SYSTEM AND METHOD FOR ENABLING HEDGING CUSTOMERS TO LOCK FORWARD POSITIONS WITH CUSTOMER-FRIENDLY PAYMENT OPTIONS
In some embodiments, a method includes providing a loan or line of credit (LOC) to a purchaser to financing the cost of purchasing a retail commodity price protection contract. A new financial instrument is created bundling the loan or LOC and the retail commodity price protection contract. The method also includes allowing the purchaser to draw on a trust (that may have been created with proceeds from the loan) to purchase the retail commodity. The retail commodity price protection contract may specify a forward position, which may be selected by the customer, associated with the retail commodity. According to the forward position specified in the retail commodity price protection contract, a price protection service provider provides price protection to the customer against variability in the price of the retail commodity. The loan or LOC may be provided by a financial institution or the price protection service provider.
1 . A computer implemented method comprising:
enabling a price protection service provider to specify a forward position associated with a retail commodity in a retail commodity price protection contract;
enabling a customer to select a payment option from a plurality of payment options, wherein the plurality of payment options includes a loan wherein covers at least a portion of the cost of the retail commodity price protection contract; and
creating a financial instrument associated with the retail commodity price protection contract between the price protection service provider and the customer based on the payment option selected by the customer.
2 . The method of claim 1 , further comprising creating a trust with at least a portion of the proceeds of the loan.
3 . The method of claim 2 , further comprising creating a security interest in the trust for a lender of the loan.
4 . The method of claim 3 , wherein the lender is a financial institution other than the price protection service provider.
5 . The method of claim 3 , wherein the price protection service provider is the lender.
6 . The method of claim 1 , further comprising enabling the customer to select an action from the group consisting of rolling over an un-used portion of the price protection service, receiving a refund for the un-used portion of the price protection service, and novating the un-used portion of the price protection service.
7 . The method of claim 1 , wherein the customer is an individual consumer.
8 . The method of claim 1 , wherein the customer represents an entity.
9 . The method of claim 1 , further comprising determining whether to include the loan as one of the plurality of payment options, wherein the determining step comprises analyzing a consumption pattern of the retail commodity by the customer.
10 . The method of claim 9 , wherein the determining step further comprises determining whether the customer has a cash flow position affected by the price of the retail commodity.
11 . The method of claim 9 , wherein the determining step further comprises assessing a credit risk of the customer.
12 . A computer readable medium carrying program instructions executable by a processor to:
enable a price protection service provider to specify a forward position associated with a retail commodity in a retail commodity price protection contract;
enable a customer to select a payment option from a plurality of payment options, wherein the plurality of payment options includes a loan wherein covers at least a portion of the cost of the retail commodity price protection contract; and
create a financial instrument associated with the retail commodity price protection contract between the price protection service provider and the customer based on the payment option selected by the customer.
13 . The computer readable medium of claim 12 , wherein the loan is serviced by a financial institution other than the price protection service provider.
14 . The computer readable medium of claim 12 , wherein the loan is serviced by the price protection service provider.
15 . The computer readable medium of claim 12 , wherein the program instructions are further executable by the processor to enable the customer to select an action from the group consisting of rolling over an un-used portion of the price protection service, receiving a refund for the un-used portion of the price protection service, and novating the un-used portion of the price protection service.
16 . The computer readable medium of claim 12 , wherein the program instructions are further executable by the processor to analyze a consumption pattern of the retail commodity by the customer.
17 . The computer readable medium of claim 12 , wherein the program instructions are further executable by the processor to assess a credit risk of the customer.
18 . A system comprising:
a processor; and
a computer readable medium carrying program instructions executable by a processor to:
enable a price protection service provider to specify a forward position associated with a retail commodity in a retail commodity price protection contract;
enable a customer to select a payment option from a plurality of payment options, wherein the plurality of payment options includes a loan wherein covers at least a portion of the cost of the retail commodity price protection contract; and
create a financial instrument associated with the retail commodity price protection contract between the price protection service provider and the customer based on the payment option selected by the customer.
19 . The system of claim 18 , wherein the loan is serviced by a financial institution other than the price protection service provider.
20 . The system of claim 18 , wherein the loan is serviced by the price protection service provider.