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Ludi Svelte
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Posted - 2008.05.25 21:19:00 -
[1]
The Idea Allow alliances to create tradeable shares that they can sell on an ingame stock market.
IPO The alliance can create a certain number of shares and have an IPO to raise isk. The price of shares in the IPO and the % of the maximum issued shares can be set by the executor of the Alliance. The maximum number of shares an alliance can give out is based on the average number of members in the month before the IPO,(1,000 shares per member) average number of corporations in the month before the IPO(1m shares per corp) Sov count (ie for every system with 1 point of sov, that gives 100,000 shares, 20 systems with an average sov of 3 = 6m shares) and stations (5m shares per station). When an IPO is announced, players can access the share market, select "Announced IPO's" and subscribe to the IPO.
Members of the Alliance and their alts are able to subscribe but members of other corps/alliances get priority in the issue. Also, if the issue is vastly oversubscribed, shares are allocated on a first come, first served basis and you are not guaranteed to get the full allocation you requested.
Dividend What entices people to buy these shares aside from the chance to resell them, is a Dividend. The dividend is either a 50%of the market tax, brokers and contract fees in each station owned by any of the corps in the alliance and/or a percentage of taxes earned, or it could be an isk generator based on a %age of the total money earned by corp wallets less money spent..
The Market People who own the shares earn the dividend at the end of each full month of ownership of the shares. And can list their shares on the market to sell. The market will show statistical data for the shares for the last 12 months, showing the value of the dividend, the last 12 months share performance etc.
Additional Listings If an alliance wasn't greedy in the first place and didn't list up to it's maximum, or it grows bigger by more than 10%, it can squirt more shares into the market at a price of their choosing, either as a mini IPO (same rules above) or just by selling them on the open market.
Scenario
Red Alliance wish to IPO. They have 9000 members across 10 corps have an average of Sov3 in 50 systems and their member corps own and operate 6 stations.
In total this allows them to list up to 64M shares.
They choose to IPO half that number and release 32M shares at the price of 1,000 ISK each.
Vile Rat of Goonswarm is sitting on rather alot of isk and isn't sure what to do with it. Rather than stare at it every day, he chooses to invest 1m isk in the RA IPO. This buys him 1,000 shares.
Lots of other people also invest in RA. All 32m shares sell for 1000 isk.
The total earned in this sale this is 32Billion Isk. of this. 33% goes to the alliance executor corp wallet. 33% goes to the corp wallets of the member corps and 33% goes into the wallets of each member.
So about 10B to the alliance. 1B into each corp wallet and 1.1m isk per member.
The markets and contracts earn around 1b a day in fees and taxes, for each share owned that means a dividend (in a 31 day month) of 484 isk per month per share. Meaning vile rat has earned his initial investment back in less than 10 weeks and his money works for him. it also means that those shares become much much more desirable and their market price shoots up to 100K isk per share. early speculators can sell at an enormous profit or keep hold of he shares long term.
Suddenly, red alliance is invaded by BoB and suddenly their stations look at risk, the markets crumble, the dividend all but dries up, the shares start to plummet in price.
A real market and a way to make your isk work for you. :-)
* The alliances and members mentioned in this thread are not real and any likeness to any living alliance or member is purely coincidental;)
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Inanna Zuni
The Causality Electus Matari
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Posted - 2008.05.28 21:41:00 -
[2]
Originally by: Ludi Svelte Allow alliances to create tradeable shares that they can sell on an ingame stock market.
I'll leave aside the technical considerations for the moment, but I'd love to see additional financial instruments / options available in EVE. I wonder though how much use they would get (cost/benefit for CCP developers' time) and how many players would understand it enough to get sufficient volume active to make it a viable stock market. Sadly, I suspect that volumes and liquidity would be too low, though definitely one for the long term.
IZ
My principles |
Serenity Steele
Dynamic Data Distribution Ministry of Information
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Posted - 2008.05.29 09:15:00 -
[3]
The IPO/Share mechanism could definitely use some more loving from the perspective of providing game mechanic support for IPOs and some method of regulation.
This idea as described would require introduction of a significant number of different mechanisms: - Alliance Wallet - Alliance Shares - Alliance level Tax - Alliance Wallet interaction with Corporate Wallets - Mechanism for sale of Shares
What is the key issue here: Introduction of share capabilities to Alliances or Ability to sell shares?
I'm not sure these necessarily need to be introduced at an Alliance Level. Would it not be sufficient (at this stage) to introduce them at a Corporation level (Since most alliances have a holding corporation anyway)?
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Jason Edwards
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Posted - 2008.05.29 09:43:00 -
[4]
I didn't read this entirely thoroughly but a stock market inside game mechanics would be awesome. ------------------------ "There was this bright flash of light - and now this egg shaped thing is on my screen - did I level up?" |
Ludi Svelte
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Posted - 2008.05.29 10:31:00 -
[5]
Originally by: Serenity Steele The IPO/Share mechanism could definitely use some more loving from the perspective of providing game mechanic support for IPOs and some method of regulation.
This idea as described would require introduction of a significant number of different mechanisms: - Alliance Wallet
No, can use the executor corp wallet
Quote:
- Alliance Shares
Agreed
Quote:
- Alliance level Tax
For working out the dividend? No, could use member corp wallets
Quote:
- Alliance Wallet interaction with Corporate Wallets - Mechanism for sale of Shares
Could be a new tab to the existing Market tool. No need to add any new UI's to the game
Quote:
What is the key issue here: Introduction of share capabilities to Alliances or Ability to sell shares?
I'm not sure these necessarily need to be introduced at an Alliance Level. Would it not be sufficient (at this stage) to introduce them at a Corporation level (Since most alliances have a holding corporation anyway)?
But the holding corp isn't what you want to invest in. its the alliance.
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Serenity Steele
Dynamic Data Distribution Ministry of Information
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Posted - 2008.05.29 13:59:00 -
[6]
Originally by: Serenity Steele
What is the key issue here: Introduction of share capabilities to Alliances or Ability to sell shares?
I'm not sure these necessarily need to be introduced at an Alliance Level. Would it not be sufficient (at this stage) to introduce them at a Corporation level (Since most alliances have a holding corporation anyway)?
Originally by: Ludi Svelte But the holding corp isn't what you want to invest in. its the alliance.
The issue today is that without a wallet and direct ownership of assets, the alliance is simply a collection it's corporations. That's part of the reason why players create holding corporations, to hold stations/shared money et.al.
Think of it like CCP Games International hf. owning; - CCP Games hf. - White-Wolf studios ltd and having no bank account and then .. selling shares in CCP Games International hf. CCP Games Intl. Has assets, but no way to pay costs and no way to pay out the dividends or measure it's separate profitability.
That's is why:
Quote:
Originally by: Serenity Steele This idea as described would require introduction of a significant number of different mechanisms: - Alliance Wallet
No, can use the executor corp wallet
Doesn't change anything, it's just makes the executor corp the holding corp.
So I think fundamentally this requires an alliance wallet to issue alliance shares. Who knows, we might be lucky that CCP programmed alliances like a special case of corporations ;)
This leads us to the next question, who can access it? Eg. The Executor Corp CEO, and then selected individuals (set by Executor Corp CEO) from individual corporations?
Where would the wallet appear? Eg. Similar to the corp wallet, but just for the alliance.
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Ludi Svelte
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Posted - 2008.05.29 15:30:00 -
[7]
Originally by: Serenity Steele
This leads us to the next question, who can access it? Eg. The Executor Corp CEO, and then selected individuals (set by Executor Corp CEO) from individual corporations?
Where would the wallet appear? Eg. Similar to the corp wallet, but just for the alliance.
The best way to make this work is to make the dividends an automated feature of the game. if a human bean has to handle the payouts then it all stops working.
My suggestions were to link the dividends to:
individual corp taxes, merged or an average taken thereof. or Station taxes (only really relevant to 0.0)
Maybe CCP could link it to a number based on All corp wallets MONEY IN MINUS All corp wallets MONEY OUT
Again though, if you make the actual payment of dividends anything but an automated thing, this is dead before it gets off the ground.
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Grozen
Bulgarian Experienced Crackers The OSS
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Posted - 2008.05.29 16:13:00 -
[8]
if i recall this is one of the features promised by devs long ago its only fair that they finally start working on it. knowledge is power |
Kivin San
Dirty Deeds Corp. Axiom Empire
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Posted - 2008.05.29 18:28:00 -
[9]
Edited by: Kivin San on 29/05/2008 18:28:37 As a financial adviser and investor by career, I would very much like to see this :)
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Ki Tarra
Ki Tech Industries
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Posted - 2008.05.29 20:11:00 -
[10]
Originally by: Ludi Svelte The Idea Allow alliances to create tradeable shares that they can sell on an ingame stock market.
The key problem with this idea is that shares can only be tradeable if the person/orginization issuing the shares has the billion ISK needed to create an alliance.
I expect that very few alliances would want to issue tradable shares and few corps would sink the billion ISK into alliance creation just to issue shares.
We already have corporate shares. The main problem with them is the lack of trade mechanism. All we can do is donate them.
I agree that this issue needs to be reviewed, but I do not think that your specific suggestion would work.
Serenity Steele's thread is better structured to discuss more general solutions. I would suggest building on that thread so that the CSM can have a single reference to all of the ideas on this topic.
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Czanthria
Ad Astra Vexillum
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Posted - 2008.05.30 05:08:00 -
[11]
I like the idea if you remove the alliance aspect of it and have it apply to corps. I'm also not sure if the requirements around how many shares can be issued and how dividends get paid and where the IPO isk goes is really needed.
Overall, it's a bit to specific and I'd prefer a generalization that increases flexibility rather than lower it. -- Knowledge is Power! |
Zorda
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Posted - 2008.05.30 10:38:00 -
[12]
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Block Ukx
KDM Corp Firmus Ixion
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Posted - 2008.05.30 17:19:00 -
[13]
What we really need is an in-game stock exchange and share transaction log.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Thorvald Finnin
Caldari VIRTUAL LIFE VANGUARD Sylph Alliance
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Posted - 2008.07.03 18:47:00 -
[14]
Edited by: Thorvald Finnin on 03/07/2008 18:49:15 Edited by: Thorvald Finnin on 03/07/2008 18:48:09 I'm always in favour of more trade-type ideas, but there must be some serious safe-guards against scams, double-dealing, ripoffs and associated asshattery, and with a very complex system chances are that we'll need to hire PWC or McKinsey to audit the place.
So, not a :thup: nor a :thdown: I suppose
[edit: had to hyphenate sa***uards.. er.. safe-guards because of some issue with the naughtywordcatcher]
[edit2: can someone please enlighten me in what language *** is a naughty word ;)]
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Kazzac Elentria
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Posted - 2008.07.03 19:01:00 -
[15]
Edited by: Kazzac Elentria on 03/07/2008 20:20:34 Of course support for more love for the stock market. Didn't LV include this into the CSM meeting with CCP though?
As an aside, IMHO the best option and simplest would be to make stocks and shares like bearer bonds and tradeable on the open market like ships, and everything else in the game.
*edit for support hurrrrr |
masternerdguy
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Posted - 2008.07.03 19:16:00 -
[16]
that would be awwesome!
the ability to invest online in a game
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firestrm
Save our Souls
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Posted - 2008.07.03 19:59:00 -
[17]
I agree that MMO trade ideas are always great to hear. However a stock market? this one has been talked to death for years.
Biggest problem is what is the compeling reason to buy stock from any alliance or corperation? I would be willing to bet that if it was trackable there are more profitable sinlge corperations that you would want to buy than some of the largest alliances.
The reason for buying stock is not the dividend payout. The largest draw is the profitabilty in the market do to share price flucuation. However what would information would ever casue a stock to go down? Who would cover the cost if say BOB went bankrupt. Are you going to also have a ingame bankrupcy mechanic to allow them to cover corp and alliance assets if the market crashes?
Are you going to allow takeovers? I really do like this idea but alot more has to be considered first and it won;t be just a few tweaks or simple added game mechanics.
I think it would be better as someone else said to just allow alliances to sell off bonds that pay dividends based or something simple like the combined intake of all the alliance shared POS. Have that money dump into a huge slush fund...pay the divedends the the rest gets spilled out into the alliance walllet.
This way you cover the profts of the bond market and can easily track everything. You must also have a wallet that holds in escrow enough money to cover the existing bonds and have it pay an intrest so that it covers the buyback ability of the alliences and also gives them a compelling reason to sell the bonds and tie up the funds in the first place.
Firestrm
I don't understand why your so mad at me? Your mom said you were such a nice person... |
Sovereign533
PPN United Against ALL Authorities
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Posted - 2008.07.04 00:45:00 -
[18]
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Feng Schui
Minmatar Ghost Festival
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Posted - 2008.07.04 00:50:00 -
[19]
As far as the technical side goes, we already have some of the tools to already do this. The market!
As it is, the market tracks orders, potential profit, and even forecasts.
Now, as far as an actual stock market, I think we would need to first look at how the real world stock market works, as far as analytical tools available.
For an idea of how it would look: Yahoo Financials
Personally, I would start small, and only do NPC corporations to start with. The reason being, is to basically.. "beta" test the market.
How would the NPC market work?
- Profits (Taxes, items sold, facilities used - repair station, jump clones, etc..) - Losses (Items bought, operational costs -> ie: agent payouts)
The market would start small, and a limited number of shares (say.. 1000 per station owned by the corporation).
Now, how this would evolve into player corporations, well.. I would suggest that CCP hire a stock market analysist to make it as close to the RL stock market as possible.
Project:Gank
Pilgrim Guide
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Witcher
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Posted - 2008.07.04 10:42:00 -
[20]
I'm a professional investment banker and from real finance industry point of view you got a couple of problems here.
1) There is a problem with valuation of shares. In real world how IPOs are conducted, is that companies provide FULL disclosure of their operations and accounts, so that investors can look into that , run valuation models and determine how much the stock can actually worth.
Hecen, there will be a problem with disclosing information about alliance, I strongly dobt that major alliances like RA, GF or BOB would be willing to give full disclosure of their operations. Without appropriate disclosure level what you are gonna end up with, is a lot of "empty" companies going public, getting cash from investors, then dissapering (DOT com crisis in US).
There is also a problem on how to present it - obviously one cannot use a convetional financial format of disclosure for eve. However I see it as a minor concern, I think if corporation/alliance will be willing to work towards that goal then it is possible to design an oppropriate disclosure format and adapt valuation methodologies accordingly.
2)There is a problem in financial mechanics of IPO in EVE. It appears to be not a fair deal for issuer. Look at it like this - lets make an assumption that calculation whcih was outline in the first post is correct and does reflect a fair value then RA would recieve cash inflow of 30-40B and will gonna have to pay dividends forever. That does not seems to be a fair deal. My wild guess will be that this kinda of valuation methodology outlined in the first post is incorrect. Another instrument which can be used as a primer is current rates on depostis in EBANK.
At any given point in time investor has choice whether to invest into stocks or bonds and hence return should be comparable. If we assume that required investors return is in the range of 2-4% (equity returns should be higher thatn bonds return, due to higher risk), and if we make some reasonable assumptions what the dividens will be (I think that is relatively easy to calculate based on average tax accross coporations in the alliance for example or any other mechanism), then we can calculate the value of the stock. Again this is not a very good approximation and ideally speaking some much more complex tools should be used, but this will do as a rough estimate.
Another problem is on the global macro scale. EVE population is not growing too rapidly, hence on average every alliance ability to increase their profit and hence dividends is contrained by eve population growth (not to metion factors like wars for instance). Those issues should be balanced out. I.E. Not only the dividends should grow over time, but the stock value should also grow over time.
3) I'm not entirelly sure that companies actually need those kind of financial activities. Obviously if a company wants to go public, then this company should have a very clear idea, what is it they want to do with that cash. I.E. there should be some sort of business plan, how the company will earn superior returns on that money. Right now probably the only good reason to go public will be to raise money to build a couple of titans to protects its territory. And even then, I would imagine most alliance are capable of getting sufficient amount of resources with their own efforts.
etc etc etc
I think it is a very interesting idea, and it will be fantastic if some sort of mechanism can be designed to actually implement IPOs. However there are a lot of considerations which need to be addressed before anything can be dome in that direction.
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Ryoji Tanakama
Daikoku Fleet Shipyards
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Posted - 2008.07.04 11:19:00 -
[21]
I'm not sure i'd go with your suggestion as written, but the shares functionality in EVE needs some love. This should certainly be considered by the CSM.
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Jade Constantine
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Posted - 2008.07.04 15:15:00 -
[22]
Definitely bares discussion and advocacy. Not sure about the specific details in the OP but the principle of a stock market in Eve online is excellent.
CSM Manifesto 2008 | Destroy Outposts! |
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