“Tranched Value Security™ (TVS)* is a security whose income payments, and hence value is derived from and collateralized (or "backed") by the value of a single asset, group of assets, stream of cash-flows or any other entity or product possibly having a determinable value (and / or price). Value of TVS™ is derived either from a value share of a specific underlying, or from a minimum contract value, which can equal to the value share of a specific underlying at the contract initiation, given that a higher-level (or “prior”) TVSs™ are satisfied.”
* Patent pending. Patent application number: 62791754.
Mortgage-Backed Securities Structure
People take out mortgages. Financial institutions group hundreds of subprime mortgages into Mortgage-Backed Securities (MBS).
The securities are grouped into tranches by levels of risk and earnings potential for bond holders. When everybody can pay their mortgage in full each month, each group of bond holders gets paid; otherwise the most junior tranches absorb losses first.
Tranched Value Securities Structure
TVS Payment Structure
First-tier value tranche have the first claim priority on corresponding value, making these tranches safer, while lower-tier value tranches have opportunity to generate higher returns from the same underlying.
Low Yield First Paid Lower Risk
Higher Yield Last Paid Higher Risk
Tranched Value Securities™ benefit all market participants leading to improved market efficiency.
Tranched Value Securities™ in action
TVS™ is state-of-the-art financial derivative.
Equity Underlying
Underlying: General Electric Ordinary Common Stock (NYSE: GE)
Legend: 5 TVSs were issued on 01/01/2007 with GE as underlying
Performance assessment: monthly, 01/01/2007-01/12/2017
Value Tranches:
Code
Value Share (%)
Min Value (US$)
GETVS-A
0.30
11.22
GETVS-B
0.25
9.35
GETVS-C
0.20
7.48
GETVS-D
0.15
5.61
GETVS-E
0.10
3.74
Performance
Combined TVS and Underlying Price Data (US$)
TVS Price Share of Total Price of Underlying (%)
Securities Performance (Limited to -100% to +100%)
Debt Underlying
Underlying: APPLE INC. DL-NOTES 2013(13/23) WKN A1HKKX | ISIN US037833AK68
Legend: 5 TVSs were issued on 07/05/2013 with Apple notes as underlying
Performance assessment: daily, 07/05/2013-12/12/2018
Value Tranches:
Code
Value Share (%)
Min Value (US$)
AAPLTVS-A
0.30
29.76
AAPLTVS-B
0.25
24.80
19.84
0.20
AAPLTVS-C
AAPLTVS-D
0.15
14.88
AAPLTVS-E
0.10
9.92
Performance
Combined TVS and Underlying Price Data (US$)
TVS Price Share of Total Price of Underlying (%)
Securities YTM (Limited to +0% to +40%)
Additional Data
TVS can be of multiple types increasing the opportunities to infinity.
By varying internal and external parameters of tranched value securities, the possibilities for creating new types of instruments are endless, which could potentially satisfy a wide range of market participants with different objectives – be it speculation, long-term investment, hedging operations or any others.
Benefits for Investors
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New investment strategies
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Enhanced leverage
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Performance transformation
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Lower transaction fees
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Improved liquidity
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Enhanced risk management
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Efficient risk allocation and transfer
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Information discovery
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Diversification opportunities
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Tax liability management
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Lower minimum investment
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Limited liability
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Access to unavailable products
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More predictable earnings
Benefits for Issuers
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New ways to raise capital
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Wider investment groups available
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Better planning for cost of capital
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Additional fees
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Better liquidity
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Improved balance sheet
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Enhanced risk management
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Accessing inaccessible investors
IMPROVED MARKET EFFICIENCY
Learn More
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