Player Features and Ideas Discussion

For traders we currently have a spot market where you can buy and sell commodities. Many people doing manufacturing want dedicated mineral output and enter into private agreements with mining corporations to gain there output on a monthly basis. In the commodity markets this is known as a future.

Why doesn't Eve allow for futures to be bought and sold directly though the UI, instead of the informal way it's handled now? For example you should be able to promise you can deliver 1B of trit on a monthly basis. You could sell this monthly output and others could purchase it. (aka a futures contract) Obviously there would need to be penalties for those who break the contract and do not deliver the amount specified, payable to the person who purchased the future.

This would really help "grow up" the trading as you could then do interesting things such as fixed for floating futures. ie: If you believe the price of trit is going to fall, you can speculate by selling the future and then buy the minerals on the spot market just before the delivery date thus gaining the spread between the fixed and floating price. ie: fixed price is the price of the future and the floating is the spot price on the reg market.

You could also speculate on the futures themselves by selling a futures contract (your now on the hook to provide the commodity) and then buy back a the same type of future just prior to the delivery date (you've now passed the obligation to meet the original contract at the delivery date) and if the price fell between the two dates you profit. Would add a ton of new ways to trade and strategies for the player base, plus would mimic real markets more closely, so eve would get the benefit of all that real-world market experience and information to help design and implement the changes.

Once futures are tackled it would then open the door to also do options if CPP ever thought that was something they wanted. (I would love it, but probably too complex for most.)

Benefits

1. Give more choice to miners. They could sell at the spot price or enter into a futures contract.
2. Gives miners a way to increase reward and take on more risk. ie: By selling at the futures price they are locked in and essentially making a bet. If the market goes up they loose potential profit, but if it goes down they are locked and have a guaranteed return. Or they can simply sell at the spot-price as they do currently and avoid the risk with selling futures altogether.
3. Futures help stabilize commodity prices. The spot market will not experience the same highs and lows because the futures act as a bit of a buffer slowing movement.
4. Gives traders many new options for making isk. There are quite a few strategies to make isk off these types of futures, and it gives dedicated traders additional opportunities.
5. Creates additional depth in the markets for traders, miners and manufacturers.




Would love to hear Dr. Eyjólfur's input on this.

In theory, that situation could be curbed by disallowing biomassing with open contracts no? I'm sure there are other issues that would need to be looked into of course. I, for one, definitely support a new weapon for the market/industry pvp scene

Yeah in real world markets a future has a specific delivery date that defines when the goods change hands. So for example if you purchase a 1B Trit June Future, it's a contract says you will take delivery of 1B worth of trit in June (could make it the 1st or 31st etc, all depending on what we decide is standard.)

So you could then purchase 1 month worth of output to be delivered June. then purchase another month to be delivered July. This way you get two months of output and don't really care who is delivering as long as they meet the contract requirements.


The additional wrinkle is where the goods are to be delivered. Most makets have standard places to take delivery. ie: For crude in North America these include places like: Henry Hub, Chicago Hub etc.

So a Futures contract in Eve would need to include:
- Amount (quantity of goods to be sold)
- Delivery Date (when will be goods need to be delivered by)
- Delivery Location (where will the transfer of goods take place.)

That could be dealt with by having a certain amount of isk in escrow that equates to the penalty of a failed contract. Once you biomass a character or close a corporation, you instantly fail the contract on your end. Because the penalty was in escrow, no isk is magically generated and therefore cannot be exploited.



And natural disasters happen that destroy businesses in the real world. It's called planning ahead. If you sell futures to people for a guaranteed sale every month, you can simply be a month ahead in all your orders with something called inventory.