Player Features and Ideas Discussion

Having been part of a team that built stock exchanges I was very much into the idea of doing this for a while.

Unfortunately, with the corp shares as they are it's just simply impractical.

Setting up the exchange would be fairly easy It's just a matter of setting up a website, exchangeDB, business rules app and matching engine (in it's simplistic form). Setting up the trawling mechanism would be easy (now that you can get a corp API key for all participant corporations) although that's where the problems start. You can only get a snapshot of the share information once an hour. So you can take your first snapshot to begin with and then compare all future snapshots to see how many and of what shares have changed hands but if they've changed hands twice in that hour you've lost visibility of the first trade and it looks to your system that the trade happened between the first trade seller and the second trade buyer. Therefore your data is out of whack immediately.

You could rely on the trades being reported but that's open to abuse and is almost impossible to regulate. You could suspend any corp who's shares come into issue but that comes with it's own set of abuses and issues.

The only way for an outside stock market to function is to have a new API which records all share trades for a company including trade volume, trade price, seller, buyer, trade time as a minimum. Therefore with the corp share trade API you could effectively run an outside stock market and automate the regulatory side.

If the shares API was modified in this way every corp floating would have to supply their corp API, every trader would have to register their main's API key (for verification and regulatory reasons) and an external email address.

All trades would happen on exchange with any off exchange, non-reported trades discovered by the regulatory program causing a suspension in trading for that stock. Any valid trade that went through would then trigger 2 emails: one to the buyer to tell them to contact the seller and vice versa. Then those two would have to perform the trade ingame and the regulatory program would receive confirmation of the trade on it's next API trawl.

It would be tricky to set up, the business rules and regulatory rules would take some thrashing out but it would be possible if the share trades were published via api. I can't see any way of doing it with any reasonable regulation unless this happened.

FYI several people have tried this before. I don't believe any have actually been successful (I expect partially for the reasons I've stated regarding published information but also because of a lack of trust in the validity of share pricing and the lack of regulatory penalties for market abuse) although I'm willing to be corrected on this if my research was incorrect when I was looking into this recently.

EDIT: I've just reread your message and I might have got that wrong. If you meant that you wanted CCP to create an in game stock market I'm sorry to inform you that it simply won't happen. At least not in the next couple of years. They would need to completely revamp the corp mechanisms, design and build a stock market and regulatory system, employ a regulatory team and deal with the inevitable extreme market manipulation that would happen if a group like the eve player base got their hands on a system so rife for abuse. Simply imagine what would happen when someone floated their corp. There is nothing to stop them starting a new corp and moving all their assets and people over to that leaving the corp that people have bought into as a shell, worthless. You could programatically stop this from happening but by doing so you'd end up with seriously draconian corp rules which tied the people and assets into a corp (not sure how you'd even do that) in order to retain the worth of the company. It's just such a major ballache that CCP would be mad to chose to develop that over other things.

You're quite correct. Liquidity is definitely the issue here. As I mentioned, there have been attempts at this before. If you search Google for "Eve Galactic Stock Exchange" you'll see that there is still one running, although it doesn't appear to have been used in some time. I haven't gone over it in fine detail as I didn't think there was much point after discovering that the stocks hadn't moved and no trades had been performed for a long time.

The main issue with your proposal for a completely externalised exchange, which is what EGSE is/was, is the lack of any regulatory reprecussions which means the risk is all on the side of the brokers, investors and any market makers. The corps themselves hold no risk as after the IPO they stand to gain or lose nothing based on their share price other than increased/decreased liquidity which has no bearing on the corp ingame. The corp can be worth a small fortune on the external exchange but that doesn't change anything ingame. Conversely, the corp could tank on the external exchange which, in real life has serious reprecussions for the company but in this scenario it would have none for the corp.

So what are the incentives for the corp to continue bothering with their listing after they've garnered their initial income? What's to stop them disbanding the corp and starting another with their IPO capital? Other than the loss of the corp name and a bit of a pain in the transition period I can't think of anything. The only thing that happens if one corp did that would be a loss of confidence in the market in general which doesn't affect the corp but would potentially kill liquidity on the market or even tank all the other stocks as people attempt to get their isk out of a system they no longer have faith in.

You could argue that what the corp does ingame bears no real relevance to the IPO listing and on the surface you'd be right. The listing could still continue even if the corp disbanded which means that there isn't any real connection between the listing and the corp. I don't think that's a system anyone would want as an EvE market should reflect the EvE corps.

Now, I'm not trying to be negative for the sake of it. I've gone over this for some time and it's a very difficult problem to solve. A potential solution to some of it is to have a rigorous vetting process for the listing Corps, allowing only those with deep roots and reputations to list. Also, you could have a "risk" value on the corp which depends on such factors as length of time listed, number of trades performed, length of time the corp has existed ingame, regularity of dividends, some figure for value change etc. This would give traders a metric with which to judge whether they wish to risk investing in a corp.

You then need to solve another problem, as you correctly stated: liquidity. You (I say you for ease but I mean whoever started an exchange) would need to advertise in E-ON, ingame, games websites etc. You'd need to use various marketing techniques to garner interest in the enterprise prior to going live and retain it once live.

This is the reason I keep coming back to it needing to actually be integrated inside the game. If there are no real ties to the corp it might be difficult to keep people's interest.


EDIT: Hmm..... I've just thought of something. If the listing corp handed over all ingame shares in their corp to the exchange and admitted an alt from one of the exchange admin's accounts they would no longer be able to vote. I believe (I could be wrong) that this would mean they couldn't disband the corp. It would also mean there would be regulatory reprecussions as you could easily vote in the market alt as CEO if they breached the market's terms. Whether you could get anyone to agree to those terms is the question but it might be worth persuing.

I mentioned Facebook, not because it tanked (which was pretty hilarious to watch and we all knew it would), but because it's the most well known IPO at the moment. Even people who don't follow the stock markets know about it.

Anyway, aside from actually trading stocks, in my last post I was talking about CFDs instead of trading real shares in a corporation. CFDs mean you could trade on the price of stocks, without hedging on the other side. The trades would have no effect on the market, they would just be for speculative gain. This plan would only work assuming that more traders lose than win. The corp that runs something like this would have to pay out traders from their own pocket.

In fact, this would work much better against commodities, rather than corporations.

It seems that there's 101 other people who have brought up the same or similar ideas and I know this is almost not worth considering, but even still, I enjoy thinking about how it could be achieved successfully.

It's a shame this thread has devolved into the realms of being entirely negative. It was an interesting theoretical discussion even though all parties are aware of the impracticalities.