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Block Ukx
Block Ships and Ammunitions
   |
Posted - 2008.09.18 18:54:00 -
[1]
BSAC Future Contracts
Currently, I manage the largest mineral reserve in EVE (MinMa). Our mineral vaults hold about 300 B in minerals and we are interested in the possibility of offering future contracts. BSAC will act as a clearing house, buying and selling mineral future contracts and charging a small transaction fee. For the time being, Rens and Jita are designated as the drop/pickup locations. Please note that we are not interested in developing a Futures exchange.
I believe that both miners and manufacturers could benefit from participating in mineral futures. Miners/Manufacturers can purchase contracts to sell/buy minerals at a specific price at some specific time in the future, providing a buffer mechanism to mineral price volatility.
The exact details of how the clearing house will operate are still in development. However, the Mineral Reserve will guarantee these contracts in case the buyer/seller decides to violate a contract. Contracts will be issued according to market mineral needs. Prices will be determined using a similar Jita Mineral Index, where the spot price will be weighted according to price and volumes.
For example, a future sell contract where the Reserve will purchase from the contract holder 100,000 units of Isogen at 63.54 each on Sep 25, will look something like this:
Isogen Future Sell Contact
Material: Isogen
Units: 100,000
Date issue: Sept 18
Delivery Date: Sept 25
Delivery Price: 63.54 ISK
Delivery Location: Jita
ID: IsJsep25-S006354
The contract price is 325,830 ISK, and the number of contracts available will depend on the number of isogen future buy contracts demand.
At this time IÆm trying to gauge the publicÆs general interest in participating in such mineral futures. If you are a miner or a manufacturer and think that this is something you could use please provide the following info:
1) Prospective supplier or buyer?
2) Nearest hub [1, 2]
3) Mineral type with approximate weekly quantity.
4) Comments/concerns about mineral future contracts, and pricing model suggestions.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.09.18 18:55:00 -
[2]
Reserved
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.09.18 18:55:00 -
[3]
Reserved
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.09.18 18:59:00 -
[4]
I probably don't have sufficient capital right now to be buying too many contracts, but assuming I get the kind of capital involved, I would be interested in speculation.
- Lexander Morinex
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Kazzac Elentria
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Posted - 2008.09.18 19:16:00 -
[5]
1.Supplier
2.Jita
3.Wont go into specifics, but its on capital production level
4.Enforcement of breaches and escrow would be my primary concern |
Clair Bear
Coalition of Nations
Free Trade Zone.
|
Posted - 2008.09.18 19:40:00 -
[6]
1. buyer, occasional supplier
2. tash-murkon, rens, jita
3. trit through megacyte, in battleship mix ratios. Around 4B/week
I look forward to the exciting times we'll all have manipulating the Jita Mineral Index each week!
|
Taryn Ceridwen
Un4seen Development
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Posted - 2008.09.18 20:22:00 -
[7]
1. Buyer
2. Rens
3. Trit through to Megacyte in varying quantites for a weekly value of 1.5-2B.
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Shar Tegral
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Posted - 2008.09.18 20:23:00 -
[8]
1: Buyer (primarily)
2: Anywhere is fine
3: Various but max 100M - 400M per week
4: Only worried about process, breaches, etc., etc.. |
Ray McCormack
hirr
|
Posted - 2008.09.18 20:30:00 -
[9]
1. Both.
2. Jita.
3. Both, primarily speculation.
4. Vetting, enforcement.
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Tasko Pal
Heron Corporation
|
Posted - 2008.09.18 21:16:00 -
[10]
1) Buyer
2) Jita,Rens,Ours
3) ship construction, 100m/week currently, scaling up to 400m/week
4) plenty of observations below.
On 4), I have a number of observations.
First, I think a simple way to handle liability from trader default is to limit the amount of potential liability a trader can assume. All sorts of ways the amount coul be determined. For example, you could require that the trader post collateral and the amount to be traded would be some multiple (as low as 1 for new, untested traders). If someone defaults, they lose part or all of their collateral and can't trade again until they have sufficient collateral (and no doubt a lower multiple in place). Futures assets might need to be sold as well.
Second, settling a contract can be iffy even if the assets and sincerity are there. For example, I've lost internet before for two months. A labor intensive settling process could really mess up my assets and rep, if I can't be there. It'd be nice if under that sort of circumstance someone, for the right price, could just settle your debts for you. Certainly, if all your options are covered, then there shouldn't be a big problem here. But if they're not, settling can be a real problem even if you sincerely want to get it done. You also have problems like getting hit by a bus.
Third, I prefer limited liability. Reduces the chances of default a little.
Some advanced ideas. Simple arbitrage could be directly implemented in the market (sorry to the traders who are thinking of profiting from arbitrage trading). For example in US stock options, a long asset, a long put, and a short call, the options all expiring at the same time and having the same payoff, is equivalent to cash at the expiration time. The market could automatically make the arbitrage trade. Second, short term loans could easily be implemented under this system. Namely you could sell someone future September 25 isk for current September 18 isk.
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Athre
Minmatar
The Higher Standard
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Posted - 2008.09.18 22:17:00 -
[11]
Well I am both miner and producer. In your context I think I would be...
1) Buyer/reseller
2) Anywhere
3) Varies
4) Concern - manipulation by others.
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Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.09.19 11:53:00 -
[12]
Thanks everyone for your input.
It seems that most people are concern about enforcement and breaches. Let me begin by saying that all approved contracts will be guaranteed by the Mineral Reserve and that I will personally assume all liabilities.
A refundable performance bond of 5% spot price will be required for bidding on a contract. Contract violators will loose their performance bond. A 2.5% management fee will be included in the announced future price.
The exact process hasnÆt been finalized but it will go something like this. The Reserve places a request for bids at future prices. Bids are placed by sending the performance bond to an alt. 24 hrs later the Reserve announces approved contracts. At settlement day buyers/sellers create an item exchange contract with the Reserve for the agreed future contract price plus performance bond.
In order to limit liability IÆm going to rate each participant using three parameters, completed contracts, late delivery, breached contracts. Your chances of getting your contract approved will strongly depend on your rating. You will be fined if your performance bond does not cover the breached contract. Fines must be paid before additional bids are accepted.
Futures can hedge against market manipulation. When you buy a contract you know exactly how much you will be paying and selling for at a specified future date.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Kazzac Elentria
|
Posted - 2008.09.19 12:10:00 -
[13]
Im all for it really. I really don't mind the price I pay per min more often than I am concerned about getting all the volume I need AT that price I pay. I loathe calculating my costs when I have to make 10 purchases on the same min across a price spread of say 2.5 to 3.1 for instance. Its not hard, just a PITA. I could see this simplifying my life a little bit, and allowing those with the interest in doing so, making a little isk off the convenience I want.
Any thoughts as to how you plan to interface this to the public? |
CornerStoner
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Posted - 2008.09.19 12:30:00 -
[14]
1) Buyer/(Supplier)
2) Rens
3) Varies. 100-500mil per week.
4) Enforcement, Manipulation.
|
Feronia
Gallente
Magma Industries
|
Posted - 2008.09.19 12:40:00 -
[15]
1) Buyer/supplier
2) Amarr, Jita
3) All minerals, a few bill Isk/month
4) Only interested in medium-term contracts (1-3 months)
|
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.09.19 14:26:00 -
[16]
 Originally by: Kazzac Elentria
Any thoughts as to how you plan to interface this to the public?
Using google spreadsheets. Here is the Participant Profile input form.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.09.23 15:42:00 -
[17]
We have about 30 people interested so far. If interested please fill out the participant's form.
Futures contracts will be guaranteed by the Mineral Reserve and I will assume all liabilities. Therefore, the Reserve will charge a 2.5% management fee for approved contracts.
TERMS:
A future SELL/BUY contract obligates the contract owner to SELL/PURCHASE a specified commodity to/from BSAC on time at the specified terms. All contracts are subject to a 2.5% management fee due at settlement. A refundable performance bond (5%) must be deposited with "BSAC MinMa" before bids are considered. All bids are subject to approval by the Mineral Reserve. Failure to fulfill a contract will result is the lost of the performance bond and possible fines. All participants will be rated and granted available contracts according to their rating.
Here is an example of the available contracts and bids form.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.09.23 16:29:00 -
[18]
If I buy 1 contract and sell 1 contract, I pay a 2.5% fee on both?
If so, count me out. My intention would be to help provide the speculation side of the equation to keep the market going. If I pay those kind of transactions costs that just adds too much risk.
- Lexander Morinex
|
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.09.23 18:11:00 -
[19]
Minerals are very volatile and there is no method to enforce contracts in eve. Therefore, chances are that the default rate is going to be very high. In order for this to work I have to follow through with all approved contracts and cover for any defaults. So IÆm taking an immense risk in setting up this service. While 2.5% sounds like a large fee, in reality is very small considering the size of the bond (5%). For example, if the price drops more than 5% in a week, two weeks, or a month, every default (which is very likely to happen) will have to be covered by the Reserve and that 5% bond is not going to be enough.
I imagine I could lower the fee to 1.25% and required a larger bond (10%). However, I think a large bond is going to discourage suppliers and producers to participate.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.09.23 18:49:00 -
[20]
Block,
I agree with you. Perhaps we could negotiate a lower fee for situations in which contracts are settled purely financially?
The reason I ask is that I would personally like to be able to do more interesting financial speculation, and transaction costs are going to be a big issue. If I buy 10 contracts and sell 10 contracts, I don't mind paying a fee, but since my position is closed I would hope to keep that fee somewhat reduced.
I would not mind keeping enough money in the accounts to cover variation for just this situation.
But there are certain things I would want to do:
1. Hedge against price changes in other markets using Jita futures.
2. Speculate on price volatility.
3. Assure future supply for trading.
In the first case, I really don't want to take delivery in Jita. I am willing to assume the basis risk, but as a trader there are times when I would want to lock in my profits with hedges. High transactions fees for situations in which my buy and sell contracts cancel would shred margins.
- Lexander Morinex
|
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.09.23 18:59:00 -
[21]
This is one area I would strongly encourage the banks to get into. The money drawing interest sitting in accounts is perfectly good collateral. If both parties had accounts with EBank or other institutions, then as part of the transaction fee the banks help secure the exchange.
To me, this is the future of banking in EVE. There are only so many IPO's to invest in, and only so many ways that any one bank can generate cash. But with the large pools of cash and good reputations as backers, they can be 3rd parties who help secure the system against default.
If push comes to shove, once I get a good enough reputation this is a service I would see myself providing to interested parties.
- Lexander Morinex
|
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.09.25 15:23:00 -
[22]
Lexander,
Thanks for your interest and input. I like your idea about lowering fees for people holding collateral in banking institutions. It could easily be done for BSAMR shareholders.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.09.25 15:44:00 -
[23]
I can't speak to the policies of EBANK. I have discussed this some with the folks at Dynasty.
In the 'real world', people are used to operating in an 'easy credit' environment. That tends to implicitly drive the way people see things. In EVE, the world is not only less complex than the real world (you don't starve if you don't have money) but it simply lacks the oversight functions that make 'easy credit' a possibility.
There is no reason that functioning exchanges can't operate in a situation where you provide full collateral before you buy. There are already banking institutions in the game that provide these types of accounts. The one thing EBank has done very well in my opinion is establish a reputation for being 'good as cash'.
If both parties to a contract have accounts with a bank, then the effect of a default is a cash transfer within accounts. Banks can charge for this service and cover some of the costs of doing business. Players can be assured that defaults are not a major issue on the exchange, and the exchange can feel comfortable they won't be left holding the bag.
For a player, this allows them to invest in a bank for a small amount of interest, while still retaining the flexibility to use that money to back other transactions. As long as the collateral is 100%, the only risk in the system is bank default. And since people are already investing in the banks, that risk is part of the system.
- Lexander Morinex
|
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.09.30 16:49:00 -
[24]
News (9/30/08)
- Management fee lowered to 1%.
- Pilot program trading Isogen in October.
- Five drop/pickup locations; Amarr, Hek, Jita, Oursulaert, and Rens.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Manalapan
Dynasty Banking
|
Posted - 2008.10.01 05:30:00 -
[25]
It is an excellent idea but as Lexander was saying you are going to need some means of making, to use Lexander's term, 'easy credit' so that use of the futures is as secure as possible. If you are able guarantee the security of the isk then futures is possible just with a limited amount of security in terms of isk the risk will start piling up to where players would rather avoid the futures. Given you have a lot of interest which makes me really pleased the entire existence of BSAC will be based on how smoothly you perform in the next several months. I just think some means of backing up like Lexander was saying would be nearly sealing the deal with your system here and get the participation that you need to really get a Futures system like this working.
I am not saying that you should go with Dynasty Banking or EBANK even for helping secure this just that you need to think of something. If you want to talk some about it feel free to contact me.
Dynasty Banking |
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.10.01 15:13:00 -
[26]
Manalapan,
To me, it seems that the banks should express interest or lack of interest, and then work with BSAC to decide how to do it. It doesn't have to be one bank or another. It could be both Dynasty and EBank, it could be something else.
I am willing to help spearhead these discussions if people are interested. This is something I would very much like to see succeed.
I would propose a 100% ISK backing for buys and sells. In the case of buys you merely have to show that you have enough cash in the bank to take delivery at the agreed price. Sells are trickier, but you can either use a price cap (at which time the BSAC reserve sells to the buyer and requires ISK from the seller) or some form of mineral collateral (no reason the banks couldn't provide that function either if they wanted too). BSAC and the individual banks could work out agreeable terms for splitting the transaction fees to cover the time and money involved.
- Lexander Morinex
P.S. On a different subject entirely, would BSAC complain if I looked into selling basis swaptions between the trade hubs at some point?
|
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.02 20:58:00 -
[27]
Edited by: Block Ukx on 02/10/2008 20:58:35
News (10/02/08)
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.03 17:54:00 -
[28]
I have developed about 90% of the code and I would like to test the futures exchange code. No minerals will be delivered during the testing period. Please register and submit your bids with proper margins to test the system. The margins will be return to you immediately next time I log on (typically around 00:00 eve time).
Unfortunately, I donÆt have the resources to deploy a web application for a futures exchange. I wrote some scripts in excel, so everything is done using the API. Futures information will be posted using Google spreadsheets.
Physical delivery of futures will be done via item exchange contracts. The terms of the settlement contract will be posted.
Thanks in advanced for testing the system.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Tasko Pal
Heron Corporation
|
Posted - 2008.10.03 21:36:00 -
[29]
So where is this system that we're supposed to be testing? I've read through the instructions and that information just isn't there. Do I click on a website? Do I send messages to some Eve character?
|
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.03 22:44:00 -
[30]
Step 1 Register as a broker.
Step 2 Determine contract code. Look in the Futures page, and decided if the sell/buy price is acceptable, then determine the contract code [buy/sell]-[number contracts]-[mineral]-[futures day]
Example: buy-4-iso-oct15
Step 3 Deposit contract margin with BSAC Manager and in the in-game Give money reasons field place the contract code.
Step 4 Accepted contracts will be displaced in the Futures page.
Step 5 Settlement at the futures contract date using ingame item exchange contract [not under test]
At this point margins will be return when I login and no contracts will take place. One of the things IÆm looking for is to hear from users if this system is easy to use. Also IÆm looking for bugs in the code reading, matching, and updating contracts and settlements.
|
Manalapan
Dynasty Banking
|
Posted - 2008.10.04 03:06:00 -
[31]
Edited by: Manalapan on 04/10/2008 03:06:16
Alright, I went and just tested the system I am looking forward to how it turns out but a few things you need to do...
Explain the system more, a lot more. Looking at the site I get a nice chunk of information and had to look at it for a little bit to figure out what it all meant. So an explanation of terms would be really nice.
Directions: Now you have the directions here but I have no idea if I did it correctly or how it is suppose to work when it goes live. My advice would in addition to your instructions give an example of how both ends of the contracts work.
Also post all of it on the website. Its better if its in one place.
Dynasty Banking |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.07 16:13:00 -
[32]
This is the original post
Originally by: Block Ukx
BSAC Future Contracts
Currently, I manage the largest mineral reserve in EVE (MinMa). Our mineral vaults hold about 300 B in minerals and we are interested in the possibility of offering future contracts. BSAC will act as a clearing house, buying and selling mineral future contracts and charging a small transaction fee. For the time being, Rens and Jita are designated as the drop/pickup locations. Please note that we are not interested in developing a Futures exchange.
I believe that both miners and manufacturers could benefit from participating in mineral futures. Miners/Manufacturers can purchase contracts to sell/buy minerals at a specific price at some specific time in the future, providing a buffer mechanism to mineral price volatility.
The exact details of how the clearing house will operate are still in development. However, the Mineral Reserve will guarantee these contracts in case the buyer/seller decides to violate a contract. Contracts will be issued according to market mineral needs. Prices will be determined using a similar Jita Mineral Index, where the spot price will be weighted according to price and volumes.
For example, a future sell contract where the Reserve will purchase from the contract holder 100,000 units of Isogen at 63.54 each on Sep 25, will look something like this:
Isogen Future Sell Contact
Material: Isogen
Units: 100,000
Date issue: Sept 18
Delivery Date: Sept 25
Delivery Price: 63.54 ISK
Delivery Location: Jita
ID: IsJsep25-S006354
The contract price is 325,830 ISK, and the number of contracts available will depend on the number of isogen future buy contracts demand.
At this time IÆm trying to gauge the publicÆs general interest in participating in such mineral futures. If you are a miner or a manufacturer and think that this is something you could use please provide the following info:
1) Prospective supplier or buyer?
2) Nearest hub [1, 2]
3) Mineral type with approximate weekly quantity.
4) Comments/concerns about mineral future contracts, and pricing model suggestions.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.08 12:11:00 -
[33]
The futures exchange is NOW OPEN for business. We will start accepting Isogen Oct 21 and Oct 28 futures.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.09 11:10:00 -
[34]
I corrected a typo on the futures price formula discovered by one of the brokers.
It used to read:
Futures_Price (settlement_date) =
ROUND { [Jita_Price*( settlement_date- today_date)^1.00053333], 2 }
Correct formula is:
Futures_Price (settlement_date) =
ROUND { [Jita_Price*1.00053333^(settlement_date- today_date)], 2 }
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Manalapan
Dynasty Banking
|
Posted - 2008.10.09 19:51:00 -
[35]
I glad you are up and running. I am also happy to see that you improved on the information and directions for your exchange. Good luck on the venture.
Dynasty Banking |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.10 13:43:00 -
[36]
Manalapan and Lexander,
Thanks for your interest in working with BSAC and I hope we developed a ôrealö exchange in the near future.
From the prospective participant form, there seems to be interest in futures contracts. However, it appears that a lot of open questions are preventing people from testing the system. If you are unsure as how this is going to work out, just give it a try and purchase one contract. At this time we are only selling Isogen buy/sell contracts.
Contracts submitted: 0
Contracts approved: 0
Five Easy Steps to Futures ContractsStep 1 Register as a broker.
Step 2 Determine contract code. Look in the Futures page, and decided if the sell/buy price is acceptable, then determine the contract code [buy/sell]-[number contracts]-[mineral]-[futures day]
Example: buy-4-iso-oct15
Step 3 Deposit contract margin with BSAC Manager and in the in-game Give money reasons field place the contract code.
Step 4 Accepted contracts will be displaced in the Futures page.
Step 5 Settlement at the futures contract date using ingame item exchange contract.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Shar Tegral
|
Posted - 2008.10.10 15:15:00 -
[37]
Going to do this as if I'm a buffoon. I want to setup some isogen sell orders. I see that my code would be sell-4-iso-nov25. Looking at the spreadsheet this says that: - I'm selling 4 blocks of Isogen.
- Each block is 100,000 units. (Total is 400,000 units of isogen.)
- Delivery is Nov 25th.
- Future price for that date is 64.19 per unit.
- Margin Price is 470,000 isk per block. (Total is 1,880,000)
- Contract Price is 6,483,190. (This being the 6,419,000 + 64,190 management fee)
So far I think I'm following but after this I'm a little lost after this. How do I submit my code? Do I send you any isk? When do I get any isk? For this sell order, where do I deliver? If I was buying, how do I specify delivery location? Note: Actually I don't mind setting up a few starter items as a loss leader to kick start this thing. I just think that the process and result should be in a plain language to increase accessibility as much as possible.
To Shar -verb:
1 - To say what you mean.
2 - To say what it means.
3 - To say something mean. |
Shar Tegral
|
Posted - 2008.10.10 15:16:00 -
[38]
And that is really the current code I want to submit.
sell-4-iso-nov25
To Shar -verb:
1 - To say what you mean.
2 - To say what it means.
3 - To say something mean. |
Athre
Minmatar
The Higher Standard
|
Posted - 2008.10.10 15:48:00 -
[39]
Shar ... your missing the location code...
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Shar Tegral
|
Posted - 2008.10.10 15:52:00 -
[40]
Originally by: Athre
Shar ... your missing the location code...
Location code was in the test process but it doesn't seem to be part of this "actual" process. Though I will admit that having the first three of approved hubs as a the location code... would settle that up smartly.
To Shar -verb:
1 - To say what you mean.
2 - To say what it means.
3 - To say something mean. |
Athre
Minmatar
The Higher Standard
|
Posted - 2008.10.10 15:59:00 -
[41]
hm, yes I remember it in the test but odd that its not in the final.
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Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.10 16:16:00 -
[42]
Originally by: Shar Tegral
I want to setup some isogen sell orders.
I see that my code would be sell-4-iso-nov25.
Correct
Originally by: Shar Tegral
Looking at the spreadsheet this says that:
- I'm selling 4 blocks of Isogen.
- Each block is 100,000 units. (Total is 400,000 units of isogen.)
- Delivery is Nov 25th.
- Future price for that date is 64.19 per unit.
- Margin Price is 470,000 isk per block. (Total is 1,880,000)
Correct
Originally by: Shar Tegral
- Contract Price is 6,483,190. (This being the 6,419,000 + 64,190 management fee)
Not anymore. That price was good for sell-contracts but not good for buy-contracts, which management should be subtracted from the contract price. Therefore, I decided to remove the management fee from the contract price listed in the futures page because for simplicity. The management will be added at the end.
So, in your case Contract Price is 6,419,000 (Total 25,676,000)
Originally by: Shar Tegral
So far I think I'm following but after this I'm a little lost after this.
How do I submit my code?
Do I send you any isk?
Yes, you transferred the margin (1,880,000 in your case) to BSAC Manager by using the in-game Give Money (right-click on the character and choose Give Money). You then enter the contract code in the Give Money reasons filed.
Originally by: Shar Tegral
When do I get any isk?
At settlement
Originally by: Shar Tegral
For this sell order, where do I deliver?
If I was buying, how do I specify delivery location?
For both, buy and sell contracts, location can be anywhere in Jita, Amarr, Oursulaert, or Rens main hub station. However, full delivery/pickup in one location per customer please. Location is specified in the items-exchange contract.
Originally by: Shar Tegral
Note: Actually I don't mind setting up a few starter items as a loss leader to kick start this thing. I just think that the process and result should be in a plain language to increase accessibility as much as possible.
I really appreciate your input.
Remember, only Oct 21 and Oct 28 Isogen contracts are available at this time. I prefer not to wait till Nov 25 to discover potential mistakes and exploits.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.10 16:18:00 -
[43]
Originally by: Shar Tegral
And that is really the current code I want to submit.
sell-4-iso-nov25
Go ahead, I'll make an exception in your case for being the first one testing the system.
Thanks
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.10 16:20:00 -
[44]
Originally by: Athre
Shar ... your missing the location code...
If you are selling, just make sure the goods are located in a proper location (Jita, Amarr, Oursulaert, Rens)
If you are buying, add a comment in the contract description, like Amarr.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Shar Tegral
|
Posted - 2008.10.10 16:36:00 -
[45]
Originally by: Shar Tegral
sell-4-iso-nov25
Originally by: Block Ukx
Go ahead, I'll make an exception in your case for being the first one testing the system.
I only picked a very forward date but since Oct is the only open times I'll be adjusting my contracts to reflect that. sell-4-iso-Oct21-Our (1,880,000 margin) sell-4-iso-Oct28-Our (1,880,000 margin) I will also be submitting this in game as is proper. |
Cinta Verick
|
Posted - 2008.10.10 17:07:00 -
[46]
Buy contract has been sent, although I would like to go down the route of closing the position by purchasing an opposite contract.
To be honest I'm not too sure how that would work or how it would be possible to make a profit.
Once I get my head around the mechanics of Futures I'm sure it could be an interesting method of making or losing ISK. |
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.10.10 18:31:00 -
[47]
Originally by: Cinta Verick
Buy contract has been sent, although I would like to go down the route of closing the position by purchasing an opposite contract.
To be honest I'm not too sure how that would work or how it would be possible to make a profit.
Once I get my head around the mechanics of Futures I'm sure it could be an interesting method of making or losing ISK.
The easiest way to make a simple profit with futures is to buy a contract, and then after the prices go up, sell a contract for the same day. The net result is that you are selling what you have bought, and you pocket the difference. Suppose you buy one contract at 10, then sell a contract at 11 the next day. You have now made 1 ISK per unit. If the price goes down, you have overpaid and have effectively lost money.
Futures are not really that hard to use. All a futures contract is a buy/sell order for sometime in the future. You can make money with it just like anything else. If you buy a futures, and the price goes up, you can always sell what you just bought after you receive it.
The reason futures can be tricky is that you can use futures in a number of specialized strategies. Unless you care about those, a futures contract is a perfectly legal way to simply buy/sell something at a specific date and price.
I am thinking about writing up a simple document that describes some of these concepts. I would do so if there is any interest at all.
- Lexander Morinex
|
Cinta Verick
|
Posted - 2008.10.10 19:17:00 -
[48]
So am I right in thinking that once I have paid for that contract on the agreed date, I can then sell that contract at some time in the future for a profit?
Who buys the contract from me, other brokers or BSAC?
The BSAC futures prices have already been set for the next four weeks, so is that the only buy/sell rates?
I am interested in your document.
|
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.10.10 19:42:00 -
[49]
I am not 100% sure how the BSAC exchange is going to match up buyers and sellers.
I am used to thinking in terms of the NYMEX, which is an exchange were contracts are traded in large volume all day. The price fluctuates with demand just like a regular market, and each day a settlement price is published. In that kind of exchange, delivery is actually fairly rare, with most parties selling off and many contracts as they buy. The exchange requires you to put up money to cover the variation between days.
But yes, if you buy a contract for Isogen on Jan-01-09, and then sell a contract for Isogen on Jan-01-09 then you don't have to deliver anything, and you pocket or pay the difference.
This allows speculation (buy and selling contracts hoping to catch the price fluctuations), price hedging, and just managing supply. One of the best things about buying or selling futures contracts is that you can move a lot of volume purely through the exchange, in standard volumes at known prices.
- Lexander Morinex |
Lexander Morinex
Caldari
LDD Investments
|
Posted - 2008.10.10 19:54:00 -
[50]
I read through the docs, and the counterparty is always BSAC. That works, though I would personally like more price volatility. That is a harder problem to solve.
- Lexander |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.10 23:26:00 -
[51]
All minerals are cleared thru BSAC. We sell both sell and buy contracts. To close your position just buy the oposite contract. To give you a better idea on what would happen if you close your position, I added a balance column. Right now you have a balance of -63K, because if you close your position right now you still have to pay management fee.
Prices are determined from the open market buy orders in Jita.
What we are missing is trading in the exchange. I hope others will develope an exchange in due course.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
ofstrife
|
Posted - 2008.10.11 06:52:00 -
[52]
Just to make sure I'm doing this correctly...
I sent 940k ISK to BSAC Manager with buy-2-iso-oct21 as the reason given. That should mean that I have two contracts of Isogen bought that will be delivered on the 21st of October, assuming that I don't sell two equivalent contracts for the same day.
Questions:
If I were to sell those two contracts for Isogen before the 21st, how would I notify you that I've done so? Or would your system automatically pick it up from the appropriate sell code?
If I don't specify a place for it to be delivered, how would I specify where I would want it (assuming I don't sell the two contracts that I've purchased)?
I think that's everything, although I have a feeling that I've missed something.
Anyways, good luck, and I hope this works out well.
|
Cinta Verick
|
Posted - 2008.10.11 08:34:00 -
[53]
Originally by: Block Ukx
All minerals are cleared thru BSAC. We sell both sell and buy contracts. To close your position just buy the oposite contract. To give you a better idea on what would happen if you close your position, I added a balance column. Right now you have a balance of -63K, because if you close your position right now you still have to pay management fee.
Prices are determined from the open market buy orders in Jita.
What we are missing is trading in the exchange. I hope others will develope an exchange in due course.
Just to clarify to close my position for the buy contract arranged for 21st Oct or would need to setup a sell contract for the same date or possibly the 28th Oct or 11th Nov.
However as the buy/sell prices over the next month are already set I know what price I will get when I buy and when I sell. The difference between the 21st Oct and the 11th Nov is 0.71 ISK, so I would make a very small profit buying at 63.00 and selling at 63.71 however the management fee would strip the profit away.
I am having difficulty understanding how you can speculate and take a risk on this futures market when you already know in advance the future buy/sell price.
|
ofstrife
|
Posted - 2008.10.11 09:04:00 -
[54]
My interpretation of the futures exchange is that the price varies each day based on the Jita Index - if the price spikes upwards the day after you buy a contract, sell it after the spike and you'll make some money because the futures price will have also increased. However, I'm still personally working out how futures trading works, so there's a good chance I'm not really understanding how they work.
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, or if the price starts dropping, is there a factor added in that changes the futures from increasing in value to decreasing over time? For example, if the current Jita Index price for Isogen is 63 and has been dropping for a few days, the futures price for the end of October would be around 62 instead of around 64 (I'm making the numbers up, but the point is still there).
|
Shar Tegral
|
Posted - 2008.10.11 09:12:00 -
[55]
Originally by: Cinta Verick
I am having difficulty understanding how you can speculate and take a risk on this futures market when you already know in advance the future buy/sell price.
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. BTW: Block, I submitted two sell contracts but I don't see them up on the Isogen contracts page.
To Shar -verb:
1 - To say what you mean.
2 - To say what it means.
3 - To say something mean. |
Cinta Verick
|
Posted - 2008.10.11 09:22:00 -
[56]
Edited by: Cinta Verick on 11/10/2008 09:23:25
Originally by: Shar Tegral
Originally by: Cinta Verick
I am having difficulty understanding how you can speculate and take a risk on this futures market when you already know in advance the future buy/sell price.
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. BTW: Block, I submitted two sell contracts but I don't see them up on the Isogen contracts page.
But we do know what the future buy/sell prices will be as they are quoted on the BSAC Mineral Futures Exchange spreadsheet
|
Shar Tegral
|
Posted - 2008.10.11 09:34:00 -
[57]
Originally by: Cinta Verick
But we do know what the future buy/sell prices will be as they are quoted on the BSAC Mineral Futures Exchange spreadsheet
We know what the BSAC system states as the likely prediction of what the price will be. Still, it is just a guess and there in lies the gamble (see speculation) part of the system. Again, when you submit a buy or sell contract you are simply stating your opinion on the list BSAC futures index price. The fact that your opinion needs to be backed by assets (isk or minerals) validates your opinion by the only means that leaves no argument. Putting your money where your mouth is.
To Shar -verb:
1 - To say what you mean.
2 - To say what it means.
3 - To say something mean. |
Cinta Verick
|
Posted - 2008.10.11 10:51:00 -
[58]
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.
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.
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 
|
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.11 23:19:00 -
[59]
Originally by: ofstrife
I sent 940k ISK to BSAC Manager with buy-2-iso-oct21 as the reason given. That should mean that I have two contracts of Isogen bought that will be delivered on the 21st of October
Correct.
Originally by: ofstrife
, assuming that I don't sell two equivalent contracts for the same day.
Incorrect. You will need to purchase two sell contract without posting a margin to close your position.
Originally by: ofstrife
Questions:
If I were to sell those two contracts for Isogen before the 21st, how would I notify you that I've done so? Or would your system automatically pick it up from the appropriate sell code?
At this time trading contracts (selling your current contract to another party) has not been implemented. I hope in time we will be able to trade contracts.
Originally by: ofstrife
If I don't specify a place for it to be delivered, how would I specify where I would want it (assuming I don't sell the two contracts that I've purchased)?
Default location is Jita. So be sure to include the location in the description field of your item-exchange contract.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Block Ukx
Block Ships and Ammunitions
|
Posted - 2008.10.11 23:29:00 -
[60]
Originally by: Cinta Verick
Just to clarify to close my position for the buy contract arranged for 21st Oct or would need to setup a sell contract for the same date or possibly the 28th Oct or 11th Nov.
To close your position you must purchase a sell contract for the same settlement date, oct 21 in your case, before the last trading day of oct 21 futures. This might get modified as the exchange matures.
Originally by: Cinta Verick
However as the buy/sell prices over the next month are already set I know what price I will get when I buy and when I sell. The difference between the 21st Oct and the 11th Nov is 0.71 ISK, so I would make a very small profit buying at 63.00 and selling at 63.71 however the management fee would strip the profit away.
Incorrect. Futures prices are updated daily based on the Jita index.
Originally by: Cinta Verick
I am having difficulty understanding how you can speculate and take a risk on this futures market when you already know in advance the future buy/sell price.
Again, futures prices are updated daily based on the Jita index. Your futures price is set the moment you purchase your contract. Therefore, if the futures price increases, your buy contract will gain value. In contrast, if price goes down, your contract looses value. The oposite is true for sell contracts.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
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
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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
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Block Ukx
Block Ships and Ammunitions
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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.
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Lexander Morinex
Caldari
LDD Investments
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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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Shar Tegral
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Posted - 2008.11.12 01:25:00 -
[91]
Would love to know what the "default" penalty is so that I can pay the fine and "clear" my record.
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
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Posted - 2008.11.12 05:02:00 -
[92]
Originally by: Shar Tegral
Would love to know what the "default" penalty is so that I can pay the fine and "clear" my record.
Hmmà The document does not explicitly spells out how to deal with defaults. The Oct 28 Isogen futures sell contract you bought at 63.20 closed at 74.36. In this case the difference in price is much larger than the margin, so you are only liable for the margin. Since this is a pilot program, to settle you have two options: loose the margin or deliver your contract. Let me know your preference.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
Shar Tegral
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Posted - 2008.11.12 05:11:00 -
[93]
House can choose: Keep the margin or I can still deliver the Isogen at the agreed upon price in Ours. (Ironically it was the damn server crashing that prevented me from actually delivering.)
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
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Posted - 2008.11.12 06:16:00 -
[94]
Delivery in Ours sounds good to me. Please prepare your contract accordingly.
Thanks.
BSAC Mineral Market Manipulation (MinMa) Information Desk |
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