The "Fat ATtrition Swaps and Options" Market

Well, the first draft is complete.

At various American companies, especially in the days immediately following one of the Major Gluttony Festivals (Thanksgiving, Christmas, Labor Day, etc.), it is a tradition for co-workers to agree to give each other incentive to lose weight by making an agreement that looks something like this: we all agree that in the next eight weeks we'll each lose 8% of our current body weight. And at the end of the eight weeks, anybody who didn't in fact lose the whole 8%, will pay a fine of $300, and all the people who DID lose the whole 8% will divide that money up amongst themselves equally. This game provides lots of incentive...lots of incentive to lose weight, and (much more amusingly for the spectators) lots of incentive to nobble the competition. For example, donuts begin mysteriously to appear upon participants desks...you get the idea.

Being somebody who isn't worried about his weight, I've never been interested in playing the game. But being somebody who has spent his professional career in risk management, the moment I heard the rules I immediately thought, "Ooo, I'd think you'd want to hedge, and wouldn't it be fun to play the secondary market?"

For example, let's say that you and I and Jim Bob are the only three players, and seven weeks in I realize that I'm going to come up a pound or two short -- but you're on track to lose four pounds more than you need to. What if I could buy two pounds from you? It would be worth it to me to pay up to $299 for those two pounds, because otherwise I'm gonna be out $300. Now, let's say you think that if I go on a desperation fast there's a 25% chance I'd manage to lose the weight, and you wouldn't get any money at all, but that leaves a 75% chance I'm gonna fail and you're gonna get $150. So you probably wouldn't want to sell the weight for $20, but you might be willing to take a sure $120 rather than a possible $150, and you'd certainly jump at a sure $200 instead of a possible $150. After some split-the-difference negotiation maybe we'd wind up agreeing to something like $220.

But what about Jim Bob? If I buy the weight from you then instead of getting $150 he gets diddly. So if he's managed to lose a couple of extra pounds, he'd be crazy not to jump in and try to underbid you. After all, he'd rather get $110 than get nothing. In fact, if I can get the two of you bidding against each other, I might get away with paying as little as $75 instead of $300.

But what about Eula May? Let's say I realize I need to buy a couple of pounds, and I know both you and Jim Bob are ahead of schedule; so I figure I'm gonna see if I can start a bidding war and get off cheap. What I don't realize is that Eula May, the West Desk gas trader, has spent the last seven weeks over in the corner quietly keeping tabs of the weekly weigh-ins even though she isn't playing herself -- and she figured out last week that I was in trouble, before I faced up to the fact myself. So she got in ahead of me and bought both your two pounds AND Jim Bob's two pounds...paid 'em each $40, and is sitting there waiting for me to come a-callin'. To my chagrin, the squeeze is on. With some hard negotiating I might be able to talk her into letting me have two of those pounds for, say, $200. So now I'm out $200 (which is at least better than $300); you and Jim Bob both lose your weight AND pocket $40; and Eula May walks away with a cool $120 despite the fact that she didn't bother to lose any weight at all.

Two things made me really want to write up the rules and create that secondary market:

1. It's actually a very interesting mathematical/logical puzzle to figure out how much I ought to be able to collect from you from damages if you sell me some pounds and then don't get around to losing them yourself. After all, you can't sell me pounds you lost if you didn't lose any. So how do you settle up if one person fails to deliver -- especially if, as a result, the other guy fails to make his weight and has to put $300 in the pot instead of sharing in the winners' windfall? What if three people failed to deliver to me, but one of them would have delivered except that yet another person failed to deliver to him...who owes how much money to whom? This turned out to be a very interesting problem to solve (my solution involved two sets of iterating algorithms, one to allocate deliveries and one to calculate damages).

2. It's hilarious enough watching the participants try to nobble each other. Now imagine if you have half the office interested in the outcome. "Hey, Kenny, let's go to Souper Salad; your lunch is on me." "No, dude, you need to come with me; I'll buy you lunch and dessert at La Madeleine." Okay, so now I know which one of you is long the Per-Share Redemption Value Index and which one of you is short...

So, back to where I started this post: the first draft is done. Here are the Official Rules for the basic game and the Secondary WLC (Weight Loss Credit) Market...or, as the less sensitive among us have been known to call it, the Fat ATtrition Swaps and Options market. (Give it some time, the penny will drop eventually.) I'd love any suggestions for improving it -- this is, after all, a first draft. As it stands, you can do forwards and options on WLC's; and you can do swaps and financial options (and anything else you dream up) against the Per-Share Redemption Value index and the Per-Share Damages Value index or any combination of the two. All in all, a nice set of toys to play with as a first cut, if I do say so myself.

And if you want to set up a WLC contest and secondary market in your own workplace or social circle, and you'd like a Microsoft Word copy of the Official Rules that you can play around with and adapt to your own taste, drop a comment after this post and I'll happily send you one, along with the Excel spreadsheet I use to perform all the calculations. I just have one request...I don't want any money, but this did actually take a while to work out, and I'd get a kick out of knowing how far it spreads. So if you use it, send me an e-mail to tell me how it worked out; and if you pass it on to somebody else, make sure my e-mail's on there and ask them to let me know how it worked for them in turn...and give Randy Guidry, who pushed me until I finished it, his share of the credit as well.

In fact let's just say that it's copyrighted by Ken Pierce and Randy Guidry and by God we're keeping the intellectual property rights...

OFFICIAL RULES

1. Even though the rest of the Rules are very formal and legal-sounding, it must be remembered that this whole exercise is about three goals: (a) getting healthy, (b) having fun, and (c) building camaraderie. We therefore urge anybody considering engaging in the “Secondary Market” we describe below to BE CAREFUL – as with any derivatives market, you can lose a whole lot more playing the derivatives side than you can lose by playing the simple ordinary physical game. The most you could lose by simply trying and failing to lose your weight would be the Premium Amount (say, $300); but playing the derivatives, if you were sufficiently careless, could cost you $300 times the number of people trying to lose weight – that is (for those of you not good at math) up to $4,500 if there were fifteen people signed up to lose weight. And big losses (especially if the big losers don’t pay up) would very much interfere with having fun and building camaraderie. So watch what you’re doing.

2. Statement of Intent. These Rules are guided by two fundamental principles:

2.1. It should be possible for a Physical Participant to ignore the Secondary Market entirely, in which case he/she should be able to reduce these Rules to: either I lose my target weight and get my share of the money from the people who didn’t lose my target weight; or else I fail to lose my target weight and I pay up.

2.2. In the case of a failure to deliver in the Secondary Market, the person who expected delivery should be made whole financially by the person who failed to deliver. If an unforeseen situation arises in which the rules set forth below to govern calculation of damages fail to come up with a clear answer (e.g., because some sort of infinite loop scenario is created), then the parties involved will resolve the issue by mutual agreement in good faith.

3. Physical Participants and the Bank

3.1. The “Bank” shall be formed by any number of individuals (each a “Physical Participant”) who mutually agree that they will each, upon a specified date in the future (the “Redemption Date”), be responsible for paying to the Bank a set dollar amount (the “Premium Amount”) which will then be remitted to persons redeeming Shares in accordance with the rules that follow.

3.2. The term “Initial Bank Balance” shall denote the result of multiplying the number of Physical Participants by the Premium Amount.

3.3. The Bank shall, on the Redemption Date, calculate a Per-Share Redemption Value as follows: Divide the Initial Bank Balance by the number of Successful Physical Participants (as defined below), and divide that result by one thousand (1,000); and the Bank shall publish this result to all interested parties.

3.4. The Bank shall, on the Redemption Date, calculate a Per-Share Damages Value as follows: Subtract the Premium Amount from the Initial Bank Balance, divide the result by one more than the number of Successful Physical Participants (as defined below), and divide that result by one thousand (1,000); and the Bank shall publish this result to all interested parties.

3.5. An “Initial Weigh-In” shall be held, at the beginning of the project, at which each Physical Participant’s “Initial Weight” shall be established, to the nearest pound.

3.6. Each Physical Participant shall then be assigned an individual Target Weight equal to his/her Initial Weight times a standard “Target Percentage,” rounded to the nearest pound; and a “Weight Loss Responsibility” equal to his/her Initial Weight minus his/her Target Weight.

3.7. A “Final Weigh-In” shall be held on or before the Redemption Date, at which each Physical Participant’s “Final Weight” shall be established, to the nearest pound.

3.8. For every pound by which the Final Weight is less than the Initial Weight, the Physical Participant in question shall earn title to one (1) “Weight Loss Credit” (“WLC”).

3.9. A Physical Participant holding title to a WLC may either apply that WLC to his/her Weight Loss Responsibility, thus reducing that Weight Loss Responsibility by one (1); or else transfer that title to a Secondary Market Participant under terms and restrictions set forth below; or else allow the WLC to expire unused; and this is true equally for WLC’s that he/she has earned by actual physical weight loss, and for WLC’s that he/she has acquired on the Secondary Market.

3.10. A Physical Participant becomes a Successful Physical Participant by reducing his/her Weight Loss Responsibility to zero by application of a sufficient quantity of WLC’s; and any Physical Participant who does not thus become a Successful Physical Participant, shall be deemed an Unsuccessful Physical Participant.

4. Secondary Market

4.1. Physical Participants may, if they wish, transfer the title to one or more WLC’s on a Secondary Market under the rules set forth in this Section 4.

4.2. Persons who engage in transactions under the rules of this Section 4 shall be denoted Secondary Market Participants.

4.3. An individual may be a Secondary Market Participant whether or not that individual is a Physical Participant.

4.4. Transactions on the Secondary Market are classified either as WLC Transactions (consisting of WLC Forward Transactions and WLC Options as defined below) or as Non-WLC Transactions (all other Secondary Market transactions).

4.5. Title to one or more WLC’s shall be transferred only as the result of a WLC Transaction on the Secondary Market.

4.6. WLC Transactions

4.6.1. A WLC Forward Transaction for a certain number of WLC’s (which number is denoted the Deliverable Quantity) shall be entered into by a Buyer who guarantees that he/she will accept title to the Deliverable Quantity on the Redemption Date in exchange for a certain quantity per WLC (the Price) either of United States dollars (the exact amount possibly calculated as a formula determined by the Per-Share Redemption Value or the Per-Share Damages Value) or of a certain quantity of Shares, from a Seller who guarantees that he/she (a) will possess title to the Deliverable Quantity on the Redemption Date, either having personally earned them as a Physical Participant, or else having acquired them either as a Buyer in a WLC Forward Transaction or by exercising the right to acquire them as a result of ownership of a WLC Physical Call Option (described below), and (b) will transfer said title to the Buyer in exchange for the specified Price multiplied by the Deliverable Quantity.

4.6.2. A WLC Option is an option on WLC’s, either a WLC Call Option or a WLC Put Option, defined as follows:

4.6.2.1. The purchaser of the WLC Option is denoted the Option Holder, and the seller is denoted the Option Writer.

4.6.2.2. A hypothetical WLC Forward Transaction (the “Underlying”) is constructed, but not immediately executed, in such a way that:

4.6.2.2.1. If the WLC Option is a WLC Call Option, then the Option Holder is the hypothetical Buyer of the Underlying and the Option Writer is the hypothetical Seller.

4.6.2.2.2. If the WLC Option is a WLC Call Option, then the Option Holder is the hypothetical Buyer of the Underlying and the Option Writer is the hypothetical Seller.

4.6.2.2.3. The hypothetical price to be paid by the hypothetical Seller shall be denoted the Strike Price.

4.6.2.3. The Option Holder may choose during the Option Exercise Round (see below) either (a) to exercise the WLC Option, that is, to convert the WLC Option into the Underlying, at which point the WLC Option ceases to exist and the Underlying is executed, or else (b) to allow the WLC Option to expire unexercised, in which case nothing further is done.

4.6.2.4. The Option Holder is obligated to remit a negotiated cash price (the “Premium”) to the Option Writer, whether or not he/she chooses to exercise the WLC Option.

4.6.3. More complex transactions may be constructed by combining multiple WLC Transactions – for example, a recallable sale would involve one party’s selling a WLC Forward Transaction to a second party while simultaneously purchasing from that same party a WLC Call Option to repurchase the WLC’s if he/she should find it necessary. However, all Physical Participants and Secondary Market Participants agree to engage in no complex transactions involving delivery of WLC’s that cannot be reduced to a simple combination of the afore-defined WLC Forward Transactions and WLC Options.

4.6.4. All WLC Transactions must be registered with a person designated by the Bank (said person being denoted the “Transaction Recorder”) immediately upon execution, in order to facilitate the Final Settlement process defined below.

4.6.5. The Transaction Recorder shall not engage in Secondary Market transactions.

4.6.6. Immediately upon notification of a WLC Transaction, the Transaction Recorder:

4.6.6.1. Shall confirm with each Secondary Market Participant engaged in said WLC Transaction, the validity of the WLC Transaction.

4.6.6.2. Upon confirmation, shall publish the number of WLC’s bought or sold and the Price(s) paid, but not the identities of the Secondary Market Participants engaged in the WLC Transactions in question.

4.7. Non-WLC Transactions may be defined in terms of the obligation to deliver on the Redemption Date an amount of cash determined by a formula including either the Per-Share Redemption Value as published by the Bank, or the Per-Share Damages Value as published by the Bank, or any combination of the two as defined by the parties to the transaction; but the settlement of such transactions is a private matter between the parties. For convenience, we define here three standard types of swap transactions and two standard types of option transactions based on each type of swap transaction.

4.7.1. A Fixed-for-Floating Shares Swap shall defined as a swap in which one party (the “Shares Payer”) agrees to deliver on the Redemption Date a certain number (the “Notional Quantity”) times the Per-Shares Redemption Value as published by the Bank (the “Shares Price”), and the other party (the “Fixed Payer”) agrees to pay a certain number of dollars (the “Fixed Price”) times the Notional Quantity.

4.7.1.1. A Call Option on a Fixed-for-Floating Shares Swap shall be defined as a Fixed-for-Floating Shares Swap that is automatically rendered null and void if the Shares Price settles below the Fixed Price; said Call Option being entered into upon the Fixed Payer’s providing a non-refundable consideration (the “Premium”) to the Shares Payer.

4.7.1.2. A Put Option on a Fixed-for-Floating Shares Swap shall be defined as a Fixed-for-Floating Shares Swap that is automatically rendered null and void if the Shares Price settles above the Fixed Price; said Put Option being entered into upon the Shares Payer’s providing a non-refundable consideration (the “Premium”) to the Fixed Payer.

4.7.2. A Fixed-for-Floating Damages Swap shall defined as a swap in which one party (the “Damages Payer”) agrees to deliver on the Redemption Date a certain number (the “Notional Quantity”) times the Per-Shares Damages Value as published by the Bank (the “Damages Price”), and the other party (the “Fixed Payer”) agrees to pay a certain number of dollars (the “Fixed Price”) times the Notional Quantity.

4.7.2.1. A Call Option on a Fixed-for-Floating Damages Swap shall be defined as a Fixed-for-Floating Damages Swap that is automatically rendered null and void if the Damages Price settles below the Fixed Price; said Call Option being entered into upon the Fixed Payer’s providing a non-refundable consideration (the “Premium”) to the Damages Payer.

4.7.2.2. A Put Option on a Fixed-for-Floating Damages Swap shall be defined as a Fixed-for-Floating Damages Swap that is automatically rendered null and void if the Damages Price settles above the Fixed Price; said Put Option being entered into upon the Damages Payer’s providing a non-refundable consideration (the “Premium”) to the Fixed Payer.

4.7.3. A Shares-for-Damages Swap shall defined as a swap in which one party (the “Damages Payer”) agrees to deliver on the Redemption Date a certain number (the “Notional Quantity”) times the Per-Shares Damages Value as published by the Bank, and the other party (the “Shares Payer”) agrees to pay the Notional Quantity times the Per-Shares Redemption Value as published by the Bank.

4.7.3.1. A Call Option on a Shares-for-Damages Swap shall be defined as a Shares-for-Damages Swap that is automatically rendered null and void if the Damages Price settles below the Shares Price; said Call Option being entered into upon the Shares Payer’s providing a non-refundable consideration (the “Premium”) to the Damages Payer.

4.7.3.2. A Put Option on a Shares-for-Damages Swap shall be defined as a Shares-for-Damages Swap that is automatically rendered null and void if the Damages Price settles above the Shares Price; said Put Option being entered into upon the Damages Payer’s providing a non-refundable consideration (the “Premium”) to the Shares Payer.

5. Final Settlement

5.1. At the Final Weigh-In, the number of WLC’s created by each Physical Participant shall be established, and this number shall become each Physical Participant’s initial WLC Balance; the initial WLC Balance for any Secondary Market Participant who is not also a Physical Participant shall by definition be zero (0).

5.2. Option Holders intending to exercise their rights under one or more WLC Options shall then declare to the relevant Option Writer and to the Transaction Recorder their intention to do so or else shall allow their WLC Options to expire unexercised, and any resulting WLC delivery obligations shall be recorded by the Transaction Recorder; which process of declaration shall be denoted the Option Exercise Round.

5.3. Delivery of WLC’s shall take place in a series of WLC Delivery Rounds, each such Round being executed as follows:

5.3.1. For each Secondary Market Participant who has an obligation to deliver WLC’s, the Bank shall add up the total number of WLC’s he/she is obligated to deliver in the Secondary Market, which total shall constitute his/her initial WLC Delivery Obligations Total.

5.3.2. For each Secondary Market Participant who has a claim to receive WLC’s, the Bank shall add up the total number of WLC’s he/she has the right to receive in the Secondary Market, which total shall constitute his/her initial WLC Delivery Claims Total.

5.3.3. Each Secondary Market Participant shall compare his/her WLC Delivery Obligations Total to his/her WLC Balance, the ratio of his/her WLC Balance to his/her WLC Delivery Obligations Total being denoted his/her WLC Delivery Percentage.

5.3.3.1. If his/her WLC Balance is greater than his/her WLC Delivery Obligations Total, he/she shall transfer title as required, in full, under all Secondary Market transactions that had placed him/her under a WLC Delivery obligation, thereby (a) satisfying all such obligations and reducing his/her WLC Delivery Obligations Total to zero (0), and (b) reducing his/her WLC Balance by a corresponding amount.

5.3.3.2. If his/her WLC Balance is less than his/her WLC Delivery Obligations Total, he/she shall partially deliver on each such obligation by the WLC Delivery Percentage (the number of WLC’s delivered being rounded to ten decimal places), thus (a) reducing his/her WLC Balance to zero (0) pending receipt of WLC’s from Secondary Market Participants against whom he/she has an outstanding claim to receive WLC’s, and (b) reducing his/her WLC Delivery Obligations Total by an equal amount.

5.3.3.3. His/her WLC Balance shall then be increased by the total number of WLC’s he/she receives in this round from other Secondary Market Participants against whom he/she has an outstanding claim to receive WLC’s, and his/her WLC Delivery Claims Total shall be reduced by a like amount.

5.3.4. Once all deliveries under this First WLC Delivery Round have been completed, new WLC Balances, WLC Delivery Obligation Totals, WLC Delivery Claims Totals and WLC Delivery Percentages shall be calculated for all Secondary Market Participants.

5.4. Upon conclusion of the Option Exercise Round, and upon the conclusion of each WLC Delivery Round if any are necessary, it shall be determined whether there remain one or more Secondary Market Participants having a WLC Balance and WLC Delivery Obligation Total both greater than zero, and if so, then another WLC Delivery Round shall be executed, until no such Secondary Market Participants remain.

5.5. Upon completion of the final WLC Delivery Round, or of the Option Exercise Round if no WLC Delivery Round is necessary, all Physical Participants wishing to redeem their shares and having a WLC Balance high enough for successful redemption, shall submit to the Bank their WLC Balances, at which point the Bank shall:

5.5.1. Declare which Physical Participants have been determined to be Successful Physical Participants.

5.5.2. Calculate and publish the Per-Share Redemption Value.

5.5.3. Calculate and publish the Per-Share Damages Value.

5.6. Once the Bank has published the Per-Share Damages Value, it shall settle all WLC Transactions as follows.

5.6.1. Any Secondary Market Participant having a WLC Delivery Claims Total greater than zero (0), shall be denoted a Defaultee.

5.6.2. Each Unsuccessful Physical Participant whose WLC Delivery Claims Total is greater than or equal to the sum of his WLC Delivery Obligations Total and his Weight Loss Responsibility, shall further be denoted a Critical Defaultee.

5.6.3. Any Secondary Market Participant having a WLC Delivery Obligations Total greater than zero (0), shall be denoted a Defaulter.

5.6.4. For each Defaultee, a Share of Responsibility shall be calculated for each of that Defaultee’s Defaulters, by dividing the number of WLC’s that that particular Defaulter failed to deliver to that Defaultee by the total number of WLC’s that the Defaultee failed to receive.

5.6.5. An initial set of Damages Payable Balances shall be established for each Defaulter – one such balance for each Defaultee to whom the Defaulter failed to deliver – and shall be set initially at $0.00.

5.6.6. A Critical Damages Receivable Balance shall be established for each Defaultee, the value of which shall be determined by whether the Defaultee is a Critical Defaultee.

5.6.6.1. If the Defaultee is a Critical Defaultee, that Defaultee’s Critical Damages Receivable Balance shall be set to 1,000 times the Per-Share Damages Value if the Defaultee is a WLC Critical Defaultee

5.6.6.2. If the Defaultee is not a Critical Defaultee, that Defaultee’s Critical Damages Receivable Balance shall be set to $0.00.

5.6.7. A Damages Receivable Balance shall be established for each Defaultee, and shall initially be set equal to that Defaultee’s Critical Damages Receivable Balance.

5.6.8. If there is at least one Critical Defaultee, then a series of Damages Assessment Rounds shall commence, and shall continue until all individual Damages Payable Balances and all individual Damages Receivable Balances remain unchanged for two consecutive rounds. Each Damage Assessment Round shall proceed as follows:

5.6.8.1. Each Damages Payable Balance shall be set to the greater of either zero ($0.00) or else a value calculated by (a) dividing the relevant Defaultee’s Damages Receivable Balance by the relevant Defaulter’s Share of Responsibility with respect to that Defaultee, then (b) adding to that the sum of all cash amounts owed to that Defaultee by that Defaulter as a result of WLC Transactions, then (c) subtracting from that the sum of all cash amounts owed to that Defaulter by that Defaultee as a result of WLC Transactions, then (d) adding to that the sum of all Shares owed to that Defaultee by that Defaulter as a result of WLC Transactions, multiplied by the Per-Share Damages Value, then (e) subtracting from that the sum of all Shares owed to that Defaulter by that Defaultee as a result of WLC Transactions, multiplied by the Per-Share Damages Value.

5.6.8.2. Each Defaultee’s Damages Receivable Balance shall then be reset to the sum of his/her Damages Payable Balances and his/her Critical Damages Receivable Balance.

5.6.8.3. If at the conclusion of the round at least one Damages Payable Balance and/or at least one Damages Receivable Balance has changed since the conclusion of the previous round, another round is executed.

5.6.9. At the conclusion of the final Damages Assessment Round, if any, any Defaultee whose Damages Receivable Balance is greater than $0.00 shall be deemed a Damaged Defaultee, and any Defaultee whose Damages Receivable Balance is $0.00 shall be deemed an Undamaged Defaultee.

5.6.10. All Physical WLC Transactions between any Defaulter and any Damaged Defaultee to whom he/she failed to deliver WLC’s, shall be considered null and void and shall be replaced by said Defaulter’s obligation to remit to said Damaged Defaultee, in cash, the relevant Damages Payable Balance.

5.6.11. Any obligation to deliver Shares that a Secondary Market Participant may have under a WLC Transaction not rendered null and void under the previous paragraph, shall then be converted into a cash obligation equal to the Per-Share Redemption Value multiplied by the number of Shares said Secondary Market Participant is obligated to deliver.

5.6.12. Any claim to cash that a Defaulter may have had under a Physical WLC Transaction between himself/herself and any Undamaged Defaultee to whom he/she failed to deliver WLC’s (including claims to Shares that were converted under the previous paragraph to claims to cash), shall be reduced in proportion to the percentage of said Defaulter’s WLC Delivery Obligation to said Defaultee that said Defaulter failed to deliver.

5.6.13. Any WLC Transactions not settled under one of the previous two paragraphs shall be settled as follows:

5.6.13.1. The obligation to deliver WLC’s shall be considered to have been met in full.

5.6.13.2. Any cash obligation associated with a WLC Transaction (including obligations to deliver Shares that have been converted to obligations to deliver cash under the procedures established above) shall be payable in full.

5.6.14. All cash obligations between any two Secondary Market Participants resulting from settlement of WLC Transactions, as adjusted by the procedures set forth above, shall then be summed / offset to the highest degree possible, resulting in at most one Net Cash Obligation between those two Secondary Market Participants.

5.6.15. The Bank shall then:

5.6.15.1. Notify each Secondary Market Participant of all Net Cash Obligations owed by that Secondary Market Participant to other Secondary Market Participants, and of all Net Cash Obligations owed to that Secondary Market Participant by other Secondary Market Participants; and make available upon request all calculations used to derive said Net Cash Obligations.

5.6.15.2. Collect from each Unsuccessful Physical Participant the Premium Amount.

5.6.15.3. Remit to each Successful Physical Participant an amount equal to one thousand (1,000) times the Per-Share Redemption Value, minus the Premium Amount.

5.6.16. All Net Cash Obligations shall be payable immediately upon notification of the relevant Secondary Market Participants by the Bank.

5.7. Neither the Bank nor the Transaction Recorder shall bear any responsibility for settlement of any Non-WLC Transaction, nor for ensuring collection of any Net Cash Obligations owed by any Secondary Market Participant to any other Secondary Market Participant.

5.8. All Secondary Market Participants and Physical Participants agree, by their participation, to indemnify the Bank and the Transaction Recorder against any claims of damages arising from any inadvertent miscalculations or delays in publication or notification.

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There you have it...y'all have fun now, hear?