Systems and methods for securitizing a commodity
A commodity trust is provided by a Trustee for a particular commodity. Commodity shares are backed by the Trustee's custody of the actual commodity. For example, commodity shares are created and issued when a trust participant deposits an amount of the commodity with the Trustee or a custodian acting on behalf of the Trustee. After confirmation of the receipt of the commodity, an amount of commodity shares is issued by the Trustee, which is equal in value to the value of the commodity.
1. A method for electronically trading shares of physical gold bars over an electronic communications network (ECN), the method comprising:
providing an amount of the physical gold bars to a trust, the physical gold bars provided to the trust having a value based at least on a weight thereof;
receiving a number of trust shares each representing a proportional ownership interest in the physical gold bars; and
using the electronic communication network (ECN) to trade one or more of the trust shares,
wherein said using the ECN to trade one or more of the trust shares facilitates purchase or sale of the trust shares by an investor and provides liquidity with respect to the trading of the physical gold bars.
2. The method of claim 1 , wherein, after using the ECN to trade said one or more of the trust shares over the ECN, a buyer thereof owns a corresponding interest in a portion of the physical gold bars, said portion of the gold bars being stored in a repository associated with the trust account.
3. The method of claim 1 , wherein, after using the ECN to trade said one or more of the trust shares over the ECN, a buyer thereof owns a corresponding interest in a portion of the physical gold bars, said portion of the gold bars being physically transferred out of a repository associated with the trust account.
4. The method of claim 1 , wherein said using the ECN to trade one or more of the trust shares over the ECN comprises trading via a securities exchange so as to create a secondary market for the trust shares.
5. A method for electronically trading shares of physical gold bars over an electronic communications network (ECN), the method comprising:
providing an amount of the physical gold bars to a trust, the physical gold bars provided to the trust having a value based at least on a weight thereof;
receiving a number of trust shares each representing a proportional ownership interest in the physical gold bars; and
using the electronic communication network (ECN) to trade one or more of the trust shares,
wherein said using the ECN to trade one or more of the trust shares over the ECN comprises trading via a securities exchange so as to create a secondary market for the trust shares,
wherein the securities exchange is the New York Stock Exchange, and
wherein said trading one or more of the trust shares via the securities exchange facilitates purchase or sale of trust shares by an investor and provides liquidity with respect to the trading of the physical gold bars.
6. The method of claim 1 , further comprising establishing the value of the physical gold bars by use of an assay result of the gold bars in addition to the weight.
7. The method of claim 1 , further comprising maintaining the trust for the benefit of one or more trust share owners by a trustee.
8. The method of claim 1 , further comprising, establishing a creation order that requests creation of the trust shares.
9. The method of claim 8 , wherein said creation order requests creation of a minimum amount of the trust shares or a multiple of the minimum amount.
10. The method of claim 8 , wherein said creation order requests creation of a specific number of trust shares.
11. The method of claim 8 , wherein said creation order requests creation of a number of trust shares that correspond to a specified amount of the physical commodity.
12. The method of claim 1 , comprising:
providing a redemption order comprising a request to redeem one or more trust shares corresponding to an associated physical amount of the delivered gold bars.
13. The method of claim 12 , further comprising obtaining a receipt for the transferred physical amount.
14. The method of claim 1 , further comprising creating additional trust shares responsive to a delivery of an additional physical amount of gold bars to the trust.
15. A method for electronically trading shares of physical gold bars over an electronic communications network (ECN), comprising:
receiving an amount of physical gold bars in a trust, the physical gold bars received having a value based at least on a weight thereof;
creating trust shares, each share representing a proportional ownership interest in the physical gold bars in the trust;
enabling trading of the trust shares over the electronic communications network,
wherein said enabling trading of the trust shares over the ECN facilitates purchase or sale of the trust shares by an investor and provides liquidity with respect to the trading of the physical gold bars.
16. The method according to claim 15 , further comprising weighing of the physical gold bars prior to receiving the physical gold bars in the trust to determine a value thereof.
17. The method of claim 1 , wherein the trust shares are traded over the ECN as an exchange-traded security.
18. The method of claim 5 , wherein said one or more of the trust shares are traded on the securities exchange as an exchange-traded security.
19. The method of claim 15 , wherein said enabling trading of the trust shares over the ECN comprises enabling trading of the trust shares as an exchange-traded security.