Abstract:
Investment return on a liquid or illiquid asset is increased by granting the right to pledge the asset to an entity that can deploy the asset more efficiently than its owner. Using the committed assets—and the resulting ability of the entity to pledge those assets and borrow capital at advantageous rates—the entity can transact for greater profits than the asset owner could otherwise earn. The entity&#39;s credit rating may be based, at least in part, on a third-party guarantee of the asset&#39;s value. The credit rating may also be based on other characteristics of the entity. The entity may obtain pledges of multiple assets from multiple owners, all of whom share in the profits of the transactions. If there are losses, the pledged assets can be sold, or the owners can contribute to the entity to pay off the losses.

Description:
BACKGROUND OF THE INVENTION 
     This invention relates to allowing owners of assets to increase their investment returns, including allowing owners of relatively illiquid assets to obtain a superior return on their equity in those assets. More particularly, the invention relates to method and apparatus for obtaining guarantees of the value of the owner&#39;s equity in assets in order to facilitate the use of those assets to generate investment returns or other economic benefits for the asset owners. 
     Owners of certain types of relatively illiquid assets may seek ways to put those assets to productive use. There are many known mechanisms through which an asset owner increase the liquidity of illiquid assets, freeing up the equity in those assets for productive use. 
     However, there are many assets whose equity is underutilized or not efficiently utilized. This is because the ways in which the owner of an asset can monetize his or her equity in the asset without selling it outright are generally limited by one or more of (a) the owner&#39;s own credit characteristics, (b) the existence, or not, of a market for lending against the particular type of asset, and (c) prevailing interest rates. 
     For example, owners of real estate (in addition to putting the land itself to productive agricultural, residential, or commercial use) commonly borrow against their property by way of a mortgage or a home equity line of credit. 
     However, no existing mechanism provides a flexible solution that can, on the one hand, be applied to a variety of assets and, on the other hand, facilitate a large number of potential uses for those assets in the marketplace on a more advantageous basis than the owner could achieve individually. Further, existing mechanisms fail to maximize the return to the asset owner or have other inherently undesirable characteristics. 
     Current methods for monetizing the owner&#39;s equity in an asset by borrowing against its value are inherently inefficient. For example, in exchange for a loan, the asset owner typically makes a payment or payments to the lender at a disadvantageous rate of interest. Consequently, any return that the owner may make from investing the borrowed money needs to be offset against the owner&#39;s liability to make a payment or payments of interest and principal to the lender at a premium rate relative to the risk to the assets. Further, the asset owner is rarely able to borrow funds representing more than a fraction of the value of the owner&#39;s total equity in the asset. 
     Again considering real property as an example of a relatively illiquid asset, home equity lines of credit or mortgage lending provide two well known methods of borrowing against an asset. Reverse mortgages are a further example of one such less-than-optimal borrowing mechanism for real property, as reverse mortgages likely result in the eventual loss of the pledged real property asset so that it will be unavailable to the owner&#39;s estate. 
     The insurance market known as Lloyd&#39;s of London provides a mechanism for “providers of capital” to earn a return on their property without borrowing against it, by instead using capital assets to underwrite potential insurance losses. In the Lloyd&#39;s market, individual or corporate members underwrite certain insurable risks. This is accomplished by the use of a variety of intermediaries, including brokers, recurring annual syndicates, the syndicates&#39;s managing agents, and members&#39;s agents, as well as the various corporations formed by the Lloyd&#39;s market to assist with the insurance functions of policy writing and claims management. Corporate insurers who participate in the Lloyd&#39;s market can avoid using many of these intermediaries by forming Integrated Lloyd&#39;s Vehicles, wherein many of the functions provided by agents are combined in a single entity under the insurer&#39;s control. 
     The Lloyd&#39;s market also benefits from certain oversight and risk management functions undertaken by Lloyd&#39;s of London itself, as overseen by the Council of Lloyd&#39;s. The peculiar structure and object of the Lloyd&#39;s market is governed by a United Kingdom statute, and the structure of the Lloyd&#39;s market has been altered from time to time by the Parliament of the United Kingdom. As such, Lloyd&#39;s has a unique structure which is inexorably linked to its particular object and history, to exist as a marketplace for insurance that connects providers of capital who wish to act as insurance underwriters with insurable risks through several layers of highly structured and unique intermediaries. The Lloyd&#39;s market does not increase the liquidity of its member&#39;s assets and its activity is limited to insurance. 
     It would be desirable to be able to provide a method and apparatus that would allow an asset owner to obtain a superior return on the asset owner&#39;s equity in the asset, regardless of the liquidity of the asset. 
     SUMMARY OF THE INVENTION 
     It is an object of the present invention to provide a method and apparatus that would allow an asset owner to obtain a superior return on the asset owner&#39;s equity in an asset, by pledging that asset to an investment vehicle that can deploy the asset and commit the value contained therein to a variety of uses and investments, typically on more advantageous terms than the owner could if the owner were acting alone. 
     It is another object of the present invention to make the previously under-utilized value represented by the owner&#39;s equity in various classes of assets available for a variety of additional productive uses, thereby allowing financial markets to operate with increased efficiency. 
     The above and other objects and advantages of the invention are realized in a preferred embodiment of the invention by creating a legal entity (referred to herein as a “vehicle”), transferring to the vehicle a right to pledge the asset, and obtaining a guarantee of the value of the asset. The guarantee may be presented subsequently to a commercial credit rating agency to obtain a credit rating for the vehicle. In reliance upon the credit rating thereby obtained, the vehicle may borrow money from a lender. 
     Because the vehicle has substantially no balance sheet characteristics other than the right to pledge the asset (and the liability to pay premiums in exchange for the guarantee or other fees associated with the structure) and benefits from an external guarantee of the value of the asset, if necessary, the vehicle can typically borrow on more advantageous terms than the asset owner could, thereby making a relatively illiquid asset more liquid. In particular, the portion of the value of the asset that can be borrowed against may be greater than the portion that could be borrowed against if the asset owner were borrowing on his or her own account. Moreover, the credit rating based on the guaranteed full value of the asset would be expected to allow the vehicle to borrow at a lower interest rate than that available to the asset owner. 
     By engaging the services of a knowledgeable manager, the vehicle can agree to commit all or part the value represented by the asset to transactions. In the normal course those transactions would be expected to provide returns for the asset owners. Such returns would be expected to exceed the returns available to the asset owner from previously known mechanisms such as those described above. 
     Preferably, the manager can have the vehicle engage in any type of transaction or investment. For example, the manager can have the vehicle act as a surety to guarantee the performance of a third party in an unrelated transaction, in which case it is not even necessary to borrow against the value of the asset except in the event that the third party defaults on its obligations in the unrelated transaction. In that way, interest expense is eliminated or minimized. 
     The vehicle can also borrow against the value of the asset for investment purposes or to pay fees and expenses in connection with its operations. In such a case, there may be borrowing against the asset over the life of the investment. If the asset in question is real estate, such borrowing may be similar to mortgage financing or a home equity line of credit secured by the asset, except that the vehicle is able to borrow at more advantageous interest rates—because of its investment grade credit rating—than would generally be available to the asset owner acting alone. 
     In practice, the operations of a vehicle in accordance with the present invention will likely involve some combination of transactions that require borrowing, and transactions that do not require borrowing. 
     In one preferred embodiment of the present invention, the vehicle has a number of desired characteristics commonly associated with arm&#39;s length counterparties, such as an investment grade credit rating, liquidity, and management expertise sufficient to decide to which uses to commit the assets. For example, the vehicle may be an entity that also has a separate business, such as a bank or investment management company. In another preferred embodiment of the invention, the vehicle may possess only some of those desired characteristics, with the balance of the desirable characteristics being created using arm&#39;s length counterparties. In either embodiment, the vehicle&#39;s investment grade credit rating may be solely the result of its having rights to borrow against one or more assets (owned by one or many owners). Alternatively, particularly in the first embodiment, the vehicle may have other characteristics separate from the pledged assets that earn it an investment grade credit rating. In this connection, it should be noted that a vehicle in the second embodiment that has control of a large number of pledged assets, particularly such an entity that has been operating for a time and therefore has accumulated profits from previous transactions, may have an investment grade credit rating of the type that would be expected for a vehicle according to the first embodiment. 
     Thus, in accordance with the present invention, there is provided a method for increasing return on an asset for its owner. The method includes obtaining from the owner, by an entity other than the owner, rights to pledge the asset, and entering, by the entity, into a transaction based on a pledge of the asset. 
     There is also provided a method for increasing return of a plurality of assets for owners of those assets. The method includes obtaining from each respective one of the owners, by an entity other than any of the owners, rights to pledge respective ones of the assets, and entering, by the entity, into a plurality of transactions, each of the transactions based on a pledge of at least one of the assets. 
     Apparatus for administering the method, and an investment product based on the method, are also provided. 
    
    
     
       BRIEF DESCRIPTION OF THE DRAWINGS 
       The above and other objects and advantages of the invention will be apparent upon consideration of the following detailed description, taken in conjunction with the accompanying drawings, in which like reference numerals refer to like parts throughout, and in which: 
         FIG. 1  is a schematic diagram of a first preferred embodiment of the present invention; 
         FIG. 2  is a schematic diagram of a second preferred embodiment of the present invention; 
         FIG. 3  is a schematic diagram of a first embodiment of a hardware system for implementing the present invention; 
         FIG. 4  is a schematic diagram of a second embodiment of a hardware system for implementing the present invention; 
         FIG. 5  is a cross-sectional view of a magnetic data storage medium encoded with a set of machine-executable instructions for performing the method according to the present invention; and 
         FIG. 6  is a cross-sectional view of an optically readable data storage medium encoded with a set of machine executable instructions for performing the method according to the present invention. 
     
    
    
     DETAILED DESCRIPTION OF THE INVENTION 
     The method according to the invention will now be described with reference to  FIGS. 1-4 . 
       FIG. 1  shows an arrangement  100  according to a first preferred embodiment of a method according to the present invention. In arrangement  100 , an asset owner  10  preferably provides to vehicle  20  an assignment  16  of the right to pledge the owner&#39;s asset  12 . Vehicle  20  preferably has an investment grade credit rating  22  because of its pre-existing characteristics, which preferably are unrelated to the assignment  16 . Those pre-existing characteristics may include the ability and willingness to repay debt as evidenced by, inter alia, the vehicle&#39;s financial history and balance sheet. In a case, as described above, where a vehicle according to a second preferred embodiment of the invention has operated successfully and accumulated sufficient profit to become creditworthy in its own right, the pre-existing characteristics may also include that prior history and creditworthiness. 
     Vehicle  20  preferably makes a commitment  24  to an investment  30 , with the value of commitment  24  preferably not exceeding the realizable net cash value of asset  12  (or the aggregate realizable net cash value of a plurality of assets similar to asset  12  as discussed below). In exchange for the commitment  24  by vehicle  20 , if the outcome of the investment is as expected, vehicle  20  preferably earns a return  26 . From return  26 , vehicle  20  preferably pays income  18  to asset owner  10 , and also derives profit of its own (which may be a factor in securing credit rating  22 ). 
     If the outcome of transaction  30  is not as expected and there is a loss, vehicle  20  preferably is obligated to fund the amount of commitment  24 . In that case, a payment  28  preferably is made by vehicle  20  to cover the loss. Vehicle  20  preferably then makes a “call” on asset owner  10 —i.e., collects from asset owner  10  a payment  14  preferably equal to payment  28 . However, if asset owner  10  has no independent means of funding payment  14 , asset owner  10  may have to liquidate asset  12 , which underlies the assignment  16  to vehicle  20 . Preferably, the terms of assignment  16  give vehicle  20  the right to liquidate asset  12 , if such liquidation is necessary to fund required payment  14  to vehicle  20 . 
     For purposes of clarity, arrangement  100  as depicted in  FIG. 1  involves only one asset  12  owned by one asset owner  10 , securing one transaction  30 . However, this embodiment of the invention may operate with a plurality of assets, asset owners, and/or transactions. 
       FIG. 2  shows an arrangement  200  according to a second preferred embodiment of a method according to the present invention. As in arrangement  100 , in arrangement  200  asset owner  10  preferably provides to vehicle  20  an assignment  16  of the right to pledge the owner&#39;s asset  12 . In this embodiment of the invention, vehicle  20  may have no pre-existing credit characteristics, other obligations, or assets besides assignment  16  from asset owner  10 . Vehicle  20  preferably subsequently contracts with an insurer  36  to provide a guarantee  38  of the value of asset  12  in exchange for the payment of premiums  40  by vehicle  20 . Insurer  36  satisfies itself—e.g., through its own appraisal—of the value of the asset  12  before providing vehicle  20  with guarantee  38 . 
     Vehicle  20  preferably then presents guarantee  38 , received from insurer  36 , to a credit rating agency  25 , and in the absence of any liabilities beyond the obligation to pay premiums  40  to insurer  36 , vehicle  20  preferably obtains an investment grade credit rating  22  from credit rating agency  25 . In reliance upon investment grade credit rating  22 , vehicle  20  preferably obtains from a lender  44  a line of credit preferably equivalent to the realizable net cash value of the asset  12 . 
     Except as otherwise noted below, the remainder of the description of arrangement  200  may also apply to arrangement  100 . For example, even an entity with an excellent credit rating may have no investment expertise to speak of. Also, there is no reason why even a large financial institution operating according to the present invention could not choose to retain the services of an outside manager as described below. 
     Vehicle  20  may engage the services of a manager  60  to determine what transaction or transactions to which vehicle  20  should commit. Manager  60  preferably acts as the agent of vehicle  20  to enter into one or more enforceable contracts on behalf of vehicle  20 . The relationship of vehicle  20  to manager  60  preferably is governed by an agency contract  52 . Contract  52  preferably effectively transfers to manager  60  the right to either pledge underlying asset  12  or commit funds equivalent to the realizable net value of underlying asset  12 , either or both as enhanced by investment grade credit rating  22  of vehicle  20 . In exchange for the services of manager  60 , vehicle  20  preferably agrees to pay management fees  56  to manager  60 . 
     Preferably acting through manager  60 , vehicle  20  preferably commits to a transaction  30 —which is unrelated to the transaction among owners  10 , vehicle  20  and guarantor (or liquidity provider)  36 —the value of that commitment  24  preferably not exceeding the realizable net cash value of asset  12 . If transaction  30  is profitable, income  26  preferably is generated for vehicle  20 . Manager  60  preferably remits that income  26  to vehicle  20  by way of a payment  54 . From the amounts paid to the vehicle  20  in payment  54 , vehicle  20  preferably pays income  18  to asset owner  10 , premiums  40  to insurer  36 , any interest  48  that may be owed to lender  44 , and management fees  56  to manager  60 . Any balance remaining preferably is kept by vehicle  20  as its own profit. 
     If the outcome of transaction  30  is not as expected and there is a loss, vehicle  20  preferably is obligated to fund the amount of commitment  24 . A payment  28  preferably is made by manager  60  directly to cover the loss. That payment  28  preferably is made by manager  60  on behalf of vehicle  20 , and at least in arrangement  200  preferably is funded by funds  50  provided to vehicle  20  by lender  44  pursuant to line of credit  22  of vehicle  20 . Those funds  50  preferably are forwarded by vehicle  20  to manager  60  by way of a payment  58 . Alternatively, there may be a direct payment by lender  44  to manager  60  at the direction of vehicle  20 . In arrangement  200 , vehicle  20  preferably makes interest payments  48  to lender  44  in exchange for the disbursement of the aforementioned funds  50  by lender  44 . 
     Vehicle  20  preferably makes a call on asset owner  10 —i.e., collects from asset owner  10  a payment  14  equal to the funds  50  borrowed from lender  44 , plus the amount of any interest payments  48 . If asset owner  10  cannot make payment  14 , vehicle  20  preferably can liquidate asset  12  that underlies assignment  16  to vehicle  20 . Vehicle  20  preferably has the right to liquidate asset  12  as a result of the terms of assignment  16  as well as a right to the proceeds in an amount sufficient to fund any necessary payment  14  to vehicle  20 . Should the value of asset  12  be insufficient to cover the loss, lender  44  might have recourse to insurer  36  pursuant to the policy in order to make up the difference. 
     Alternatively, vehicle  20  may arrange for asset owner  10  to borrow funds  42  from lender  44  to satisfy the obligation of asset owner  10  obligation to make payment  14  to vehicle  20 . In that case, lender  44  preferably disburses the borrowed funds  42  (in an amount equal to what is required by payment  14 ) directly to vehicle  20  in lieu of asset owner  10  making payment  14  directly to vehicle  20 . Also, in this alternative configuration of arrangement  100  or  200 , asset owner  10  is responsible to make to lender  44  a repayment  46  of interest and principal on the loan, in exchange for lender  44  disbursing funds  42 . 
     As in the case of  FIG. 1 , for purposes of clarity, arrangement  100  as depicted in  FIG. 1  involves only one asset  12  owned by one asset owner  10 , securing one transaction  30 . However, this embodiment of the invention may operate with a plurality of assets, asset owners, asset manager, insurers, lenders and/or transactions. 
     In an alternative embodiment (not shown) of either preferred embodiment of the invention, there may be an entity (not shown) administering arrangement  100  or  200 . That entity preferably has control of vehicle  20 , and may also monitor and evaluate the risk and return of the various choices by manager  60  of transactions  30  to which to make commitments  24  on behalf of vehicle  20 . The results of that monitoring and evaluation may be made available to asset owners  10 . In this alternative embodiment, the entity administering arrangement  100  or  200  may also track the income and losses generated for asset owners  10  as a result of transactions  30 , create a mechanism for the timely distribution of income  18  deriving from those transactions  30 , and notify asset owners  10  to request and coordinate payments  14  necessitated by losses as well as any necessary liquidations of the pledged assets  12 . 
     In any embodiment of the invention involving a plurality of assets  12 , asset owners  10  and transactions  30 , the entity administering arrangement  100  or  200  may establish a system to advertise, market and promote the participation of asset owners  10  in arrangement  100  or  200 . 
     The types of assets  12  of which the present invention can be used include, but are not limited to, relatively illiquid assets such as real estate, life insurance contracts, pension benefits, annuity contracts, a beneficiary&#39;s interest in trust funds, funds held in an individual retirement account, restricted securities, lease income, royalties, artwork and and other personal property, as well as relatively liquid assets such as stocks, bonds, or futures contracts in traded commodities. Similarly, those assets  12  could be committed to a variety of different kinds of transactions, with vehicle  20  being able to participate in virtually any type of financial transaction in which asset owner  10  could participate. 
     As discussed above, it may be that characteristics of vehicle  20  itself allow vehicle  20  to obtain an investment grade credit rating without resorting to an external insurer  36 . Where an external insurer  36  is used, insurer  36  preferably is an entity operating at arm&#39;s length from vehicle  20 . However, insurer  36  also may be an entity affiliated with vehicle  20 . 
     Similarly, if a lender  44  is used, lender  44  preferably is an entity operating at arm&#39;s length from vehicle  20 , but also may be an entity affiliated with vehicle  20 . Alternatively, the function of lender  44  may be performed by vehicle  20  itself, by virtue of vehicle  20  having sufficient funds—e.g., from profits from either previous transactions, or unrelated endeavors (where vehicle  20  has such endeavors as discussed above, such as the case in which vehicle  20  is a bank)—to fund any necessary payment  58  without resorting to an external lender. 
     Also similarly, if a manager  60  is used, manager  60  preferably is an entity operating at arm&#39;s length from vehicle  20 , but also may be an entity affiliated with vehicle  20 . Alternatively, the function of manager  60  may be performed by vehicle  20  itself by virtue of vehicle  20  (or personnel in vehicle  20 ) having sufficient expertise to evaluate and decide to which transactions  30  to commit, without resorting to an external manager. 
     As discussed above, both arrangement  100  of  FIG. 1  and arrangement  200  of  FIG. 2  are shown with only one asset  10  and one asset owner  12 , but the present invention can be used—in arrangement  100 , arrangement  200  or some other arrangement—with a plurality of assets  10  and asset owners  12 . In such a case, involving a plurality of assets  10  and asset owners  12 , asset owners  12  may be divided into two (or more) classes, with a first class of asset owners  12  agreeing to be primarily responsible to fund any payments  28  (by way of payments  14  or borrowed funds  42 ) brought about by losses in transactions  30 , in exchange for that class of asset owners  12  having an entitlement to a larger portion of income  18 . The second class of asset owners  12  would receive a smaller portion of income  18  and would be liable to fund payments  28  (by way of payments  14  or borrowed funds  42 ) only to the extent that the amount of the required payments  28  exceeded the value of the assets pledged into the system by asset owners  12  in the first class. In another such case, involving at least one asset  10  and a plurality of vehicles  20 , the asset owner  12  has the option to transfer the right to pledge asset  10  from one vehicle  20  to another. Preferably such transfer would include the guarantee  38  of the asset&#39;s value obtained from insurer  36  before the transfer. 
     Any arrangement according to any embodiment of the invention involving a plurality of assets  10 , asset owners  12 , and transactions  30  may be arranged so that any individual asset owner  12  and that owner&#39;s asset  10  may begin or end participation in the system at any time, upon reasonable notice. Alternatively, either a participant&#39;s entry date or exit date, or both, may be restricted. With regard to entry dates, for example, the arrangement may require that asset owners  12  join on fixed dates. With regard to exit dates, for example, the arrangement may require that once an asset owner  12  has joined the arrangement, that asset owner  12  must remain in the arrangement for some predtermined minimum duration—e.g., three years, five years, etc. 
     In any arrangement according to any embodiment of the invention, an account  21  may be set up within vehicle  20  for each participating asset owner  10  and payments  18  due to asset owner(s)  10  may be accumulated inside vehicle  20  for some period of time before being remitted to asset owner(s)  10 . During the period that they are retained, such accumulated funds may be used as an alternate source of funding for any payments  28  made necessary by losses in any transaction  30 , as an alternative to payments  14  from asset owner(s)  10  (whether or not borrowed by asset owner(s)  10  from lender  44 ). 
     In any embodiment of the present invention, the entity administering that embodiment may establish a system (described below) to provide proof and documentation to asset owners  10 , lender  44  (if used) and insurer  36  (if used) regarding the amounts and circumstances surrounding losses in any transaction  30  that would trigger the aforementioned payments  58  and  28 . Such a system could also send periodic (e.g., monthly or quarterly) reports to asset owners  10  detailing their profits or losses and the value of their investments (i.e., the assets  10  they have contributed, adjusted for any realized profits or losses), as well as annual statements that may be required to satisfy obligations of asset owners  10  to report profits or losses to governmental taxing authorities. 
     The entity administering any embodiment of the present invention may establish a system of settling any disputes arising between any two parties including vehicle  20 , any asset owner  10 , any lender  44  (if used) and any insurer  36  (if used), including disputes between two parties in the same class of parties (e.g., between two owners  10  or between two lenders  44 , etc.) regarding their participation in that embodiment of the present invention (such as disputes regarding their respective responsibilities and obligations in connection with payments  18 , the pledging  16  of the underlying assets  12 , any losses in any transaction  30  giving rise to the aforementioned payments  14  and  58 , or any other dispute arising out of participation in an embodiment of the present invention). Such a dispute resolution system, for example, may provide for arbitration, including binding arbitration, of disputes. 
     The present invention may be administered using any of a variety of computer systems—ranging from a modest personal computer (such as one based on the 80X86 series of microprocessors originally developed by Intel Corporation, of Santa Clara, Calif., and currently represented by the Pentium® family of microprocessors and related processors such as the Core™ Duo and Core™ 2 Duo processors) equipped with a spreadsheet and/or database program, to a supercomputer, depending on the number of potential participating asset owners  10  and assets  12 . 
     A computer system for administering the method of the present invention could process applications for participation by asset owners  10 . This could include printing application forms for completion by asset owners  10  seeking to participate in vehicle  20 , in which case the data from completed applications could then be entered by human operators. Alternatively, the data could be entered by operators based on verbal responses from an applicant, who may appear live at the vehicle&#39;s place of business or may call by telephone. Or the system could include access over an external network such as the Internet (or via modem), by which an applicant could complete an application online. As part of the application process, the system could print the necessary documents for completion by an asset owner  10  for pledging an asset  12  and could also be used to record receipt of pledge documents (whether or not printed by the system). 
     The computer preferably would similarly administer the various transactions  30 , preferably keeping track of necessary trades, as well as payments made and received, and preferably would also administer participant accounts  21 , keeping track of payments due to or from participating asset owners  10 . Account administration preferably would also include sending periodic statements to participating asset owners  10 , including statement sent annually (or on some other timetable as required by the relevant taxing authorities) to enable participating asset owners  10  to meet their tax reporting and payment obligations. If external insurers or lenders are involved, the system preferably also would keep track of those relationships (either between the vehicle and the external entity or entities, or between individual asset owners  10  and the external entity or entities) and payments to be made to or from the external entities. In addition, the system preferably would keep track of any open disputes and the status of attempts to resolve those disputes. 
     An exemplary computer hardware system  300  with which the present invention may be implemented is shown in  FIG. 3 . System  300  preferably includes a computer  301  comprising a central processing unit (“CPU”)  302 , a working memory  303  which may be, e.g., RAM (random-access memory) or “core” memory, mass storage memory  304  (such as one or more disk drives or CD-ROM or DVD-ROM drives), one or more display terminals  305  which may be based on cathode-ray tubes (“CRTs”) or liquid crystal displays or plasma displays or any other display technology that may be used for computer display terminals, one or more keyboards  306 , one or more input lines  307 , and one or more output lines  308 , all of which are interconnected by a conventional bidirectional system bus  309 . 
     Input hardware  310 , coupled to computer  301  by input lines  307 , may be implemented in a variety of ways. Market value data and other transaction data may be inputted from an online financial service via the Internet, or dedicated data line  311 , or the use of a modem or modems  312  and a conventional telephone line. Alternatively or additionally, input hardware  310  may include CD-ROM or DVD-ROM drives or disk drives  313 . In conjunction with display terminal  305 , keyboard  306  may also be used as an input device. 
     Output hardware  320 , coupled to computer  301  by output lines  308 , may similarly be implemented by conventional devices. By way of example, output hardware  320  may include CRT display terminal  305  for displaying the status of a participating asset owner&#39;s account  21  or particular assets  10  in that account  21 , payments to be made to or received from participants, that status of any outstanding dispute requiring resolution, or any aspect of operation of the method according to the invention. Output hardware  320  might also include a printer  321 , so that hard copy output may be produced, or a disk drive  313 , to store system output for later use. Where asset trades are to be executed in connection with a transaction  30 , trading information may be transmitted over the Internet or dedicated data lines  314 , or possibly by telephone with the use of modem  312 , to cause the trades to be executed. 
     In operation, CPU  302  coordinates the use of the various input and output devices  310 ,  320 , coordinates data accesses from mass storage  304  and accesses to and from working memory  303 , and determines the sequence of data processing steps. 
     In  FIG. 4 , which shows a second preferred embodiment of apparatus for administering the invention, hardware combination  400  replaces CPU  302  for many of the functions performed in administering the method of the invention. Although a CPU of some kind will still be used for many of the bookkeeping operations of the system (billing, collection, etc.), in the embodiment of  FIG. 4  many of the functions are carried out by special purpose hardware. Although some or all of the dedicated hardware modules could be implemented as single-program general purpose microprocessors, they may also be implemented as hard-wired logic (such as appropriately hard-wired gate arrays). As still another alternative, all or part of this hardware combination  400  could be implemented by a programmable logic device (“PLD”), such as those manufactured by Altera Corporation, of San Jose, Calif. One advantage to using a PLD-based hardware system would be the ability to dynamically reconfigure the hardware components. 
     Apparatus  400  preferably is built around a communications bus  401  similar to bus  309  of  FIG. 3 . Although not shown in  FIG. 4 , a CPU similar to CPU  302  may also be included in apparatus  400 , connected to bus  401 . System  400  also includes input/output devices  402  similar to those in system  300 , including one or more mass storage devices  403 , one or more CRTs  404 , one or more keyboards  405 , one or modems  406 , and one or more printers  407 . 
     Bookkeeping subsystem  410 , whose functions could also be performed by a CPU (not shown) as discussed above, preferably includes an accounting/arithmetic unit  411  for keeping track of the accounts  21  of the various asset owners  10 , a collection system  412  for billing asset owners  10  and keeping track of their payments, and transaction monitoring system  413  for monitoring transactions  30 . Although each module of subsystem  410  is preferably connected directly to bus  401 , at least some of the modules may also be interconnected by local bus  414 . 
     A first trading system  420  preferably secures for the vehicle, from participating asset owners  10 , the rights  16  to pledge assets  10 . System  420  preferably includes the logic and communications ability (in conjunction with modems  406  available through bus  401 ) necessary to secure those rights. Preferably, system  420  includes recording unit  421  for recording pledges  16 , and releases thereof, in the appropriate public registry, if applicable. 
     A second trading system  430  preferably handles any aspects of transactions  30  that may involve purchases or sales of securities in the public markets. 
       FIG. 5  presents a cross section of a magnetic data storage medium  600  which can be encoded with a machine executable program that can be carried out by systems such as the aforementioned personal computer, or other computer or similar device to administer the method of the invention. Medium  600  can be a floppy diskette or hard disk, or magnetic tape, having a suitable substrate  601 , which may be conventional, and a suitable coating  602 , which may be conventional, on one or both sides, containing magnetic domains (not visible) whose polarity or orientation can be altered magnetically. Except in the case where it is magnetic tape, medium  600  may also have an opening (not shown) for receiving the spindle of a disk drive or other data storage device. 
     The magnetic domains of coating  602  of medium  600  are polarized or oriented so as to encode, in manner which may be conventional, a machine-executable program, for execution by a system such as a personal computer or other computer or similar system, in accordance with the invention. 
       FIG. 6  shows a cross section of an optically-readable data storage medium  700  which also can be encoded with such a machine-executable program, which can be carried out by systems such as the aforementioned personal computer, or other computer or similar device for administering the method of the invention. Medium  700  can be a conventional compact disk read only memory (CD-ROM) or digital video disk read only memory (DVD-ROM) or a rewriteable medium such as a CD-R, CD-RW, DVD-R, DVD-RW, DVD+R, DVD+RW, or DVD-RAM or a magneto-optical disk which is optically readable and magneto-optically rewriteable. Medium  700  preferably has a suitable substrate  701 , which may be conventional, and a suitable coating  702 , which may be conventional, usually on one or both sides of substrate  701 . 
     In the case of a CD-based or DVD-based medium, as is well known, coating  702  is reflective and is impressed with a plurality of pits  703 , arranged on one or more layers, to encode the machine-executable program. The arrangement of pits is read by reflecting laser light off the surface of coating  702 . A protective coating  704 , which preferably is substantially transparent, is provided on top of coating  702 . 
     In the case of magneto-optical disk, as is well known, coating  702  has no pits  703 , but has a plurality of magnetic domains whose polarity or orientation can be changed magnetically when heated above a certain temperature, as by a laser (not shown). The orientation of the domains can be read by measuring the polarization of laser light reflected from coating  702 . The arrangement of the domains encodes the program as described above. 
     The present invention, in any of its embodiments, has many advantages, including providing a mechanism for furnishing an increased return to asset owners on equity in their assets regardless of liquidity, as well as a structure that can use assets belonging to third parties in order to participate in many types of financial transactions. It is understood that that of the advantageous features described herein need not be incorporated into every embodiment of the invention, and certain changes may be made in the foregoing disclosure without departing from the scope of the invention. One skilled in the art will appreciate that the present invention can be practiced by embodiments other than those described herein, which are presented for purposes of illustration and not of limitation, and the present invention is limited only by the claims that follow.