Securitization of a commercial transaction
View Patent ↗A method and apparatus for generating a tradable security includes confirming a vendor's compliance with predefined terms of a commercial transaction, such that a buyer is obligated to make a due payment. The method and apparatus further includes electronically rating a financial commitment relating to a receivable account for the commercial transaction. This receivable account is rated based on conditions and factors known to a system facilitating the commercial transaction. Based on the ability for the financial commitment to be rated, a financial exchange is operative to transfer entitlement rights to monies due under the receivable account where the terms for the transfer of the entitlement rights are based at least in part on the electronic rating. Thereby, receivable accounts to commercial transactions may be tradable by one or more investors as properly rated investment.
1. A computer-implemented method for generating a tradable security, the method comprising:
by a processor, confirming compliance by a vendor with terms of a commercial transaction between the vendor and a buyer;
electronically rating a financial commitment relating to an account receivable held by the vendor at a time prior to a payment due date for the account receivable, the account receivable resulting from compliance by the vendor with the terms of the commercial transaction and representing a debt due to the vendor subsequent to the compliance with the terms of the commercial transaction; and
in a computer-implemented financial exchange, transferring entitlement rights to at least a portion of the debt due under the account receivable, where the terms for the transfer of the entitlement rights are based at least in part on the electronic rating of the financial commitment relating to the account receivable.
2. The method of claim 1 , wherein the rating of the financial commitment includes electronically determining a credit rating of a buyer that is a party to the commercial transaction.
3. The method of claim 1 further comprising:
transferring the entitlement rights to a security special purpose vehicle (SPV), wherein the security SPV exchanges financial notes from at least one investor for the entitlement rights.
4. The method of claim 3 wherein the financial notes are received through a trustee representing the at least one investor.
5. The method of claim 3 further comprising:
transferring the entitlement rights prior to the completion of the commercial transaction, such that the security SPV receives an assignment of a credit protection from a credit protection SPV.
6. The method of claim 1 further comprising:
transferring an adjusted financial amount due to the vendor based upon the buyer's compliance with a designated condition of the commercial transaction, wherein the adjusted amount is based on the terms of the financial exchange.
7. The method of claim 6 further comprising:
transferring the adjusted financial amount to the vendor from an account service entity and providing, from a management system, authorization for the account service entity to provide the adjusted financial amount to the vendor.
8. The method of claim 1 further comprising:
determining the entitlement rights based on a credit line of a buyer, wherein the credit line is managed within a management system; and
providing the entitlement rights to the vendor from a credit protection special purpose vehicle (SPV).
9. The method of claim 8 wherein the credit protection SPV provides entitlement rights from at least one credit provider, such that the entitlement rights are credit protection rights and the method further includes transferring the credit protection to a security SPV prior to the completion of the commercial transaction.
10. The method of claim 9 further comprising:
combining the financial commitment with a pool of like-rated financial commitments and granting an investment vehicle an entitlement right to the pool, wherein the investment vehicle may be at least one investors.
11. The method of claim 10 further comprising:
trading the pool of like-rated financial commitments between a plurality of investment vehicles.
12. An apparatus for generating a tradable security, the apparatus comprising:
a processing device, in response to executable instructions, operative to confirm compliance by a vendor with terms of a commercial transaction between the vendor and a buyer, and electronically rate a financial commitment relating to an account receivable at a time prior to a payment due date for the account receivable, the account receivable resulting from compliance by the vendor with the terms of the commercial transaction and representing a debt due to the vendor subsequent to the compliance with the terms of the commercial transaction; and
a financial exchange operative to transfer entitlement rights to at least a portion of the debt due under the account receivable, where the terms for the transfer of the entitlement rights are based at least in part on the electronic rating.
13. The apparatus of claim 12 , wherein the rating of the financial commitment includes the processing device further operative to electronically determine a credit rating of a buyer that is a party to the commercial transaction.
14. The apparatus of claim 12 wherein the financial exchange is further operative to transfer the entitlement rights to a security special purpose vehicle (SPV), wherein the security SPV exchanges financial notes from at least one investor for the entitlement rights.
15. The apparatus of claim 14 wherein the financial notes are received through a trustee representing the at least one investor.
16. The apparatus of claim 14 wherein the financial exchange is further operative to transfer the entitlement rights prior to the completion of the commercial transaction, such that the security SPV receives an assignment of a credit protection from a credit protection SPV.
17. The apparatus of claim 12 wherein the financial exchange is further operative to transfer an adjusted financial amount due to the vendor based upon the buyer's compliance with a designated condition of the commercial transaction, wherein the adjusted amount is based on the terms of the financial exchange.
18. The apparatus of claim 17 wherein the financial exchange is further operative to transfer the adjusted financial amount to the vendor from an account service entity and provide, from a management system, authorization for the account service entity to provide the adjusted financial amount to the vendor.
19. The apparatus of claim 12 further comprising:
the processing device operative to determine the entitlement rights based on a credit line of a buyer, wherein the credit line is managed within a credit management system; and
the financial exchange further operative to provide the entitlement rights to the vendor from a credit protection special purpose vehicle (SPV).
20. The apparatus of claim 19 wherein the credit protection SPV is operative to provide entitlement rights from at least one credit provider, such that the entitlement rights are credit protection rights and the method further includes transferring the credit protection to a security SPV prior to the completion of the commercial transaction.
21. The apparatus of claim 20 wherein the financial exchange is further operative to:
combine the financial commitment with a pool of like-rated financial commitments and grant an investment vehicle an entitlement right to the pool, wherein the investment vehicle may be at least one investors.
22. The apparatus of claim 21 wherein the financial exchange is further operative to trade the pool of like-rated financial commitments between a plurality of investment vehicles.
23. A computer-implemented method for trading a security, the method comprising:
confirming compliance by a vendor with terms of a commercial transaction between the vendor and a buyer;
electronically rating a financial commitment to pay a debt to satisfy an account receivable held by the vendor at a time prior to a payment due date for the account receivable, including electronically determining a credit rating of a buyer that is a party to the commercial transaction, the account receivable resulting from compliance by the vendor with the terms of the commercial transaction and representing the debt due to the vendor;
in a computer-implemented financial exchange, transferring entitlement rights to at least a portion of the debt due under the account receivable, where the terms for the transfer of the entitlement rights are based at least in part on the electronic rating;
transferring the entitlement rights to a security special purpose vehicle (SPV), prior to the completion of the commercial transaction, wherein the security SPV exchanges financial notes from at least one investor for the entitlement rights; and
transferring an adjusted financial amount due to the vendor based upon the buyer's compliance with a designated condition of the commercial transaction, wherein the adjusted amount is based on the terms of the financial exchange.
24. The method of claim 23 wherein the financial notes are received through a trustee representing the at least one investor.
25. The method of claim 23 wherein the security SPV receives an assignment of a credit protection from a credit protection SPV.
26. The method of claim 25 further comprising:
transferring the adjusted financial amount to the vendor from an account service entity and providing, from a management system, authorization for the account service entity to provide the adjusted financial amount to the vendor.
27. The method of claim 23 further comprising:
determining the entitlement rights based on a credit line of a buyer, wherein the credit line is managed within a management system; and
providing the entitlement rights to a vendor from a credit protection special purpose vehicle (SPV).
28. The method of claim 27 wherein the credit protection SPV provides entitlement rights from at least one credit provider, such that the entitlement rights are credit protection rights and the method further includes transferring the credit protection to a security SPV prior to the completion of the commercial transaction.
29. The method of claim 28 further comprising:
combining the financial commitment with a pool of like-rated financial commitments; granting an investment vehicle an entitlement right to the pool, wherein the investment vehicle may be at least one investors; and
trading the pool of like-rated financial commitments between a plurality of investment vehicles.