Patent ID: 8265965

Claim:
A computer-implemented method of processing and clearing an agreement for a derivative product, comprising: a) receiving, at an electronic interface comprising at least one of an input device and a network interface, an initial performance bond of a protection buyer of the derivative product, wherein the derivative product has a digital outcome and comprises a predetermined number of constituents; b) updating a price of the derivative product through a mark-to-market process using a processing unit in communication with the interface, including transferring at an interval a cash flow between the protection buyer and a protection seller based on the price of the derivative product; c) adjusting the cash flow including a part of a total fee for the derivative product based on the price of the derivative product such that the fee component of the cash flow of a first interval, a second interval, and a third interval are each different; d) for each of the predetermined number of constituents that experience a predetermined triggering event before an expiration date, requiring sufficient funds to cover a percentage of a final settlement price of the agreement; and e) terminating the agreement.