Hello guys, initially this post appeared in Economics section, but since there was no reply I assume it might be more appropriate in trading section.
Basically, we are launching a startup (
it's not a promotion post - just looking for feedback) – OTC marketplace of innovative financial instruments, new types of derivatives and alternative assets. The ultimate goal is to allow investors to better execute risk management and achieve the desired financial performance.
Our first product will be Tranched Value Security (patent pending). And we would be grateful for any review or feedback you might have about this. We are still developing the marketplace (expected to be in Beta launch in September) and your feedback would really help us.
To minimize compliance burden, we will start with crypto assets, and later will add other underlying assets.
The Tranched Value Security (TVS) works in a concept similar to Asset-Backed Securities (ABS) and Mortgage-Backed Securities (MBS) in particular. Whereas ABS and MBS securitize a pool of assets or asset’s cash flows, split them and sell as separate tranches to investors, TVS follows a similar procedure, but rather than securitizing an asset / cash-flow base, it securitizes a value! So, the underlying can be a single asset value, a portfolio, a cash flow or any other investible asset.
To give you a brief example, imagine that today BTC costs $100, and you securitize it and issue 2 TVSs, where TVS-Senior has a claim on 50% of BTC market value OR $50 fixed; and the TVS-Junior has a claim on the rest of BTC value (50%) OR $50 fixed, ONLY IF TVS-Senior’s claim was satisfied, OR whatever left after TVS-Senior’s claim. It implies that if BTC goes up to $150 – TVS-Senior can claim 50% of market value (as its > than $50 fixed), and so does TVS-Junior. But if BTC market value declines to $80, TVS-Senior can claim $50 (as its greater than 50% of BTC value), while TVS-Junior can only claim $30. With subsequent increase in BTC value – TVS-Senior’s return will be slightly less than BTC’s return, but TVS-Junior’s return will be significantly greater than even BTC’s.
Of course that is just an example, and all variables can vary – asset can be different, number of TVSs can be different, they can be perpetual or with maturities, % and $ value claims can be different, and overall it can be highly customizable upon investor’s needs.
What it gives you is that in the case if you want to reduce downside exposure – you securitize and sell Junior TVSs to others, and if you are very certain of upside potential or have ability to hold Junior TVSs – you can buy cheaply a portfolio of Junior TVSs and earn significant returns.
This is pretty much it. And TVS is just a first instrument that we intend to implement on the marketplace (already have working papers for other instruments too). If you would like to learn more about TVS, you can visit our web-site at:
https://www.altersecurities.com,
http://as.exchange, or see the entire research paper at:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3337692#Any kind of constructive feedback is welcome guys! And thanks in advance!
