SHTAR שטר
Terms establish the rights. Observations determine obligations. Payments settle them. SHTAR preserves those relationships as a product moves through its life.
Symbolic Hierarchical Terms And Rules
The central idea
A June coupon and December principal are different dated obligations. Once the coupon is settled, it belongs to the history. A coupon that became due but remains unpaid is still an outstanding claim.
A later wealth amount depends on what the recipient did with earlier receipts: hold them, reinvest them or spend them. The original product does not silently choose that strategy.
A definition establishes the product’s meaning, including its retained state and update rules. Accounting, model valuation and software execution apply that definition in different ways.
An illustrative autocall
Assume a coupon of 2 USD per review, released when the index is at least 70% of its initial level. The definition keeps one coupon-memory amount, M, initially zero.
Follow three review observations
65%→60%→85%
Each observation is assumed for this illustration. These reviews isolate coupon memory; the full note also defines early redemption, maturity and settlement.
Continuing state
M = 0
Missed-coupon amount
Latest payable
None
A separate delivery obligation
Next observation
Review 1
Requested from the terms
| Review | Index level | Payable | New M |
|---|---|---|---|
| 1 | 65% | — | — |
| 2 | 60% | — | — |
| 3 | 85% | — | — |
No reviews processed. Coupon memory is zero.
The payable of 6 is an output, not continuing coupon state. Creating it resets M; the claim remains outstanding until settlement. Settled receipts remain in the historical record.
An authored definition
The aggregate coupon amount is a choice in the SHTAR definition. An interpreter follows its initialization and update rules. It does not silently replace a declared coupon list with an aggregate.
The same idea applies to an Asian option whose definition declares a sum and count of contractual fixings. That state evaluates a discrete arithmetic average. A continuously averaged contract requires a stated numerical approximation.
Compact state and the audit record have different purposes. Retaining enough state to continue does not erase earlier fixings or settlements.
Modular by construction
A payment may deliver currency, shares, a bond or a separately defined security. A swaption can deliver a swap with its own remaining rights and obligations.
The delivery stays the same when its value is reported in another asset. Choosing valuation units does not cash-settle the claim.
A context supplies data for typed keys. It can provide a market observation, a shared average, or a read-only view of another product’s state.
Nested and derived contexts retain their information time. Reading another product’s state does not acquire its payments.
A continuing review returns the next observation request. It can identify a timestamp or ask for the next eligible occurrence.
The request belongs to the definition. The model’s floating-point time coordinate and integration steps belong to its interpretation.
Connect to a model
A direct payable has an exchange value treated as market-agreed and sufficiently liquid within its valuation context. A synthetic payable lacks that accepted basis. The status can change as market conditions change.
Either can require analytic calculations, PDE or Monte Carlo. The numerical method does not determine the status. A model can recognize a delivered swap and value it with a suitable formula or solver while preserving the contract’s actual deliveries.
Registration connects the definition to available observations, market assumptions and valuation capabilities. Missing inputs remain explicit requirements.
Continue reading
The guide develops these examples. The language reference specifies types, contexts, events and the proposed portable representation.