Market Discussions

Have some interest from me if that counts for anything.

So you're basically going to create an ETF for commodities, similar to GLD, SLV, and JJC in real life? And then pay interest on top of it?

Where does the isk for the interest come from, since obviously minerals and materials like that are not cashflow producing entities?

Biggest ponzi scheme ever in the making, with VV and Grendell teaming up?

No, that's a mutual fund not an ETF.

ETFs don't have separate secondary markets, since they closely follow the exact price of the underlying.
Also, I quite well indicated mine is an active fund (that is, actively managed), while ETFs are cheap because they are completely passive. The upside is that they are cheap. The downside is that YOU are the one who needs to manage them, that is guess when to buy low and to sell high (like speculating in EvE). Active funds may yield much less but the fund manager does his best to keep a positive - even if low-ish - profit.
This is why I specified the fund was a "money storage". You dump ISK there and it slowly builds up because the manager (that is me in this case) is meant to actively buy and sell and create a plusvalence. The net result is like you subscribed a bond, that is a coupon you receive at each month.


Edit: the profit for active funds is often matched against a benchmark, in our case the benchmark would be the natural evolution of the various EvE commodity markets.

Im interested in helping, I'd love to see a better 2ndry market in eve.

I would be interested too

Well, I want to do it well, so I need to "measure" what I am going to face.

Example: if shares are 1M each, how many would you more or less want?

I suppose most will want some dozens, but then Grendell could be interested in many thousands.

What does this mean and why does it matter?

It matters because I need to find a way, a medium to make most investors happy, that is to find a fair interest % that is realistic (as I don't want this to become a second job and risk burnout) yet enticing enough to have people want to invest.

Then there's also the EVEBOR to factor in and how far I am from it.

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As for nitty gritty details: the first iteration for the secondary market would be a Google Docs spreadsheet.
It'd look like a standard (i.e. Infinity Futures) orders book with bids and asks. Nothing really weird, since the regular EvE market window already follows that model.

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The workflow would work like this:

Some years ago I setup a corp called VEMEX. That would be the acronym for Vahrokh's EvE Mechantile Exchange.
I had grand plans for it, including setting up a whole online market system, but alas I never found a suitable script (PHP) and I don't have time to code it.
Anyway, interested Investors would send the "teller" character ISK for the shares.
As you well know, it's possible to specify a text description. That description would specify the desired action plus the fund name or code.


Primary market

Example: Johm Smith sends the teller character:

- 10M ISK with description: "Subscribe Zydrine".
- 23.6M ISK with description: "Subscribe Tritanium".

Or

He can just tell about his intention on the investment thread and I'll arrange for him.


The following happens:

He is identified as a new investor who wants to purchase 10 Zydrine shares. "New investor" is important, because this means he wants to access the primary market. The primary market happens only when new shares are issued, which will happen when this investment will start and possibly in other times (in case the fund expands).
The primary market is about new shares and those new shares cost 1M each with no load (ie no visible or hidden costs).

He also sent another transaction with 23M.6 ISK. 23.6M ISK is not a multiple of 1M so 0.6M will be returned (minus CSPA charge) and 23 Tritanium shares allocated.

He starts getting a monthly interest, from 1% to 3% even when mineral prices tank (this is the main difference vs an ETF: on the ETF you'd lose say 50% of your value when the mineral tanks, an active fund will yield less but also lose less).

After a certain amount of months (say 3-6 months, I said this is a long-ish term investment) the share "matures".
What does this mean? That John Smith can send the teller character an eve-mail with subject:

Unsubscribe Zydrine

Or

He can just tell about his intention on the investment thread and I'll arrange for him.

This will return his matured shares value back at 100%. This means he'll get his 10M back.

He may also specify a number:

Unsubscribe Zydrine 6

This means he wants to drop six shares and get back the equivalent (6M). The remaining 4 will keep running).


Notice how unsubscribing becomes ONLY available after shares mature (that is after 3-6 months).

If John Smith wants to terminate the shares early, he can in two ways:

- by arranging (privately and on the investment thread) a sale of his shares to someone else.

- by using the secondary market.

The secondary market workflow will be posted later.

Thank you a lot, I am really helped by your feedback! I hope others will follow your example.

Secondary market

- First part -

[Bear with me, it's a lot of text but in the default situations it'll just work like EvE markets.]

Secondary market is a facility to allow Investors to trade their shares (like RL funds secondary markets).

This allows them to make a plusvalence in case they bought shares for cheap and sold for an higher value.
Each share will deliver the same interest anyway, so the lowest you bought them at, the better.

Workflow:

There are two ways to trade shares: "peer to peer" and through the exchange.


Peer to peer
The two involved parties will do everything between themselves:

a) They settle a share price
b) They settle how to manage accrued interest.

This second point is important, because like in RL, the interests are only and always delivered to the share holder.
This means that if John Smith sells his share to Joe Ross on June 14, only Joe Ross will receive full interest at the end of the month.
So, like in RL, it's left to John Smith to require Joe Ross to pay the share agreed value plus the pro-rated interest for those 14 days.
VEMEX will have no say nor authority in any of this settlement.

c) Once the transaction completes, both John Smith and Joe Ross must tell (possibly on the investment thread) that the transaction happened.
In fact, VEMEX will keep sending interests only and always to the last known share holder. There will NEVER be interest payments back-traced or undone and transferred (because of delays in communication) because the micromanagement and opaqueness would quickly escalate to intolerable levels.
For better insure quickness of execution I really suggest to also send an EvE mail to me (this character) about the finished transaction.


Exchange


There will be a published "something" (in the beginning it will be a Google Doc) showing two panes:

Ask and bid. They work more or less like EvE Market orders but the investor names won't be visible like in RL.

So let's imagine John Smith of the previous post wants to dump 6 shares before they mature or just because he wants to sell high.
There are 4 buy orders for 1115800, and 1 for 1115801.

He sends an EvE mail to the teller character with subject:

Sell Zydrine 6

This is known as "market order", that is "I want to immediately buy / sell this security at the best available market price".
This puts him in a FIFO queue (like in RL), EvE mail time stamps decide who gets those shares first.
There is no guarantee you'll get exactly those prices, because if somebody else bid on them right before you then he'll get them and then you are queued for the next best priced shares.


He sells 4 of his shares getting 1065800 per share (50k is subtracted for each traded share as exchange fee => 0.01 ISK disincentive) and one for 1065801.
What about the sixth share? There's nobody who wants to buy it!

No problem, as I indicated in the first post, he may:

a) Wait till it matures, he'll get 100% of his share value back.
b) Sell back to the exchange for 90% of face value, that is 900000 (no fee charged for this).

In the above example, since he indicated Sell Zydrine 6 he will get 5 shares sold as per above and one sold for 900k.

If he does not want to lose on the sixth share (900k is well below par) he must specify this instead:

Sell Zydrine 6 nodump

Nodump means that you don't want to dump to 900k in case you want to sell more shares than available on the market.
In this example, by using nodump, the sixth share will simply not be sold.

I would be in for probably 1000+ shares

I have had some offers in game as well.

At this point, since the markets won't wait for me to go ahead, I will possibly launch the investment leaving out some advanced secondary market features for a second iteration.

It'd certainly help me a lot if someone could suggest me a PHP based order system with a book, it'd make things soooooo much smoother.