20130124434 | SYSTEM AND METHOD USING CONTRACT FOR RISK TRANSFERENCE - Disclosed herein is a system and method for eliminating or transferring the non-economic risk of financial securities. The system and method serves to avoid non-economic losses in the first instance, and to counter the adverse capital impact of prior non-economic gap losses by providing capital relief consistent with a determined protected amount. A client sells to an investor its rights to payments from a fixed income securities (FIS) Portfolio that exceed an agreed threshold, or protection value. The investor purchases the rights to the payments from the client for an amount substantially equal to the difference between the protection value and a higher threshold, or implied value. The client and investor agree to a profit sharing arrangement for FIS Portfolio payments over the implied value. As security for the client's obligation to deliver either the FIS Portfolio or its proceeds to the investor after the FIS Portfolio returns reach the protection value, the client pledges the FIS Portfolio or other agreed upon assets, or some combination thereof. | 05-16-2013 |