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Future Contracts û Gauging public interest?

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Block Ukx Block Ships and Ammunitions	Posted - 2008.10.11 23:35:00 - [61] Originally by: ofstrife Another question: the formula provided seems to assume that the price is going to keep going up during the period of the contract. Is this the way futures trading works, Yes. I'm assuming a 30-day yield "risk free" interest rate of 1.61%. In other words, I could either purchase isogen OR deposit the money in the "bank" and earn 1.61%. BSAC Mineral Market Manipulation (MinMa) Information Desk
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.11 23:39:00 - [62] Originally by: Shar Tegral That's the point, you really don't know what the future buy/sell point will be. Any contract you submit is a guess that the current "future" price is accurate or inaccurate. It is how you handle the difference that generates profit. Correct. Originally by: Shar Tegral BTW: Block, I submitted two sell contracts but I don't see them up on the Isogen contracts page. Yes, I found them in my journal and placed them in the futures page. Remember to submit contracts with BSAC Manager, as the API only checks his journal and not mine. BSAC Mineral Market Manipulation (MinMa) Information Desk
BSAC Manager EVE Mineral Reserve	Posted - 2008.10.11 23:40:00 - [63] Please submit your contracts to this character. Thank you. BSAC Mineral Market Manipulation
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.11 23:50:00 - [64] Originally by: Cinta Verick However the BSAC system quotes the prices we will have to pay for buy / sell orders, it maybe a prediction but that is what we will have to pay to complete the contract. Yes, that is correct. Remeber, the quoted futures price changes daily, BUT your contract price is fixed the moment you submit your order. Therfore, the price you pay at the end might be lower or higer than the market price at settlement day. Originally by: Cinta Verick Personally, I don't wish have any minerals delivered to me and I am not looking at selling them on the normal market, I was hoping just buy and sell contacts. What you are interested in is called cash settlement. In your case, you will need to close your position with an oposite contract. The day you close your position the futures price will likely be different than your original contract. Therefore, you will loose or make money depending on your closing contract. Originally by: Cinta Verick It seems I currently lack the understanding of how BSAC system will work going forward. Maybe I shall just watch what happens for a few months or just take deliverly of any minerals I purchase and sell them in the normal manner. Thanks for you explainations but I feel my brain has left my skull and taken a holiday Edit ** The futures prices change on a daily basis - the penny has dropped, I now understand (brain has returned to skull). Do not hesitate to ask questions. Your input is very important. BSAC Mineral Market Manipulation (MinMa) Information Desk
Shar Tegral	Posted - 2008.10.12 10:11:00 - [65] Originally by: Block Ukx Yes, I found them in my journal and placed them in the futures page. Remember to submit contracts with BSAC Manager, as the API only checks his journal and not mine. Doh To Shar -verb: 1 - To say what you mean. 2 - To say what it means. 3 - To say something mean.
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.15 18:36:00 - [66] The futures exchange has 17 registered brokers and only three have submitted Isogen contracts. I wonder if more documentation is needed to motivate brokers to participate. Please post any reasons you are not submitting contracts. BSAC Mineral Market Manipulation (MinMa) Information Desk
Kazzac Elentria	Posted - 2008.10.15 18:44:00 - [67] Originally by: Block Ukx The futures exchange has 17 registered brokers and only three have submitted Isogen contracts. I wonder if more documentation is needed to motivate brokers to participate. Please post any reasons you are not submitting contracts. Time limitations to fool around with yet
Shar Tegral	Posted - 2008.10.15 19:27:00 - [68] I would venture that until you make the process much much easier you may not see enough activity to make it seem a success. Now, imho, the ideal solution would be a web interface. Person makes their futures orders via the web interface. Isk can be inputted into the "system" viola ala ebank. Fees and settlements remain internal and to avoid CSR overload setup a specific day that "tellers" will do all withdrawals. Mind you that's part of my thinking for something I've been wanting coded for some time. My skillz, there, suck big time. To Shar -verb: 1 - To say what you mean. 2 - To say what it means. 3 - To say something mean.
Lexander Morinex Caldari LDD Investments	Posted - 2008.10.15 20:35:00 - [69] I would personally like to see a group effort to get this going. I am a little time strapped right now, or I would try to spearhead such an effort. The exchange can be a very powerful tool if used correctly. - Lexander Morinex
Cinta Verick 4th Dimension Investments	Posted - 2008.10.17 16:10:00 - [70] A question with regard to closing a buy contract in cash. Your instructions advise to create a sell contract without posting a margin. The contract info is contained in the 'Give Money' reasons field, however I am unable to submit zero ISK to the BSAC Manager in order to close the position (no margin = no ISK), therefore is it ok to post 1 ISK with the contract info?

Block Ukx Block Ships and Ammunitions	Posted - 2008.10.17 18:56:00 - [71] Yes, one ISK will be fine. I will change the instructions to 1 ISK. Thanks BSAC Mineral Market Manipulation (MinMa) Information Desk
Cinta Verick 4th Dimension Investments	Posted - 2008.10.17 19:37:00 - [72] Is there a limit to the number of contracts that can bought or sold? For example if I purchase 1000 contracts of Isogen and the price rises by 5 ISK and I then create a sell contact the Futures Exchange would need to pay me 500m ISK. Now, again for example, 10 people followed my idea of investing heavily in Isogen, you would need to pay out 5b ISK. Would this be an issue?
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.18 00:59:00 - [73] Yes, large number of contracts is an issue. My biggest concern is that the Jita Index is not the best method to determine mineral fair market prices. For the time being, BSAC will only approve a limited number of contracts. We reserve the right to reject any submitted bid. BSAC Mineral Market Manipulation (MinMa) Information Desk
Athre Minmatar The Higher Standard	Posted - 2008.10.20 00:16:00 - [74] well that was partly my problem, poor timing and the jita price dropped from what it was making it a loosing thing to sell to you at that rate. I ended up putting a normal sell order in a hub.
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.21 12:31:00 - [75] Dear Brokers, October 21st Isogen contracts are due Last trading day for October 21st Isogen contracts was October 17. Please prepare your item exchange contract and submitted it to BSAC MMM (not BSAC Manager). Please make sure the contract price matches the settlement price shown in the Isogen Contracts page, which includes the management fee and the refundable performance bond. Please contact me ASAP if you believe the contract price is incorrect. Thanks for your participation Block
Shar Tegral	Posted - 2008.10.21 12:47:00 - [76] Setting up my delivery contract to you right now and I have one disagreement: Management Fee should not be part of what I receive. Doesn't that belong to you? So I'm setting up my contract price not at 25,280,000.00 + 252,800.00 = 26,907,200.00 but at 25,280,000.00 - 252,800.00 = 25,027,200 and then I'm adding back my already submitted margin. Thus 25,027,200 + 3,760,000 = 28,787,200. Just so we are clear: When I made my order I submitted a margin cost. I didn't think you got to keep that or do you? PS: I'll set up the contract in a couple of hours after giving you time to respond. I have a new clone, her skill points are quite low but i forsee vast potential. Born at 05:56 18-Oct-08, weighing 7 lbs 12 oz, and was named Lara Florence. Mother & baby doing well - Dylythium
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.21 13:18:00 - [77] Edited by: Block Ukx on 21/10/2008 13:19:21 Yes, we both agree with the math of a sell contract. 25,280,000 (contract price) û 252,800 (management fee) + Margin The discrepancy is in the margin you are using. You submitted a margin of 1,880,000 for the Oct 21 futures, and 1,880,000 for the Oct 28 futures. Therefore, I should pay: 25,280,000 - 252,800 + 1,880,000 = 26,828,000 for 400,000 units of Isogen. BSAC Mineral Market Manipulation (MinMa) Information Desk
Shar Tegral	Posted - 2008.10.21 14:48:00 - [78] Originally by: Block Ukx Therefore, I should pay: 25,280,000 - 252,800 + 1,880,000 = 26,828,000 for 400,000 units of Isogen. Thanks, hadn't had my first coffee of the day and only had minutes before my first client meeting. I hope this takes off as I'd like more automation to help spare me the effects of my own idiocy. I have a new clone, her skill points are quite low but i forsee vast potential. Born at 05:56 18-Oct-08, weighing 7 lbs 12 oz, and was named Lara Florence. Mother & baby doing well - Dylythium
ofstrife	Posted - 2008.10.21 19:10:00 - [79] I need to accept my contract, which I'd like to do out of Oursulaert because it's closest to the hub at which I do most of my trading (Dodixie). However, it's been a while since I've been to Ours, and I don't remember which station is the accepted hub station. Which station should I create my contract out of? Similarly, I couldn't name what station in Jita, Rens, or Amarr is the hub station. Just in general, it's probably a good idea to put what station you have your depots at to make it easy to facilitate (and idiot-proof to some degree, so people don't accidentally create contracts in Auv like I did) the creation of those contracts.
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.21 20:05:00 - [80] Originally by: ofstrife Just in general, it's probably a good idea to put what station you have your depots at to make it easy to facilitate ... Yes, that's a very good idea. I added the station name to the delivery locations. In addition, I plan to add the station names to BSAC MMM bio to make it even easier. Thanks for the suggestion. BSAC Mineral Market Manipulation (MinMa) Information Desk

Block Ukx Block Ships and Ammunitions	Posted - 2008.10.22 11:03:00 - [81] Summary Isogen October 21st Futures Closing Price: 61.21 Broker Participants: 3 Contracts Submitted: 7 Cash Settlements: 0 Defaults: 0 Management: +376,680 Available Contracts Isogen Oct 28 Isogen Nov 11 BSAC Mineral Market Manipulation (MinMa) Information Desk
ofstrife	Posted - 2008.10.23 07:53:00 - [82] Just wondering, is there a time period in which the rest of the different kinds of minerals will be open for contracts? I know you're probably still working all the bugs out of the system, so just about any answer (including "I don't know" and "when it's done") would be appreciated. Also, what are the odds of adding more hubs to pickup locations? I'd like Dodixie to be a location, but Oursulaert isn't too bad for me either. Is there anyone else out there who also wants Dod?
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.28 10:48:00 - [83] My plan is to continue with Isogen till the end of November and make a decision whether or not to continue with futures. We donÆt have the resources (man and capital) to expand to other locations without jeopardizing the effectiveness of our present locations. Oct 28 Isogen Futures now due, please prepare your contracts. Cash settlements will be paid tonight.
ofstrife	Posted - 2008.10.28 15:57:00 - [84] That's fair, thanks Block. And good luck.
Block Ukx Block Ships and Ammunitions	Posted - 2008.10.30 12:23:00 - [85] Summary Isogen October 28th Futures Closing Price: 74.36 Broker Participants: 3 Contracts Submitted: 16 Cash Settlements: 12 Defaults: 4 Management Fee: +1,260,200 Exchange Profits: - 4,448,880 Available Contracts Isogen Nov 11 Isogen Nov 25 BSAC Mineral Market Manipulation (MinMa) Information Desk
Raaz Satik	Posted - 2008.11.03 19:45:00 - [86] Edited by: Raaz Satik on 03/11/2008 19:46:56 Some general feedback. Sorry if it all sounds like criticism. I think you have a great idea here, but I think you need some tweaks to the way it works. I think your making this more confusing that it needs to be. I would suggest not having both a buy contract and a sale contract but just one contract. If you want delivery you buy the contract if you want to deliver you sell the contract. Your current trading prices are all very susceptible to manipulation. What are you going to do if the price spikes one day and 10 people each try to sell you 10 contracts at that price? You've said that its your choice to accept them. Problem is the concept of speculatively trading futures depends upon liquidity. The first time you don't accept an order you risk ruining your venture before it even starts. Your forward prices are currently nothing more than spot prices with cost of carry. In reality what economists refer to as the Convenience Yield will result in very different forward prices than you would expect. (ie expected price changes due to a patch) Your current management fee make's it almost prohibitive to trade anything like this speculatively (and in my opinion non-speculatively). I know your trying to make money through this venture, but if your successful volumes will be a lot higher in the future so your fees can be a lot lower. Most RL futures exchanges have three types of margin. Initial Margin, Maintenance Margin and what I will call Delivery Margin for lack of a defined term. Initial Margin is the amount of money you must have in your account for each contract you buy or sell. Maintenance Margin is additional money you have to put into your account if the position moves against you. If you don't post the maintenance margin when you should, your positions are liquidated and all losses are subtracted from your initial margin. Delivery Margin is additional money you have to have in your account as the contract approaches delivery to ensure the exchange of your ability to pay for/deliver the contracts you have in your account. At expiration delivery margin is equal to 100% of the contract value. I think your contract sizes are too large. A crude tanker carries as much as 3 million barrels of oil, but a futures contract is only for 1000 barrels. Hence to hedge a vessel you might need 3000 contracts. Many RL contracts are designed so that the tick size multiplied by the contract size is less than $10 but obviously you have a different target market here.
Block Ukx Block Ships and Ammunitions	Posted - 2008.11.03 20:30:00 - [87] Originally by: Raaz Satik I think your making this more confusing that it needs to be. I would suggest not having both a buy contract and a sale contract but just one contract. If you want delivery you buy the contract if you want to deliver you sell the contract. Yes, that's a good suggestion. I'll change the wording shortly. Originally by: Raaz Satik Your current trading prices are all very susceptible to manipulation. What are you going to do if the price spikes one day and 10 people each try to sell you 10 contracts at that price? You've said that its your choice to accept them. Problem is the concept of speculatively trading futures depends upon liquidity. The first time you don't accept an order you risk ruining your venture before it even starts. Yes, current prices are very susceptible and IÆm looking into alternatives before going forward. You are confusing two things here. Someone could submit a request for 1,000 Isogen Nov 25 contracts. I have the right to accept or reject such request. However, once I accept that contract, the Reserve guarantees the contract. Originally by: Raaz Satik Your forward prices are currently nothing more than spot prices with cost of carry. In reality what economists refer to as the Convenience Yield will result in very different forward prices than you would expect. (ie expected price changes due to a patch) Right now IÆll stick with the simple formula so anyone can verify futures prices. Originally by: Raaz Satik Your current management fee make's it almost prohibitive to trade anything like this speculatively (and in my opinion non-speculatively). I know your trying to make money through this venture, but if your successful volumes will be a lot higher in the future so your fees can be a lot lower. Actually, one broker that likes to speculate has made significant money of the future exchange even with the 1% management fee. In time I expect the fee to be reduced. Originally by: Raaz Satik Most RL futures exchanges have three types of margin... I was trying to simplify things by having just one margin. Originally by: Raaz Satik I think your contract sizes are too large... I was thinking in terms of Battleship production. I see no problem reducing the contract size a factor of ten or 100. Thanks for your input. BSAC Mineral Market Manipulation (MinMa) Information Desk
Lexander Morinex Caldari LDD Investments	Posted - 2008.11.03 20:42:00 - [88] Some interesting feedback. Sadly, I feel this whole process has been handled wrong. The idea is good, but Block hasn't really sold the idea and so it is up to a very small number of people who are already interested to use it. Unless something changes, this whole approach will fail. For example, I tried to get Block interested in letting Dynasty help provide the margins for this business. Players have lots of money sitting around in DBANK and EBANK that could be used as perfectly good collateral. That idea never even got a proper hearing. Second, it isn't a futures exchange so much as a systematic method of selling forwards. The counterparty is always BSAC, the prices are controlled by BSAC and the market forces aren't really being used to sell/buy. That opens up all kinds of speculation as the price BSAC is quoting might be a terrible price. But that speculation will tend to hurt BSAC since players can find 'good deals' on the market and then buy/sell to BSAC for profit. Third, I think it should have been Trit and not Iso. Trit is the most basic commodity in the game, and the one commodity that you might want to buy and sell lots of consistently. But that is my opinion. Fourth, this needs a web interface and a way of bidding. The futures price should be player driven. If BSAC wants to accept bids, that is fine, but unless players are competing in a direct market then I don't think this will get very far. - Lexander Morinex
Block Ukx Block Ships and Ammunitions	Posted - 2008.11.04 15:46:00 - [89] Originally by: Lexander Morinex ... The counterparty is always BSAC, the prices are controlled by BSAC and the market forces aren't really being used to sell/buy. That opens up all kinds of speculation as the price BSAC is quoting might be a terrible price. But that speculation will tend to hurt BSAC since players can find 'good deals' on the market and then buy/sell to BSAC for profit. Yes, BSAC is the clearing house. However, prices are NOT controlled by BSAC; prices are based on the Jita Index, which is ver suceptible to market forces. Originally by: Lexander Morinex Third, I think it should have been Trit and not Iso. We will eventually offer futures on all minerals. Isogen is probably the easiest one to cover for defaults. Originally by: Lexander Morinex Fourth, this needs a web interface and a way of bidding. The futures price should be player driven. If BSAC wants to accept bids, that is fine, but unless players are competing in a direct market then I don't think this will get very far. The futures price is market driven. Web interface would be nice and will come in time. I think my biggest mistake was to start with futures instead of forwards. Most players are only interested in obtaining minerals below market price, and that is an issue with futures. Currently, IÆm working with buyers/sellers to develop a relationship where mineral futures can stand a chance. I plan to close the futures to speculators (cash settlements) after Nov 25.
Lexander Morinex Caldari LDD Investments	Posted - 2008.11.07 17:44:00 - [90] Edited by: Lexander Morinex on 07/11/2008 17:45:11 Edited by: Lexander Morinex on 07/11/2008 17:44:23 Originally by: Block Ukx Yes, BSAC is the clearing house. However, prices are NOT controlled by BSAC; prices are based on the Jita Index, which is ver suceptible to market forces. Yes, but the future price is deterministically related to the current price, instead of being allowed to vary naturally. There is nothing preventing such an approach, but it means that you are open to being hammered by BOTH speculators and hedgers. Quote: I think my biggest mistake was to start with futures instead of forwards. Most players are only interested in obtaining minerals below market price, and that is an issue with futures. Currently, IÆm working with buyers/sellers to develop a relationship where mineral futures can stand a chance. I plan to close the futures to speculators (cash settlements) after Nov 25. Cash settlements can and often are used by hedgers, not just speculators. If I have a commodity I am selling near Jita, but not in Jita, I can still hedge by buying and selling futures at Jita and then relying on the high correlation between my location and Jita to make my hedge work. In such a situation, I couldn't care less about delivery at Jita since my business is somewhere else. The futures contract just lets me hedge and that is fine. You are not selling futures so much as forwards, and you are interested not in hedging or speculation on price as you seem to be in managing supply. That is a perfectly acceptable business, and I wish you well with it, but people are only going to buy or sell from you when they believe that your price is off the mark. If you want to manage your supply with fixed-price contracts, then you should just do that on an individual basis and price it based on whatever you think it will be worth. Ironically, if you sell fixed-price contracts, you will wish you had a futures market so that YOU could hedge. - Lexander



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October 21st Isogen contracts are due