CONTRACTS EXCHANGE SYSTEM
A contracts exchange system includes a liquid contracts exchange, traders trading on the exchange, a securities exchange listing shares of the trader, thereby enabling access to the capital markets, and a surety guaranteeing obligations of the trader. Methods are provided for transferring risk to the capital markets, for operating a liquid contracts exchange, for paying obligations under an exchange traded contract, for calculating sureties, for auditing traders, detecting errors, mistakes or fraud in a trader's financial statements, for assuring compliance by a trader, for estimating a franchise value of a trader, for making a contract tradable on an exchange, and for managing traders in the contract exchange system.
1 . A contracts exchange system, comprising:
a liquid contracts exchange;
a trader trading on the liquid contracts exchange;
a securities exchange listing shares of the trader; and
a surety guaranteeing obligations of the trader.
2 . The system of claim 1 , further comprising:
software which verifies that holdings according to records of the trader, the surety, and the liquid contracts exchange all substantially match.
3 . The contracts exchange system of 1 , wherein the contracts exchange system comprises a central bank.
4 . The system of claim 1 , further comprising:
software which compares trading prices of bonds on said exchange to trading prices of other bonds of similar maturity and assigns a rating in contemplation of relative yields.
5 . The system of claim 1 , further comprising:
a reporting mechanism which provides real time surety pricing.
6 . The system of claim 2 , wherein the reporting mechanism provides computer accessible data of surety pricing.
7 . The system of claim 1 , wherein the surety comprises an internal surety assuring timely payment of the obligations of the trader.
8 . The system of claim 1 , further comprising:
an auditing mechanism that provides data used in surety pricing.
9 . The system of claim 5 , wherein the auditing mechanism detects errors, fraud or concentration of risk.
10 . The system of claim 5 , wherein the auditing mechanism provides real time data.
11 . A method for transferring risk to capital markets using the system of 1 , comprising:
providing a contract;
enabling the contract exchange system to determine that the contract is eligible;
entering into the contract with the contract exchange system;
transferring risk to a trader; and
transferring risk to an investor in the trader.
12 . The method of claim 11 , wherein the step of entering into the contract comprises:
unbundling financial rights and obligations of the contract from any services called for by the contract.
13 . The method of claim 11 , wherein the step of entering into the contract comprises:
unbundling financial rights and obligations of the contract from any surety guarantee.
14 . The method of claim 11 , wherein the step of entering into the contract comprises:
listing a share of the contract on a liquid contracts exchange.
15 . The method of claim 14 , further comprising the step of:
trading a share of the contract on a liquid contracts exchange.
16 . The method of claim 11 , further comprising:
determining that the contract is standardized.
17 . The method of claim 16 , wherein the step of determining that the contract is standardized comprises:
determining that the contract is part of a set of standardized contracts.
18 . The method of claim 11 , further comprising:
amending the contract after it has been entered into.
19 . The method of claim 11 , wherein the step of providing the contract comprises:
creating the contract.
20 . The method of claim 11 , wherein the step of providing the contract comprises:
modifying an existing contract.
21 . The method of claim 11 , wherein the step of providing the contract comprises:
renegotiating an existing contract already being traded on an exchange.
22 . A method for operating a liquid contracts exchange, comprising:
qualifying traders to become eligible for trading on the exchange;
trading on the contracts exchange using a computer or computer network by the transparent traders;
providing a surety guarantee for each trader's obligations; and
pricing each surety guarantee.
23 . The method of claim 22 , wherein the step of pricing each surety guarantee comprises:
obtaining relevant data;
tabulating the relevant data using a computer or computer network; and
generating reports of surety pricing.
24 . The method of claim 23 , wherein the step of obtaining the relevant data comprises:
obtaining information on surety premiums for the traders; and
obtaining information on market values of assets and liabilities held by the traders.
25 . The method of claim 24 , wherein the step of generating reports of surety pricing comprises:
generating reports containing calculations of surety pricing in relation to each trader's assets and liabilities.
26 . The method of claim 22 , further comprising:
monitoring a financial condition of each transparent trader.
27 . The method of claim 22 , further comprising:
restricting substantially all trading on the contracts exchange to transparent traders.
28 - 109 . (canceled)