ongoing market activity to purchase positions in the series.

18. The system according to claim 17 further comprising valuing data for electronically assigning a value to the positions purchased, determining the outcome of the natural event and assigning a portion of the value to the positions predicting the determined outcome of the future naturally occurring event.

19. The system according to claim 17 wherein said communication port receives an ongoing series of natural event data concerning the precursor activity, and said current pricing data storage includes an ongoing series of probabilities of occurrence of the natural event based upon the ongoing series of natural event data, and wherein the secondary purchase prices are based at least in part upon the ongoing series of probabilities of occurrence.

20. An article of manufacture including a machine readable medium for causing a computer to perform a computerized method of automatic price setting throughout a substantially continuous ongoing natural process starting with a reported precursor activity and culminating in a future naturally occurring event at a particular geographic area, for the purchase of positions predicting the eventual outcome of the future naturally occurring event, comprising:

providing a database containing a) historical precursor data collected from at least one historical precursor activity leading to an historical naturally occurring event at a particular geographic area of at least one of the coastal and the inland type, and b) a first purchase price to purchase a position predicting an eventual outcome of the future naturally occurring event at a particular geographic area of at least one of the coastal and the inland type, that is based at least in part upon a calculated probability predicting an outcome of the historical precursor activity as the future naturally occurring event;

electronically making the first purchase price available to prospective purchasers at a communication port, prior to an announcement of the reported precursor activity;

electronically receiving a commitment from a prospective purchaser to purchase at the first purchase price, a position predicting an eventual outcome of the future naturally occurring event;

electronically receiving notification of the reported precursor activity from an external and verifiable notification source;

responsive to receiving notification of the reported precursor activity, and throughout an ongoing duration of the reported precursor activity, making available to prospective purchasers via the communication port, a series of secondary purchase prices to purchase positions predicting the eventual outcome of the future naturally occurring event, with an initial secondary purchase price in the series based at least in part on the first purchase price, and with subsequent secondary purchase prices in the series based on an ongoing market activity to purchase positions in the series, along with at least temporarily storing the initial secondary purchase price and the subsequent secondary purchase prices;

electronically receiving a commitment from a prospective purchaser to purchase a position predicting the eventual outcome of the future naturally occurring event, at the initial secondary purchase price;

electronically receiving further commitments from prospective purchasers to purchase positions predicting the eventual outcome of the future naturally occurring event at the subsequent secondary purchase prices, and

monitoring, and making available to prospective purchasers via the communication port, throughout the duration of the reported precursor activity, the series of secondary purchase prices previously made available to prospective purchasers, along with ongoing electronically calculated probabilities of occurrence of the future natural event based on data collected from the reported precursor activity, to serve as a basis for future prices in the series of secondary purchase prices.