Securities, supporting systems and methods thereof
View Patent ↗A financial instrument, equity dilution inhibitor and security upgrade account are disclosed based on an enhanced call-spread option. Implementation of the investment vehicle and/or upgrade account are managed via program controlled data processor governing system operation in accordance with investment parameters. Enhanced flexibility for this investment vehicle increases its usefulness to a broad spectrum of potential investors.
1. A computer implemented method for creating an investment vehicle, comprising:
creating via software stored on a computer a debt security providing a fixed income return to a purchaser for a pre-set period of time that further provides to said purchaser an equity conversion arrangement for a select underlying equity security based on future contingent events; and
creating via software stored on said computer a derivative instrument coupled to, but separate from, said debt security by providing an option to an issuer of said debt security to purchase shares of said equity security at a select price at a future date, wherein said derivative instrument may be canceled by said issuer prior to said future date and said issuer is obligated to make payments for said derivative on an installment basis, with future payment obligations of said issuer extinguished upon cancellation with no penalty to said issuer for said cancellation.
2. The method of claim 1 wherein the debt security is a convertible bond.
3. The method of claim 2 wherein the underlying equity security is for equity in an issuer of said convertible bond.
4. The method of claim 3 wherein said derivative instrument is a callspread option having a strike price equal to a conversion price of said convertible bond.
5. The method of claim 1 wherein the future contingent event is matching a price of said underlying equity to a pre-set value.
6. A data processing computer system for implementing and managing investment vehicles configured to alter equity dilution on select debt instruments, said system comprising:
a. a data input and storing platform in communication with information relating to debt securities linked to equity securities, including total amount, yield, and conversion price of said debt securities;
b. a processor connected to and in communication with said input and storing platform for receiving said information and selectively creating an investment vehicle, wherein said investment vehicle favorably alters risk of equity dilution to an issuer of said debt securities by coupling said debt securities to a callspread option held by said issuer, said coupling comprising an option to purchase shares of said equity security at a select price at a future date, and said processor further provides pricing and hedging information for output to a system user wherein said callspread option is funded by a cancelable payment stream that may be canceled without penalty.
7. The data processing system of claim 6 wherein at least some part of said payment stream is a reversible swap of coupons from said security, in exchange for a lowered, effective conversion price.
8. The system of claim 6 wherein said output includes a hedging position determined from said callspread option.