WO2010063041A1

WO2010063041A1 - Diamond-based commodities trading system

Info

Publication number: WO2010063041A1
Application number: PCT/ZA2009/000103
Authority: WO
Inventors: Isaac Neuman
Original assignee: Isaac Neuman
Priority date: 2008-11-28
Filing date: 2009-11-20
Publication date: 2010-06-03

Abstract

This invention relates to a tradeable commodity, a trading system for a plurality of such commodities and a method of trading using such a system. As a rule, diamonds are not readily fungible. This invention proposes means to combine individually non-uniform, non-standard, relatively non-fungible valuable items, such as diamonds, into a largely standardised, fungible tradeable commodity as well as a trading system fora plurality of such commodities and a method of trading using such a system.

Description

Diamond-based Commodities Trading System

Technical Field

i This invention relates to a tradeable commodity, a trading system for a plurality of

/ such commodities and a method of trading using such a system.

Background Art

3 Commodities and the trading systems on which commodities are traded rely on the

4 underlying fungibility of the commodity - a commodity is more or less fungible

5 depending on the extent to which individual units of the commodity are capable of e substitution with one another. Examples of highly fungible commodities are crude 7 oil, precious metals, and currencies. Fungibility has little to do with liquidity - a a commodity is liquid and tradeable if it is easily exchangeable for money or another

9 commodity. The measure of the fungibility of a commodity, on the other hand, is

10 determined by the ease with which one unit of the commodity can be exchanged / 1 for another substantially equivalent unit of the same commodity at the same time 12 and place. 1 Precious stones are generally prized for their individual uniqueness, which, by

2 definition, tends to detract from the commodity value thereof.

3 Individual diamonds, for instance, are unique and diamond prices vary widely

4 notwithstanding attempts by the diamond industry to develop a standardised

5 quality assessment that depends on the caratage, colour, clarity and cut (the e proverbial 4-C's of the diamond industry) or such tools as the Rapaport Diamond 7 Report, which is published every week as a price reference.

β As a rule therefore, diamonds are not readily interchangeable and are therefore

9 not considered to be highly fungible. Some firms offer "investment-grade"0 diamonds for sale to the public, often coupled with buyback guarantees in terms of1 which they undertake to buy the diamond from the purchaser at or near the2 purchase price within a specified period. This is a far cry however, from the3 manner in which precious metals are traded as commodities. 4 This invention proposes means to combine individually non-uniform, non-standard,s relatively non-fungible valuable items, such as diamonds, into a largely6 standardised, fungible tradeable commodity as well as a trading system for a7 plurality of such commodities and a method of trading using such a system.

Disclosure of Invention 8 According to this invention a tradeable instrument comprises: 9 a secure tamper evident envelope; 0 within which a plurality of relatively similar, individually non-uniform, non-1 standard valuable items are securely contained; 1 the valuable items each being selected for a declared value according to a

2 declared valuation method;

3 the contained valuable items being combined such that the sum of the

4 values of the valuable items contained within the tradeable instrument is

5 substantially equal to the sum of the declared values of the valuable items e contained in similar, like valued tradeable instruments.

7 As will be seen below, the invention includes a trading system including a large

8 number of tradeable instruments similar to that described immediately above, as

9 well as variants thereof falling within the scope of the above definition.

u) The term "equal", when used with reference to the comparative values of like or

11 comparable tradeable instruments, must not be interpreted in an absolute sense.

12 Due to the fact that the valuable items are, by definition, individually non-uniform, 73 non-standard items, each collection of valuable items will be of no more than U roughly equal value to a comparable collection of valuable items. With diligent

15 selection and the combination of a sufficient number of valuable items however, it

16 is possible to ensure that the value deviation between comparable instruments

17 falls within a relatively small deviation range. The deviation range will be declared is and unit pricing will preferably be set at the lowest value within the range.

19 The term "declare" in this specification, includes any means of making known and

20 publicising the declarations required in respect of the instruments, such as unit

21 values and the valuation method used in valuing the valuable items, generally to

22 the public and specifically to persons wishing to trade the instruments.

23 One or more such declarations may be made by means of information display

24 means associated with the tradeable instrument.

25 The information display means may be constituted by one or more of printing in or 1 on the tradeable instrument or a print medium or on-board certificate incorporated

2 in the tradeable instrument, a digital data store incorporated in or on the tradeable

3 instrument, one or more discrete printed certificates associated with the tradeable

4 instrument and stored remotely of the tradeable instrument or one or more digital

5 data stores associated with the tradeable instrument and stored remotely of the β tradeable instrument.

7 The association with the tradeable instrument may conveniently be by means of

8 inclusion of the display means into the tradeable instrument or by reference to a

9 unique attribute of the tradeable instrument, such as a unique number assigned to w and incorporated in or on the tradeable instrument.

11 In the preferred form of the invention, each tradeable instrument envelope

12 conveniently includes a secure data carrier adapted to provide a means of making 73 the required declaration or declarations and of establishing one or more of the i4 identity and authenticity of the instrument.

/5 The data carrier may include either or both a printed, human readable certificate

16 and certificate data recorded on a programmable logic device securely

17 incorporated into the envelope.

18 All or some of the data stored in the data carrier may be encrypted.

19 The valuable items are preferably low mass, high value items such as precious

20 stones, particularly diamonds, a number of which are securely assembled into a

21 secure, tamper-evident envelope to define a tradeable instrument.

2? To obtain comparable cumulative values across similar, like valued diamond-

23 based instruments, preferably ten stones are selected per tradeable instrument.

?4 The invention includes an envelope for use as a secure tamper evident envelope 1 within which a plurality of relatively similar, individually non-uniform, non-standard

2 valuable items may be securely contained, the envelope being adapted to

3 constitute, in combination with the valuable items, a tradeable instrument as

4 described above.

5 The invention includes a commodity trading system including a plurality of the β above mentioned tradeable instruments and means to make and publicise the

7 declarations required in respect of the tradeable instruments such as unit values

8 and the valuation method used in valuing the valuable items.

9 In the preferred form of the invention, the means to make and publicise the

10 declarations required in respect of the instruments may conveniently include one

11 or more data carriers incorporated in each instrument in the trading system and a

12 remotely stored certificate, whether digital or human readable or both, in respect of

13 each instrument in the system.

14 The commodity trading system is preferably constituted by a computer network is that includes the publicising means, means to market and sell the instruments

16 between parties to the trading system and payment and banking mechanisms to

17 settle payments within the system.

18 In this embodiment of the invention the computer network forming part of the w system may conveniently include means to trade in certificates associated with

20 tradeable instruments instead of or in addition to trading in actual instruments.

21 The invention includes a method of trading comprising the steps of:

2? first valuing a predetermined number of relatively similar, individually non-

23 uniform, non-standard valuable items according to a predetermined

24 valuation method; 1 selecting and grouping the valuable items so valued into sets of equal

2 numbers and substantially equal combined values, the valuable items being

3 selected such that the sum of the values of the valuable items in each set is

4 substantially equal to the sum of the values of the valuable items making up

5 each of the other sets of valuable items;

6 installing each set of valuable items securely in a secure, tamper evident

7 envelope to define a number of tradeable instruments each having a

8 substantially equal value; and

9 declaring the valuation method and the value of the contained valuable io items in respect of each tradeable instrument.

u With diamond values being established largely on the basis of the carat, clarity,

12 colour and cut characteristics of the stones, the method may conveniently include

13 the preliminary step of implementing a cutting regime in respect of all the stones

14 according to a constant (or preferably a predetermined minimum) cut value (for

15 instance "very good and up / ideal - also known as perfect only") and, in a

16 subsequent step, using that cut value for purposes of valuation in respect of each

17 stone in each tradeable instrument.

is Such a preliminary step introduces a degree of standardisation to the valuation

19 method by removing "cut" as a variable from the four assessment variables of

20 caratage, colour, clarity and cut, thereby reducing the valuation method to a three- ?i variable matrix, which is desirable since it is the intention, as far as possible, to

22 standardise and commoditise the tradeable instrument of the invention.

23 In addition, and further to standardise the tradeable instrument, the stones making

24 up the tradeable instrument may be selected to have a total, cumulative caratage 2ό that is equal to or greater than a predetermined total caratage per tradeable 26 instrument. Brief description of the drawings

1 The invention will be further described with reference to the accompanying

2 drawings in which:

3 Figure 1 is a diagrammatic representation of an example of a tradeable

4 instrument according to the invention, implemented in a credit card-shaped

5 and -sized unit, in exploded isometric view;

6 Figure 2 is a diagrammatic plan view of the tradeable instrument of Figure

7 1 ; and

8 Figure 3 is an elevation section on a line III - III in Figure 2.

Best Modes for Carrying Out the Invention

9 A tradeable instrument, by definition, is a financial instrument on which a buyer w and seller agree a price and then effect a contractual exchange of ownership of

11 the instrument. Certain tradeable instruments have come to acquire the nature of

12 highly fungible commodities, which is desirable since this increases the ease and

13 certainty with which one unit of the commodity can be exchanged for another

14 substantially equivalent unit of the same commodity at the same time and place.

is In the field of commodities trading, precious metals are something of an anomaly -

16 precious metals constitute highly fungible commodities, but have nevertheless not

17 lost their individual, decorative appeal and use.

is Natural precious stones however, have not been the subject of similar

/9 commoditisation. This is attributable, in the main, to the fact that precious stones,

20 such as diamonds in particular, are prized specifically for their individual / uniqueness, but also to the lack of a terminal market. Most commodities have

2 terminal markets, and some form of commodities exchange, clearing houses and

3 trading mechanisms which do not exist for diamonds.

4 Diamonds in larger sizes have become increasingly available and valuable, but no

5 readily understood or standardised pricing system has yet been established. As

6 an example, the weekly Rapaport Diamond Report publishes matrices of diamond

7 prices for cut, colour and clarity within size bands. The price matrix for brilliant s cuts alone normally exceeds 1 ,000 entries, which is only achieved by grouping 9 some grades together. The Rapaport Diamond Report also displays considerable

10 price shifts near the edges of the size bands. For instance a 49 point stone may

11 list at $1 ,000 less than a 50 point stone of similar quality, which appears to be a i? relatively large difference for such a small difference in size.

13 In addition, while there are numerous diamond grading laboratories, such as the

14 market-leading Gemological Institute of America (GIA) and the laboratories is affiliated to CIBJO (Confederation Internationale de Ia Bijouterie, Joaillerie et to Orfevrerie, also known as the World Jewellery Confederation), there is no easy 17 way for investors or dealers to know the relative competence and integrity of each is or whether there is any commercial pressure on any such a laboratory to upgrade

19 marginal stones or lose business to other facilities that are prepared to reduce

20 standards.

2 ? To further cloud the issue of fungibility, the non-linear pricing of different sizes and

22 stones of different carat mass means that it is not realistic to exchange, for

2? example, two 25 point stones (total mass 100mg) for one 50 point stone (of 100

24 mg). With commodities such as gold on the other hand, it is clear that one 100g

25 bar is worth the same as two 5Og bars, assuming the same metal grade and 2β quality.

27 1 It is an object of this invention to propose a tradeable instrument by means of

2 which these objections to the use of precious stones, particularly diamonds, may

3 be overcome and by means of which the terminal market requirements of standard

4 quality (or a known quality variation factor), quantity and fungibility maybe fulfilled.

5 The invention will be described with reference to a diamond-based tradeable e instrument, but it will be appreciated that this is done purely for illustrative ? purposes and it is not intended to limit the invention only to diamonds, since the a invention will find application in respect of tradeable instruments based on any 9 relatively similar, individually non-uniform, non-standard valuable items. The io advantage of diamonds however is their high value per unit mass, which makes

) 1 them easy to store and transport and gives them an extremely condensed value

12 and portability.

u In summary, the tradeable instruments of this invention are basically card units,

14 roughly the plan outline size of a conventional credit card, but slightly thicker, to is accommodate a number of diamonds that are incorporated into the tradeable

/6 instrument card. The card assembly itself is a secure, tamper-evident envelope

17 that incorporates a data insert with multiple layers of physical and digital security to ta establish both the authenticity of the instrument as well as its identity. In

19 developing a terminal market for the tradeable instruments of the invention, it is

?o unlikely that the physical tradeable instrument cards will exchange hands for the

21 most part. Instead, certificates which map to the cards are likely to be the objects

22 traded.

23 The tradeable instrument card 10 illustrated in the drawings includes a transparent

24 cover 12, a container sheet 14, a stone holder 16, a data card 18 and a bottom ?5 cover 20 (all simplified in this drawing). The various layers of the tradeable

26 instrument card 10 are preferably of a suitably durable plastics material or

27 combination of materials. 1 After insertion of a set of diamonds (not shown) into the stone holder 16, the

2 various layers of the tradeable instrument card 10 will be secured together. The

3 tradeable instrument card 10 is, in plan outline, dimensioned to equate the size of

4 a conventional credit card. The various layers and the inclusion of the set of

5 diamonds make the tradeable instrument card 10 slightly thicker than a credit card. e The layers of the tradeable instrument card 10 are interconnected into a secure,

7 tamper-evident envelope.

8 The tradeable instrument card 10 generally and the data card 18 in particular is g printed with identifying information. The data card 18 incorporates physical and

10 digital security features in the form of holograms (preferably holographic foils as

11 will be described below) and one or more programmable logic devices that may be

12 incorporated therein.

u In the preferred terminal market for the tradeable instruments of the invention, it is

14 unlikely that the physical tradeable instrument cards will exchange hands for the

15 most part. Instead, certificates which map to the cards are likely to be the objects

16 traded.

17 Referring to Figures 2, 3 and 4, the cover 12 has a dependent skirt 12.1 about its is periphery and the lower cover 20 has an upstanding rim 20.1. The skirt 12.1 and

19 the rim 20.1 are formed with complemental formations that are adapted to

20 interdigitate to provide a first mechanical connection between the upper and lower

21 covers 12, 20.

22 The container sheet 14 is conveniently formed with a substantially rectangular slot

23 14.1 within which the stone holder 16 is a complementary fit. The stone holder 16

24 is formed with a plurality of sockets 16.1 extending centrally along its length - ten ?5 sockets 16.1 being formed in the tradeable instrument card 10 in the example ?β illustrated. 1 Referring to Figure 3, the tradeable instrument card 10 is assembled by first filling

2 a stone holder 16 with diamonds. To do this, a diamond holder 22 is placed in

3 each socket 16.1 of the stone holder 16. The diamond holders 22 are a snug fit in

4 the sockets 16.1 and are each formed with a conical recess shaped

5 complementally to the pavilion of a brilliant cut diamond. A holographic foil 26 is

6 then secured over the stone holder 16. The diamonds 24 to be included in the / tradeable instrument card 10 are placed with their pavilions in the conical recesses s of the diamond holders 22. With the diamonds 24 in place, the stone holder 16 is 9 located in the slot 14.1 of the container sheet 14, which is then installed within the

10 upstanding rim 20.1 of a lower cover 20 within which a data card 18 has been pre-

11 installed.

12 The upper and lower covers 12, 20 are then secured to one another by ultrasonic

13 welding or the like, permanently to envelop and encase the diamonds 24 in the

14 tradeable instrument card 10.

15 The tradeable instrument card 10 is then electronically registered for trading on the iβ terminal market and paired with a suitable digital certificate for trading purposes.

17 Information storage and data security can take many forms and will depend on the is sophistication of the security features incorporated in the tradeable instrument card

19 10.

20 The trading system and the certificate pertaining to the tradeable instrument card

21 10 can be used to record and display the declarations required in respect of the

22 tradeable instrument card 10. For instance, a subscriber-only application may be

23 provided to investor owners of the tradeable instrument cards 10 by means of

24 which they may access this information over the internet. 2o To this end, either or both the system and the certificate may be used to record the

26 declared value of the tradeable instrument card 10 at the date of issue thereof 1 together with the declared valuation method at issuance.

2 In addition, more detailed information can be recorded in respect of each of the

3 diamonds 24 included in the tradeable instrument card 10. If the diamonds are

4 certified, for instance by the GIA, live links could be provided to digital copies of

5 the GIA certificates.

6 Further security features include the use of inks that can only be seen under ultra-

7 violet light or the plastics material of the tradeable instrument card 10 can be β adapted to indicate any attempt at compromising the integrity of the tradeable 9 instrument card 10 envelope, by discoloration as a result of externally applied io stress for instance.

M Notwithstanding that diamonds have unique features, they are capable of

12 categorisation into established categories for which pricing criteria are available.

13 For purposes of valuation according to the invention it may be found advantageous

14 to use multiple valuation methods and to and declare (or quote) a plurality of is values or a value range for each tradeable instrument card 10 or tranche of

16 tradeable instruments, a tranche being one of many variants of the tradeable

17 instruments of the invention, similarto a currency or commodity denomination, with is each tradeable instrument in the tranche having a quality and value range that is /9 statistically insignificant for purposes of valuation of each tradeable instrument in

20 the tranche.

21 The important thing however, is to ensure that all the tradeable instrument cards

22 10 in a particular tranche contain equal quantities of diamonds, each being

23 selected for a declared value according to a declared valuation method and the

24 diamonds being combined such that the sum of the values of the diamonds

25 contained within each tradeable instrument card 10 in that tranche of tradeable

26 instrument cards 10 is substantially equal to the sum of the declared values of the

27 valuable items contained in the other tradeable instrument cards 10 in that tranche 1 of instrument cards 10.

2 As a means of standardising valuation methodologies and increasing the fungibility

3 of the tradeable instrument cards 10, it is desirable to reduce the number of

4 categorisation variables used in the valuation of the diamonds.

5 One variable that can be controlled to a substantial extent, is the cut of the e diamonds. To this end, it is proposed, for the tradeable instrument cards 10 of the 7 invention, to adopt a standard cut across all the diamonds used for the tradeable β instrument cards 10. For instance, each tradeable instrument card 10 will contain 9 only Brilliant-cut diamonds. The cut quality will also be kept standard, using a

10 predetermined minimum cut value (for instance "very good and up / ideal - also

11 known as perfect only").

12 This will enable the application of a three-dimensional valuation method which is ;3 less variable than the conventional four-dimensional pricing matrix conventionally 14 used in the valuation of diamonds (thereby removing "cut" from the four Cs of cut, is colour, clarity and carat mass). With the cut assessment being standardised, the

16 diamonds need be assessed for quality only (clarity and colour), since carat mass

17 can be objectively measured by weighing.

18 In an exemplary valuation scheme, the diamonds to be included in the tradeable

19 instrument cards 10 are first assessed for quality against a predetermined quality

20 matrix, the details of which will be declared when the tradeable instrument cards

21 10 are released for trading. As an example, the diamonds may be assessed and

22 graded in respect of colour and clarity according to the methodologies and

23 nomenclature of the Gemological Institute of America (GIA).

24 According to GIA methodologies, colour is ranked alphabetically from grade D

25 (colourless) to grade Z (light yellow). For the tradeable instrument cards 10 of the

26 invention it is preferred to use only diamonds of clarity grade D-E-F (colourless) 1 and G-H-I-J (near colourless), each forming a grading group on the quality matrix

2 illustrated in Table 1 below.

3 The GIA diamond clarity scale is divided into six categories and eleven grades,

4 with the clarity categories and grades relevant to this invention being set out

5 below:

β Flawless (FL)

7 Internally Flawless (IF)

8 Very Very Slightly Included (WS) - this category is divided into two grades in

9 which WS1 denotes a higher clarity grade than WS2

io Very Slightly Included (VS) - this category is divided into two grades in which n VS1 denotes a higher clarity grade than VS2

12 Slightly Included (Sl) - this category is divided into two grades in which SM

13 denotes a higher clarity grade than SI2.

14 Using the above mentioned colour and clarity gradings, it is possible to grade and

15 categorise most investment grade diamonds into one of four categories denoted

16 ALPHA, BETA, GAMMA and DELTA in the two-axis matrix set out in Table 1

17 below, in which:

is colour grades D-E-F (colourless) and G-H-I-J (near colourless),

19 respectively, each form one of two grading groups on the colour axis; and

20 clarity grades FL/IF; WS1 and VVS2 and VS1 ; VS2; SM and SI2,

21 respectively, each form one of two grading groups on the clarity axis: Table 1

Q. g o υ

1 Diamonds of equivalent cut and carat mass classified and graded into the ALPHA

2 quadrant above (for instance diamonds with a colour grading D, E or F and a

3 clarity grading of FL/IF, WS1 or WS2) will all have roughly equal quality values

4 for purposes of calculating the price and value of the diamonds concerned.

5 The stones in each quality graded group are then sorted into mass groups for

6 assembly into various tranches of tradeable instrument cards 10.

7 For example, a 10-carat tradeable instrument card tranche may be assembled, in s which each tradeable instrument card in the tranche is made up of a 10-carat unit 9 containing 10 diamonds of roughly 1 carat each, the combined mass of all the w stones being 10 carats or more.

11 As a further example, a 5-carat tradeable instrument card tranche may be

12 assembled in which each tradeable instrument card in the tranche is made up of a

13 5-carat unit containing 10 diamonds of roughly Vz carat (50 points) each, the u combined mass of all the stones being as close as possible to 5 carats.

15 4 Carat-, 3 carat-, 2 carat- and 1 carat tranches are also envisaged. In each case

/e (including the examples just described), variation from the declared individual stone mass in a unit will be permitted and declared.

An example of such a variation range is set out in Table 2 below:

Table 2 Permitted Mass Variation

Mass Variation Total Instrument Range card 10 Mass

Individual Stones 10 stones (carat) (carat)

0.92 - 1.12 X10 diamonds 10.0

0.45 - 0.57 X10 diamonds 5.00

0.35 - 0.45 X10 diamonds 4.00

0.25 - 0.35 X10 diamonds 3.00

0.15 - 0.25 X10 diamonds 2.00

0.08 - 0.15 X10 diamonds 1.00

It will be appreciated that any combination of masses and mass ranges can be used and that such masses and mass ranges will vary from one tranche of tradeable instrument cards 10 to the next.

The use of multiple diamonds in each tradeable instrument card 10 makes it possible to obtain largely standard values in respect of the combined values of the diamonds in each tradeable instrument card 10 in each tranche (with acceptably low variations). In each case the diamonds in each tradeable instrument card 10 in a tranche will be combined such that the sum of the values of the diamonds (and possibly also the sum of the carat masses) in each tradeable instrument card 10 is substantially equal to the sum of the declared values (and masses) of the diamonds contained in the other tradeable instrument cards 10 in that tranche.

It is appreciated that notwithstanding the most careful selection, the diamonds 1 used in the tradeable instrument cards 10 nevertheless remain individually non-

2 uniform, non-standard items. For this reason, the collection of diamonds

3 contained in the tradeable instrument cards 10 in similar tranches will be no better

4 than substantially equal in value. With diligent selection and the combination of a

5 sufficient number of diamonds however, it is possible to ensure that the value

6 deviation between comparable instrument cards 10 falls within a relatively small

7 deviation range (statistically insignificant relatively to the total value of the s tradeable instrument card 10). In addition the deviation range will be declared and

9 pricing of the tradeable instrument card 10 will at all times be quoted and traded at

10 the lowest value within the declared value range.

it Like most commodities, the tradeable instrument cards 10 of the invention will i2 require the setting up of terminal markets, including some form of commodities

/3 exchange, clearing houses and trading mechanisms. In this regard, the tradeable

14 instrument card 10 of the invention will expand the traditional markets (jewellery

15 and industrial) for diamonds by opening up numerous distinct markets, some of

16 them investment markets where the physical exchange of the tradeable instrument

17 cards 10 will not be required and some of the markets, such as a private investor

18 market, which is designed to provide physical delivery and exchange of the

19 tradeable instrument cards 10.

Industrial Applicability

20 This invention relates to a tradeable instrument for use in commodities trading , a

21 trading system for a plurality of such tradeable instruments and a method of

22 trading using such a system.

?3

Claims

/ Claims

2 1. A tradeable instrument comprising:

3 a secure tamper evident envelope;

4 within which a plurality of relatively similar, individually non-uniform,

5 non-standard valuable items are securely contained;

6 the valuable items each being selected for a declared value

7 according to a declared valuation method;

8 the contained valuable items being combined such that the sum of g the values of the valuable items contained within the tradeable

10 instrument is substantially equal to the sum of the declared values of

11 the valuable items contained in similar, like valued, tradeable

12 instruments.

is 2. A tradeable instrument according to claim 1 including information display H means by means of which a declaration pertaining to the value of tradeable

15 instrument may be displayed.

w 3. A tradeable instrument according to claim 2 in which the information display 17 means is constituted by printing in or on the tradeable instrument.

is 4. A tradeable instrument according to claim 2 in which the information display >9 means is constituted by a certificate incorporated in the tradeable instrument.

20 5. A tradeable instrument according to claim 2 in which the information display

21 means is constituted by a digital data store incorporated in or on the ?2 tradeable instrument and means to display the contents of the data store.

1 6. A tradeable instrument according to claim 2 in which the information display

2 means is constituted by a discrete printed certificate associated with the

3 tradeable instrument and stored remotely of the tradeable instrument.

4 7. A tradeable instrument according to claim 2 in which the information display

5 means is constituted by a digital data store associated with the tradeable e instrument and located remotely of the tradeable instrument and means to / display the contents of the data store.

s 8. A tradeable instrument according to any one of claims 3 to 7 in which the

9 envelope includes a secure data carrier adapted to provide a means of

10 making the required declaration or declarations and of establishing one or

11 more of the identity and authenticity of the instrument.

12 9. A tradeable instrument according to claim 8 in which the data carrier includes

13 a printed, human readable certificate securely incorporated into the

14 envelope.

15 10. A tradeable instrument according to either of claims 7 or 8 in which the data /e carrier includes certificate data recorded on a programmable logic device

17 securely incorporated into the envelope.

18 11. A tradeable instrument according to any one of the preceding claims in which

19 the valuable items are low mass, high value items such as precious stones,

20 particularly diamonds, a number of which are securely assembled into a

21 secure, tamper-evident envelope to define a tradeable instrument.

, 2 12. A tradeable instrument according to any one of the preceding claims in which

23 the valuable items are low mass, high value items, a number of which are 1 securely assembled into a secure, tamper-evident envelope to define a

2 tradeable instrument.

3 13. A tradeable instrument according to claim 12 in which the valuable items are

4 precious stones.

5 14. A tradeable instrument according to claim 13 in which the valuable items are

6 diamonds.

7 15. An envelope for use as a secure tamper evident envelope within which a

8 plurality of relatively similar, individually non-uniform, non-standard valuable

9 items may be securely contained, the envelope being adapted to constitute, to in combination with the valuable items, a tradeable instrument according to

11 any one of the preceding claims.

12 16. A commodity trading system including a plurality of tradeable instruments

13 according to any one of the preceding claims and means to make and

14 publicise the declarations required in respect of the tradeable instruments, is such as unit values and the valuation method used in valuing the valuable /e items.

17 17. A commodity trading system according to claim 16 in which the means to

18 make and publicise the declarations required in respect of the tradeable

19 instruments include one or more data carriers incorporated in each tradeable

20 instrument in the trading system and a remotely stored certificate in respect

21 of each instrument in the system.

22 18. A commodity trading system according to either of claims 16 or 17 which is r<, constituted by a computer network that includes the publicising means, 1 means to market and sell the instruments between parties to the trading

2 system and payment and banking mechanisms to settle payments within the

3 system.

4 19. A commodity trading system according to claim 18 in which the computer

5 network forming part of the system includes means to trade in certificates e associated with tradeable instruments instead of or in addition to trading in 7 actual tradeable instruments.

e 20. A method of trading comprising the steps of:

9 first valuing a predetermined number of relatively similar, individually ia non-uniform, non-standard valuable items according to a

11 predetermined valuation method;

12 selecting and grouping the valuable items so valued into sets of

13 equal numbers and substantially equal combined values, the

14 valuable items being selected such that the sum of the values of the ;5 valuable items in each set is substantially equal to the sum of the /6 values of the valuable items making up each of the other sets of 17 valuable items;

W installing each set of valuable items securely in a secure, tamper

19 evident envelope to define a number of tradeable instruments each

20 having a substantially equal value; and

21 declaring the valuation method and the value of the contained

22 valuable items in respect of each tradeable instrument.

1 21. A method of trading diamonds in respect of which the values are established

2 on the basis of the carat, clarity, colour and cut characteristics of the stones,

3 the method including the preliminary step of implementing a cutting regime in

4 respect of all the stones according to a predetermined minimum) cut value

5 and, in a subsequent step, using that cut value for purposes of valuation in e respect of each stone in each tradeable instrument.

7 22. A method of trading diamonds according to claim 21 in which the stones s making up a tradeable instrument are first selected to have a total, a cumulative caratage that is equal to or greater than a predetermined totalo caratage per tradeable instrument.