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Little idea draft: a smallish commodity based fund

Author
Samroski
Deep Core Mining Inc.
Caldari State
#41 - 2012-10-17 07:47:56 UTC
Vaerah Vahrokha wrote:
Samroski wrote:
Vaerah Vahrokha wrote:

This means that the real reservations will be started being accepted at a certain to be announced day and hour.
I will try posting the IPO reservation at about 9pm EvE time, hoping it's a fair medium both for EU and American participants (I have no clue about Australians, they seem to get the bone every time).

I've somehow managed to miss the deadlines for every single auction or investment opportunity over these past few years, and now I am sure that I'll mess this one up as well :)

Maybe I can send my ISK now?


Due to your outstanding and continued role and duty in your VAERT's Sister Fund I hereby offer to be your delegate and will do the reservation for you. Just tell me the amount and we are set.

Thank you very much. This makes me very happy :)

Please reserve 10b.

Any colour you like.

Nanatoa
#42 - 2012-10-17 18:41:41 UTC
Please be my delegate too, and reserve 20B. Thanks!

"Stay the course, we have done this many times before." - (CCP) Hilmar, June 2011

De Guillaume
Van Lanschot Banking
Van Lanschot
#43 - 2012-10-17 21:01:49 UTC
reserve 10b for all 4 areas

Has you ever went so far as chose to go even use want to look more like do?

Arancar Australis
Dead Sun Rising Enterprises
#44 - 2012-10-18 08:56:58 UTC
Well looks to be a very late night/very early morning for us Aussies, but meh, still sounds interesting...who needs sleep anyway.
Vaerah Vahrokha
Vahrokh Consulting
#45 - 2012-10-19 01:11:12 UTC
Update: the project is getting final

In these days I have worked pretty hard on finding viable compromises that could work in the short time frame the markets gave me. Follows a blurb that I feel I need to write, it will impact on your investment portfolio a lot.

Here are the specifications:

1) Do it fast.
2) Give a market to those who want a market.
3) Give a simple investment to those who just want to dump some ISK and forget about it and just get a monthly wallet blink.
4) Give everyone an experience on what a quasi-realistic finance instrument looks like.



1) Do it fast

Why? Because I need a momentum for this thing to take off and one of the few times it's sort of predictable to get such a momentum, it is during the months before Christmas.

However, this imposes a very, very heavy toll. I cannot code what's needed to implement a full infrastructure. I need basically to write an automated teller system, an automated EvE API reader to fetch the current funds assets and compute the updated NAV (a fundamental parameter for funds, it decides shares price = NAV / outstanding shares. Then I need to code a personal stock portfolio, an orders management and matching system and much more. I dare say it'll take several man weeks - if I had nothing else in RL to do.

So I have to setup a temporary solution and do it half manually. I created some Excel sheets that will replace the exchange and order forms..

The sheets are available as Google Docs for review at this location.

I will expand later about what the hell are all those "pages", since they will make more sense once I cover the next points.


2) Give a market to those who want a market.

As mentioned in previous posts, there will exist 4 close ended funds: Minerals, Ices, T2 materials and PI materials. Those are baskets of multiple kinds of items each. Therefore they are not indexes, i.e. they won't track any particular EvE market.

I urge to re-read the links I posted in previous posts so you understand what a fund is and which fund does what.

These 4 funds are close ended and thus behave like stocks. An IPO will be published and a counted number of shares will be issued. I.e. if I find interest for 50B I will issue 50K shares.

Interested investors, included those who want to delegate me to do their bidding, MUST specify how much ISK they want to invest on each of those 4 funds. I.e. it's not enough to tell "I want to invest 10B" because I don't know if you want to put 2.5B per fund or 5B on 2 funds and zero on the others and so on.

Once the shares will be distributed, the primary market phase is over and you'll receive your order (tracking) number, in fact you'll be long on your shares (you just bought them!) at 1M per share.

At this point, you will be able to read how the market is and you'll be able to buy / sell etc. like on RL markets.
RL markets are almost like EvE, except you don't pay a single nickel to place and modify buy / sell orders (you can also just directly buy / sell like in EvE's "simple" market order window).
What you pay in RL markets are exchange fees and - possibly - fund fees. Here is a quite informative document explaining them.

Everything is crystal clear and transparent on the Excel sheet I linked above. You'll notice some funds are almost free (except a little fee to prevent mad by / sale cycles - this is also done in RL), while others have different costs. Why different? Because there's unique intrinsic risk and illiquidity in some markets. I.e. it's harder to liquidate some T2 materials to make cash for a possible large withdrawal and those materials also have higher volatility to manage.

Those investing in the closed funds will earn ISK:

- by buying low and selling high.
- by short selling high and buying low. Notice short selling will be implemented once I find a stock borrower. A market maker investor could do that and earn interest just for lending some stock for some days.
- by doing nothing. Yes. Do nothing and just wait for the monthly wallet blink, like a regular IPO / bond.

Remember, in order to "get out" you'll need to sell the stock. If you can't wait the fund issuer (VAHFT - Vahrokh Financial Technology => my finance branch) will redeem the stock at 90% of its current value, no question asked, as long as there's enough liquidity for that (i.e. don't pretend to insta-liquidate 30B worth of shares, it won't happen).


Vaerah Vahrokha
Vahrokh Consulting
#46 - 2012-10-19 01:23:21 UTC  |  Edited by: Vaerah Vahrokha
3) Give a simple investment to those who just want to dump some ISK

A fifth, open ended fund will also be made available. Unlike the four above, this is targetted to people who just wanted to invest ISK in something simple like a bond.

This fund, aptly named "Easy Fund" Cool - ticker ESYFND - comes with reduced costs and no secondary market. VEMEX (the exchange) will be your direct counterpart like in RL open ended funds.
Unlike the funds above, Easy Fund will have a broader basket of goods, including fully collateralized bonds / loans).

Those investing in the open ended fund will earn ISK:

- by buying shares when the fund NAV is smaller and selling them when it grows (shares track the NAV)
- by doing nothing. You still get the monthly wallet blink. Notice how, unlike a bond and like an IPO, you are NOT granted a fixed dividend.

One neat characteristic of an open end fund is that it has no limit to how many investors can enter, even at a post-launch time. But open end funds can and will close to new investors once they hit their self imposed glass ceiling. This will be no exception.

Once you are done with the fund, you just redeem the share directly to me and unlike the above funds you won't get a bad (90%) deal. You'll get only to pay 2%.

That's it. Even the Google spreadsheet reflects this lower complexity by providing a shorter section for this fund.


I will explain more about the interface / spreadsheet tomorrow.


In short:

Overview is just a dashboard with a succint view of all the listed securities.
The various tabs are the expanded detail for each security.

On the top left there's a number of financial instrument data, characteristics and stats.
Below that panel, there's an order form. It's quasi realistic, even if in RL these things can get even trickier.
You are meant to fill in the values for the shares you want and paste the resulting text in an EvE-mail to send to my teller alt VEMEX Monica. I will process as humanly possible.

On the right, there's the DOM, aka Deph Of Market. It keeps the orders book in a compact form (more compact than EvE, in RL the traders don't want all that clutter). Those who traded RL futures will immediately recognize what platform I took inspiration from. It works more or less like EvE, on the top you see the sell orders and below there are the buy orders.

All to the bottom, there should be a chart: in fact the exchange comes with industry compliant OHLC candle bar charts!

Google does not support importing those charts so you won't see them. I might deliver those charts in some other way or just make the Excel file downloadable from my website.



Please explore the whole spreadsheet and re-read what I posted and feel free to ask questions, I am sure there will be.
Grendell
Technologies Unlimited
#47 - 2012-10-19 02:47:21 UTC
Easy for me!

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Samroski
Deep Core Mining Inc.
Caldari State
#48 - 2012-10-19 07:52:09 UTC
Vaerah Vahrokha wrote:

Interested investors, included those who want to delegate me to do their bidding, MUST specify how much ISK they want to invest on each of those 4 funds.

Please invest 10b for me, equally across all the 4 closed funds i.e. 2.5b each.

Any colour you like.

Elegbara
White Wolf Enterprises
Harmonious Ascent
#49 - 2012-10-19 12:58:59 UTC
Vaerah Vahrokha wrote:
Interested investors, included those who want to delegate me to do their bidding, MUST specify how much ISK they want to invest on each of those 4 funds. I.e. it's not enough to tell "I want to invest 10B" because I don't know if you want to put 2.5B per fund or 5B on 2 funds and zero on the others and so on.

1 billion on t2, 500 millions on minerals, 250 on each ice and moon materials.

Is that specific enough? Unfortunately I have no idea if I'll be able to properly invest it all myself.

Open your eyes. And awaken.

Arancar Australis
Dead Sun Rising Enterprises
#50 - 2012-10-19 13:30:40 UTC
Well if this is now open, i'd like to invest 1 billion spread equally between the 4 closed funds please.

Cheers,

AA
Vaerah Vahrokha
Vahrokh Consulting
#51 - 2012-10-19 14:58:26 UTC
Nanatoa wrote:
Please be my delegate too, and reserve 20B. Thanks!


Please specify the exact basket.
I need to know before the IPO is launched (see next post) else this delegation request cannot be executed.
Vaerah Vahrokha
Vahrokh Consulting
#52 - 2012-10-19 15:02:02 UTC
@Investors above.

Please post your exact request in the thread I will create for it.

In my next post I am going to exactly specify when and how to do everything.

I apologize for not being able to queue you right now, I need to provide the maximum fairness and transparency to everybody.
Vargan Armer
Tribal Liberation Force
Minmatar Republic
#53 - 2012-10-19 15:03:38 UTC
I would be willing to invest 400m in the mineral fund. If that is not possible then that money will go to Easy Fund please.
Vaerah Vahrokha
Vahrokh Consulting
#54 - 2012-10-19 15:25:59 UTC
Vargan Armer wrote:
I would be willing to invest 400m in the mineral fund. If that is not possible then that money will go to Easy Fund please.


Please read above. Reservations are still not open.
Vaerah Vahrokha
Vahrokh Consulting
#55 - 2012-10-19 15:26:07 UTC  |  Edited by: Vaerah Vahrokha
@Elegbara please re-post your offer when the reservations will start. There will be a dedicated thread for that.



Some random addendums


Here is how the securities charts could look like:

Picture

Since Google Docs does not support Excel charts I have to figure out a no nonsense way to make them available in other ways.




Market orders vs Stop orders

This jargon is the RL finance way to call the two things you do all the time in EvE already.

A market order is nothing more than dumping stuff to buy orders or directly buying from sell orders. It's basically the "Simple" EvE trading window. Like EvE, it's immediate execution at current price. That is, even if you specify a price in the order form, it'll be ignored and you'll be given the best current market price.
Notice how all the ESYFND open ended fund sales are always market orders, you can see it by looking at the orders book. In fact open ended funds only involve direct taking or redeeming of shares.

Stop orders, instead, are the equivalent of the "Advanced" EvE trading window, where you may specify the price, duration etc.



Orders number

One very very important detail: like in RL finance, your orders will be tracked with a number / code.

When you create a new order (buy / sell etc) you will get this code sent to you. Now, you'll have to paste that code to subsequent requests to move / change / delete that order.


The process is quite easy, but I am going to explain it step by step in order to make it as easy as possible.

First of all please open this screenshot and keep it handy so you can see the sample numbers in the right places. Download the Excel stuff from the Google docs link I posted earlier.

Imagine you want to:

- setup a sell order for 12 MINBSK shares. You want to 0.01 ISK the current ask price like you do in EvE.
Since you are in the MINBSK Excel sheet already, all you have to do is to look the DOM (orders book) to the right. The lowest ask price is 1,216,000.00.

So in the lower left orders pane you enter the following data (left to right):

MINBSK. This is already pre-filled in, since you are already in the MINBSK sheet.
Operation = SELL
Order type = STOP
Price = 1,215,999.99 (0.01 ISK below the lowest ask price).
Quantity = 12
Only Expiration available at the moment is "forever", so leave GTC (Good Till Cancelled).
Leave 0 as order id as you are creating a new order. You will receive the created order ID from the exchange.

Now you can copy these data and paste them into an EvE Mail and send it to Vemex Monica for FIFO processing.

Imagine you also wanted to redeem 3 ESYFND shares. You can switch to the ESYFND spreadsheet tab or just fill in the next row below the ICEBSK order. This way you can just send one EvE-Mail for multiple orders.

Now, ESYFND is the open ended fund so you can only dump to market (effectively redeeming the shares at their intrinsic price minus the listed fees of 1 + 1 percent). To do so, you enter:

Operation = SELL
Order type = MARKET (if you enter STOP, it'll be ignored for the open ended fund)
Price = leave the default (1) since market orders are always matched with the best current price.
Quantity = 3
Order ID = 0. You will receive an order ID for your own book keeping but by the time you receive it, your shares have been processed already.


Finally, imagine you also want to change a 10 shares ICEBSK order you set up yesterday. Yesterday you sent an order for 10 shares and the exchange sent you the code 4533322. To do so, you enter:

Operation = CHANGE. If you use CANCEL, the order will be just cancelled and the shares returned for free.
Order type = irrelevant. It will stay what you set it up for yesterday, you are just relisting (i.e.because someone 0.01 ISKed you).
Price = new price you want the shares to be relisted at.
Quantity = irrelevant. The whole order is moved anyway, it won't split.
Order ID = 4533322 (the number you got sent back from the exchange yesterday).


Nota Bene

Like RL and unlike EvE, setting up, moving and cancelling orders is completely free.

Only the actual trades are charged.
Vaerah Vahrokha
Vahrokh Consulting
#56 - 2012-10-19 15:42:44 UTC  |  Edited by: Vaerah Vahrokha
Important information about reserving shares

The request for reservations will be put on October 21st (Sunday), at 9pm EvE time.
Regardless of the hour of the day that the IPO thread will be setup at (it will appear earlier than that), only and exclusively reservations posted from 9:00:00pm will be taken into consideration. Reservations posted before that time will be completely ignored. That is, they won't be queued as last or anything, they will just be completely considered void.

I am being so utterly pedantic about this, because I know there will be a race and I want things to be fair for everybody.

Edit:

IMPORTANT!

I will create the IPO thread before that hour.
At 9pm EvE time I will create a simple post stating something like: "RESERVATIONS ARE OPEN".
Every reservation posted before that post is effectively void.
The RESERVATIONS ARE OPEN post is effectively the true reservations enabler, that is if it's 9:00:10 and you still don't see that post then the reservations are still not open. I will indeed try posting that post at 9:00:00pm but if for any reason I cannot, then you have to wait for that post to appear. So, start oiling that Refresh Page button on your browser Pirate


All the market makers reservations are capped at 40B (fourty billions). Who will come last, will see his reservation cut to fit in the hard cap, save last minute arrangements.

You MUST specify you will be a market maker (plus he amounts per each fund), else you'll be just a big but regular Investor and market maker terms won't apply to you.


Big and small investors: the total reservations will be capped at 100B till so I can analyze its performance in safety.
It should be a fairly large margin and the open ended fund makes sure that creating new shares does not dilute existing shares.


The official caps

- Market makers are capped to 40B, market makers only exist in the close ended funds (the open ended fund has no market to make).
Notice that you don't need to be a market maker just because you want to invest big.

- Total aggregate closed ended funds are capped at 60B. If I see the open ended fund has few Investors I'll raise this cap to 70B.

- Open ended fund is capped at 40B.


Reservations

As I stated above, reservations will only be valid if posted on the IPO thread and past the stated hour.
In case you can't make it, you may choose a friend to act as your Delegate and reserve the spot for you.
Both you and the Delegate must post on this thread about this setup.
At the date and time when reservations will be opened, the Delegate will reserve the spot.
The Delegate will have to post (in the IPO thread, not here) the exact portfolio you reserve.

If anyone has doubts or needs more information feel free to ask away!
Vargan Armer
Tribal Liberation Force
Minmatar Republic
#57 - 2012-10-19 15:53:43 UTC  |  Edited by: Vargan Armer
Vaerah Vahrokha wrote:
Vargan Armer wrote:
I would be willing to invest 400m in the mineral fund. If that is not possible then that money will go to Easy Fund please.


Please read above. Reservations are still not open.


I know, I was just showing my interest in your project ^^
Also would anyone mind being my delagate for the reservation, as it's quite late where I live, so I don't think I'll be able to post. For anyone interested in doing it, 400m for the mineral fund, as a market maker :D
Vaerah Vahrokha
Vahrokh Consulting
#58 - 2012-10-19 15:57:13 UTC
Vargan Armer wrote:
Vaerah Vahrokha wrote:
Vargan Armer wrote:
I would be willing to invest 400m in the mineral fund. If that is not possible then that money will go to Easy Fund please.


Please read above. Reservations are still not open.


I know, I was just showing my interest in your project ^^


Heh ok, I am actually sorry I sounded a bit harsh. I am just quite agitated at doing this right.
Vargan Armer
Tribal Liberation Force
Minmatar Republic
#59 - 2012-10-19 15:58:10 UTC
Vaerah Vahrokha wrote:
Vargan Armer wrote:
Vaerah Vahrokha wrote:
Vargan Armer wrote:
I would be willing to invest 400m in the mineral fund. If that is not possible then that money will go to Easy Fund please.


Please read above. Reservations are still not open.


I know, I was just showing my interest in your project ^^


Heh ok, I am actually sorry I sounded a bit harsh. I am just quite agitated at doing this right.


Of course, this sounds immensely stressful. If you manage to pull this off, you should bloody well be proud of it.
Grendell
Technologies Unlimited
#60 - 2012-10-19 16:45:13 UTC
It's unlikely I will be available "October 21st (Sunday), at 9pm EvE time" to claim my reservation in the open ended easy fund which appears to be capped at 40b. So that I guess is good news for everyone else who might want to invest in that portion.

I will try to show up, but it's just not likely. If not good luck to everyone else!

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