Introduction: Global Credit e-Bourse is one of a host of novel exchange-traded derivatives (“ETD”) platforms created by Global e-Bourse Suites® (“Suites”), a unit of Dearborn Financial, Inc. Its solutions target commercials (physical delivery-oriented counterparties) that deal in asset classes traditionally traded “forward” over – for lack of better alternatives -- opaque, illiquid OTC platforms intermediated by broker-dealers. Commercials are ideally suited for Suites of centralized ETD platforms designed to enhance prospects for contract settlements via physical delivery by facilitating order transparency, depth, and liquidity while reducing counterparty credit risk. See www.globale-boursesuites.com for details.
To date, Suites has customized both conventional and Sharia-based ETD platforms for asset classes such as energy commodities and industrial minerals and rocks. Also, an integrated barter and countertrade platform (Global Commodities e-Counter) was created to deal with those and other commodities.
All Suites platforms noted above and others, particularly Global Credit e-Bourse (addressed herein), are designed to match, execute and settle buy and sell orders placed over a Suites-controlled network by counterparties who desire to manage asset price volatility risks using Suites’ novel ETD contracts. The novelty: rather than specifying one form of a denoted asset to serve as a benchmark proxy for all forms of that asset (e.g. West Texas Intermediate in the case of crude oil or 10-year U.S. Treasuries for bonds), Suites ETD contracts are linked with a plurality of underlying asset forms (i.e. sets). Each in the plurality has varying degrees of properties that add to or detract from asset value per parameters unique to Suites’ benchmark-specific sets of assets and complementary differential indexes, all of which are crafted to uniformly process ETD contract settlements by physical delivery in manners that enhance order depth and liquidity for counterparties having practically, rather than absolute, opposite interests.
Below are proprietary “Benchmark Complex” embodiments common to all Suites’ platforms noted above, as disclosed in a U.S.-issued patent assigned to Suites and its continuation-in-part application.
Benchmark Data Collection Module configured to collect data for a plurality of tradable assets underlying a particular derivatives contract wherein the data includes permitted asset types and classes, plus quantitative and qualitative data properties applicable to each asset.
Benchmark Selection Module configured to select tradable assets from the plurality of tradable assets based on their quantitative and qualitative properties to generate sets of assets comprising benchmarks that are formulated for a particular derivatives contract.
Benchmark Weight Generating Module configured to generate weights for use in generating weighted averages wherein a specific weight for generating a specific weighted average for a specific tradable asset within a set of said assets is based on the quantitative properties of each asset relative to the aggregate quantitative properties of all assets in the specific set.
Benchmark Generating Module configured to generate benchmarks formulated for each derivatives contract indicating aggregate properties of the sets of tradable assets, wherein said benchmark for any specific set of assets is generated based on weighted averages of the qualitative properties of the assets in the set.
Benchmark Communication Module configured to communicate tradable asset benchmarks formulated for each derivatives contract to traders and receive orders from those traders to buy or sell derivatives contracts based on said benchmarks.
Order Processing Module configured to process orders for derivatives contracts based on differences between (a) the actual properties of the tradable asset to be physically delivered under the terms of an operative derivatives contract and (b) the aggregate properties indicated by an operative benchmark associated with the specific set of assets from which the asset to be physically delivered is only one component of several in the set.
Data Update Module configured to periodically receive updated data for each of the tradable assets in the sets of tradable assets and using said data to update tradable asset benchmarks listed over the exchange-controlled network.
Dongle comprised of hardware and software, or alternatively a subsystem comprised of at least software, each configured for exchange-controlled communications required to enable information to be securely and selectively passed along the network for purposes of creating the tradable asset benchmarks formulated for derivatives contracts, and for determining or effectuating orders to be placed for the complementary differential index contracts to be presented at future settlement dates along with underlying exchange-for-physical (“EFP”) contracts being settled by physical delivery.
Application: Global Credit e-Bourse applies Suites’ proprietary Benchmark Complex embodiments to credit instrument ETD based on benchmark sets configured as to instrument type (and sector, where applicable) and qualitative differences. Examples of credit instrument types and sectors include:
Corporate industrials sector bonds
Corporate utilities sector bonds
Corporate transports sector bonds
Corporate financial services sector bonds
Municipal bonds
Preferred stocks
Leveraged loans
Qualitative differences that are integral to the configuration of benchmark sets and complementary differential indexes include coupon interest rate, duration to maturity and call dates, security and credit quality ratings, convertibility, etc.
Contract Listings and Products: See the Contract Listings for details re: ETD contract listings, products, and specifications derived from the disclosures made herein, as well as in the issued patent and continuation-in-part applications (note: access requires password).