Method for structuring a transaction
View Patent ↗In one embodiment, a method for structuring a transaction between a first party having a long position in a security and a second party is provided. In another embodiment, a method for structuring a transaction involving a first party having a long position in a security, a second party acting as a transaction facilitator, and a third party desiring to acquire short exposure to the security is provided.
1. A method for structuring a transaction, comprising:
selling a security into a market by a first party at a predetermined time;
paying interest by the first party to a second party;
paying a dividend equivalent by the second party to the first party;
periodically marking the security sold by the first party to market; and
arranging an agreement between the second party and a third party, wherein the agreement provides, to the third party, short exposure to the security based upon the sale of the security by the first party;
wherein the dividend equivalent equals at least part of the value of a dividend paid on the security sold by the first party.
2. The method of claim 1 , wherein the predetermined time includes a predetermined calendar date.
3. The method of claim 2 , wherein the predetermined time includes a predetermined hour.
4. The method of claim 1 , wherein the first party retains the proceeds of the sale of the security.
5. The method of claim 1 , wherein the interest is paid periodically using a period selected from the group including: a) daily; b) weekly; c) monthly; d) quarterly; e) semi-annually; f) annually; and g) at the completion of the transaction.
6. The method of claim 1 , wherein the dividend equivalent is paid periodically using a period selected from the group including: a) daily; b) weekly; c) monthly; d) quarterly; e) semi-annually; f) annually; and g) at or about the period which is correlated with the payment of the dividend.
7. The method of claim 1 comprising the additional step of making a payment from the first party to the second party or from the second party to the first party, depending upon the price of the security at the time the security is marked-to-market.
8. The method of claim 1 , wherein the marking is carried out in U.S. dollars.
9. The method of claim 1 , wherein the marking is carried out periodically using a period selected from the group including: a) daily; b) weekly; c) monthly; d) quarterly; e) semi-annually; and f) annually.
10. The method of claim 1 , wherein the security is selected from the group including: a) at least one fixed income security; b) at least one warrant; c) at least one stock; d) at least one option; e) at least one convertible bond; f) at least one non-convertible bond; and g) at least one future.
11. The method of claim 1 , wherein the security is selected from the group including: a) at least one security associated with a single stock issue; b) at least one security associated with a basket of stocks formed of a plurality of stock issues; and c) at least one security associated with a stock index.
12. The method of claim 1 , wherein the first party has a long position in the security.