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Block Ukx
Forge Laboratories
Posted - 2010.01.19 15:21:00 - [1]
 

Edited by: Block Ukx on 04/06/2010 02:04:49

BSAC Stock Exchange



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Original Post:
Previously, we discussed an open proposal to extend the BSAC Exchange to non-BSAC shares. Currently, two existing ventures (Cista2 and LYII) will join the BSAC Exchange in its efforts to provide the best options to its shareholders by allowing share trading in the Exchange. Here we will discuss how the virtual share concept will be applied to new and existing IPOs/Bonds.

One challenge any share Exchange faces is attracting enough investors willing to trade shares. Two barriers in trading shares are volume and price. Unfortunately, most IPOs and Bonds share prices make them extremely unattractive for a real-time stock exchange, mostly due to their high price and very limited volume. This is where share virtualization comes in handy by allowing stock splits on virtual shares. Ideally, shares trading in the Exchange should be priced in the range of 10,000 to 100,000. For instance, an in-game share valued at 1 M should split into 10 to 100 virtual shares.

Due to the need of stock splits for a healthy stock exchange, virtualized shares will remain sealed in the Exchange vault. This however, will not affect in any way or form dividends nor will affect existing shareholders. Only investors wanting to take advantage of the trade market and profit from share trading will need to submit in-game shares to the Exchange. Submitted shares will be added to the shareholder account with the established stock split ratio.

Virtual shares will not affect dividends. Any dividends received by the shares sealed in the Exchange vault will be distributed to rightful shareholders. LYII investors will continue to receive dividends into their Exchange account.

The BSAC Exchange will never impose share virtualization to shareholders not interested in participating in the Exchange. Since shares must be submitted to the Exchange willingly by the shareholder, any investor not interested in participating in the Exchange can simply choose not to. Similarly, Exchange trading price will not translate into in-game share price.

Because share prices tend to increase with demand, shareholders could potentially double, or even triple their investment by simply trading in the Exchange. The mere fact of virtualization can increase a share price because of its increased desirability and increased market exposure.

Lets examine one of the new non-BSAC shares coming to the Exchange. On a recent meeting with LYIIs CEO, a stock split 1:100 was decided. In other words, for every share submitted by the shareholder to the Exchange, the shareholder will receive 100 virtual LYII shares. The shareholder is then free to trade even a single share in the Exchange. In addition, the shareholder will not need to worry about dividends as they will be deposited into their account according to the number of shares they own. The only drawback is having the need to request a withdrawal from the exchange to access dividends. However, there are no withdrawals fees nor API will ever be required.

Similarly, Cista2 has a 1:8,000 stock split, or 8,000 virtual shares per in-game share.

In summary, share virtualization is key for a healthy stock exchange. Stock splits will be applied upon share submission to the Exchange. Dividends will not be affected, nor will current shareholders be affected.


Comments will be appreciated.


Question Time
Posted - 2010.01.19 15:30:00 - [2]
 

First.

Cista2
Hydra Investment Fund
Posted - 2010.01.19 16:00:00 - [3]
 

Confirming that Jidsale is approving this initiative. For the investors this means that if you want to try trading your shares on the BSAC exchange, you will receive dividends as usual, transferred from me through Block.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.01.19 16:24:00 - [4]
 

I wonder if this plan would could be generalized to "virtual securities".

I have no time to do it myself, nor the institutions I contacted can devote my idea the time it'd take (i.e. EBANK atm has other more pressing issues, ECR is stalled).

I wanted to be able to create a secondary market (the real one, not the MD mis-labelled one), including futures and whatsnot. I also offered ideas about adapting real tools to that situation, i.e. RL technical analysis simple software (open source or free, the others would cost Block tens of thousands just in licenses).

That whole package would probably help add substance to the newborn.

But for now, I'd like to ask if it's possible for a corporation to freely emit their own securities at a determined face value (a sort of venture capital) and accept investors. Or even to create securities with public but self made "ruleset". As long as the rules are followed (you would enforce them like as supervisory institution) and can be mapped into dividends, it should be feasible.

SencneS
Rebellion Against Big Irreversible Dinks
Posted - 2010.01.19 17:19:00 - [5]
 

VV - Just what would you be securing?

The only things I could think of that would really be worth while offering up any type of security would be Institutions offering loans or selling risk, like an up and coming insurance company.

You could sell collective bonds collected from all over the place, but I doubt there is enough to go around, same could be said for Shares I guess, you want to sell part of the risk of owning the shares, but if that's the case then just sell the shares.

About the only IPO I considered selling security for was Titan4U, since the shares where in demand, none available and people are holding onto them I was considering offering up part of the shares I purchased in form of a security. I purchased 1000 shares at 1mil a pop, I was going to break it down into 100K lots and sell off the part of the dividends. While that could have worked at the time, I felt in the end I would just sell the shares. Collected my investment and moved on. Why? convenience, while an Exchange like Blocks could offer this given some time there is still a requirement to interact with not only the shares and the exchange, in return I'd get pennies.

The big issue is not that securities can't be done, it's the fact it's not exactly viable. Unless the shares where dulling out double or triple digit ROIs it's just not worth the effort. Same can be said for Bonds or Market activity, leaving Loans or Insurance. Without a decent big loan or Insurance institution securities are just not worth the effort for the majority.

It would be a labor of love and that's about it. Sure some people would gobble up securities because they have oodles of ISK not being used, but there would be no real big honest investor.

Virtual shares are the next evolution, it removed the requirement to use CCP's rather poor and lacking Share mechanic of EVE and places it directly in the hands of the player in which everything can be done.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.01.19 17:52:00 - [6]
 

Quote:

The big issue is not that securities can't be done, it's the fact it's not exactly viable. Unless the shares where dulling out double or triple digit ROIs it's just not worth the effort. Same can be said for Bonds or Market activity, leaving Loans or Insurance. Without a decent big loan or Insurance institution securities are just not worth the effort for the majority.



The big issue is that nothing is possible until someone does it. It's how the filthy rich out of nowhere come up in RL and everywhere there's a stagnant, low profit environment.

The other big issue is that thru the months I have followed some big top-down analysis, formulas and blah blah that result in nothing done.
Why? Because it's really the same as talking about buying a freigther: you either need it or it's a waste.

Now, looking at an awesome, top down (typical of the MD old guard) grand formal theories, a secondary market is indeed an excercise of futility.

Going the Unix way and putting together many independent common use bits to make something greater is what works nowadays.
Thus I will proceed with my ultra-long term plan (I lack the money and most of all, the time) in peace and will see where it'll bring.

Kalrand
GoonWaffe
Goonswarm Federation
Posted - 2010.01.19 18:04:00 - [7]
 

Are wholly virtual shares supported?

Actually, how about options attached to securities (i.e. Callable, puttable, or conversion options)?

Block Ukx
Forge Laboratories
Posted - 2010.01.19 18:20:00 - [8]
 


The shares sold in the exchange fall under the category of "registered equity securities". The virtual shares concept can be applied to any new/existing shares.

I'm working on the tools to issue new shares under the supervision of a Fund managers with rulesets.

Options are Futures are outside of our current scope of development.

Kalrand
GoonWaffe
Goonswarm Federation
Posted - 2010.01.19 18:22:00 - [9]
 

Originally by: Block Ukx
Options are Futures are outside of our current scope of development.


I was thinking more along the lines of a convertible bond trading along side an equity in the same venture.

Block Ukx
Forge Laboratories
Posted - 2010.01.19 18:34:00 - [10]
 

Originally by: Kalrand
I was thinking more along the lines of a convertible bond trading along side an equity in the same venture.


Not at this time. My main priority is trying to get investors willing to trade virtual shares of existing in-game shares. Most people purchase shares and never trade them.


herot
Fortunis - Redux
Posted - 2010.01.19 18:38:00 - [11]
 

Will there be any options, for a fee, to convert the virtual shares back into normal ingame shares?


Block Ukx
Forge Laboratories
Posted - 2010.01.19 19:01:00 - [12]
 

Originally by: herot
Will there be any options, for a fee, to convert the virtual shares back into normal ingame shares?


No, once the share enters the Exchange and becomes virtual, it will remain in the Exchange.


Kalrand
GoonWaffe
Goonswarm Federation
Posted - 2010.01.19 19:10:00 - [13]
 

Originally by: Block Ukx
Originally by: herot
Will there be any options, for a fee, to convert the virtual shares back into normal ingame shares?


No, once the share enters the Exchange and becomes virtual, it will remain in the Exchange.




Oh that's bad. That means that the virtual price will stray from the hard share price.

Ray McCormack
Nordar Innovations.
Posted - 2010.01.19 19:17:00 - [14]
 

What would the benefits be to a public corporation virtualising its shares with your exchange?

Block Ukx
Forge Laboratories
Posted - 2010.01.19 19:30:00 - [15]
 

Originally by: Ray McCormack
What would the benefits be to a public corporation virtualising its shares with your exchange?



Larger market exposure.
Access to a large pool of investors trading in the Exchange.
Access to a pool of investors interested in profiting from share trading.
Automatic dividends report.
Share trading report.
Stock splits.
Stock recall and force stock liquidation.

Also, the corporation does not need to virtualise its shares. Shareholders can do so if allowed by the corporation.



herot
Fortunis - Redux
Posted - 2010.01.19 22:37:00 - [16]
 

Originally by: Block Ukx
Originally by: herot
Will there be any options, for a fee, to convert the virtual shares back into normal ingame shares?


No, once the share enters the Exchange and becomes virtual, it will remain in the Exchange.




I really hope that that dosn't also apply to the "virtual isk" that i imagine one would have to deposit in order to trade!ugh

Talkin about isk deposit, would deposited funds be kept in a type of "treasury account" not accessed other than for withdrawals? Or are management free to utilize the funds for other purposes? (would be sort of an interest free loan from the traders, great incentive for running an exchange though if deposits become largeTwisted Evil)

Block Ukx
Forge Laboratories
Posted - 2010.01.19 22:53:00 - [17]
 

Originally by: herot
I really hope that that dosn't also apply to the "virtual isk" that i imagine one would have to deposit in order to trade!


ISK can be withdraw anytime.

Originally by: herot
Talkin about isk deposit, would deposited funds be kept in a type of "treasury account" not accessed other than for withdrawals? Or are management free to utilize the funds for other purposes?


Yes, deposits are kept in a "treasurey account" and funds are not to be utilized by management for other purposes other than withdrawals.



LarcatOfRens
Posted - 2010.01.19 23:03:00 - [18]
 

Inre: Conversion ---

One model for you to follow would be to become a third party in bond issuance. If an offering comes up, you "virtualize" ALL of the shares, and allow conversion.

For some of us, conversion either on your mineral products or on a stock exchange might well be the thing that pushes us over the line into actually making use of your products.

I would personally trade ANY product you introduced which had a conversion schema that went both ways, assuming there was enough volume to approach decent liquidity. This sort of trading is something I know very well from IRL, and thus far all of the ways I have contemplated doing it with the existant tools ingame have left me wanting for a variety of reasons.

There ARE ways to *sort of* do this in game, but they all require you to go long on raw materials. I know I will never be able to short anything eve-related, but if you let me at least convert fluidly, I would cease mucking about with .01 crap in game, and take heavy advantage of such a product.

Starting with these shares, or with your mineral products (where physical settlement/conversion to the virtual product can only happen at Jita, Amarr, Dixie, Rens maybe, but ALL conversion of virtual to physical happens at Jita) just makes lots of sense.

I understand why you probably don't want to ---- You are already taking advantage of these sorts of opportunities ;) but the point stands. You DO have a market for people who want something more complicated than 1) debt vehicles and 2) physical product. Thats ALL we have in EVE.


Kalrand
GoonWaffe
Goonswarm Federation
Posted - 2010.01.19 23:36:00 - [19]
 

Originally by: Block Ukx
Originally by: herot
I really hope that that dosn't also apply to the "virtual isk" that i imagine one would have to deposit in order to trade!


ISK can be withdraw anytime.




The more I think about it, the more I dislike the "roach motel" treatment of hard shares.

Ji Sama
Caldari
Tash-Murkon Prime Industries
Posted - 2010.01.19 23:42:00 - [20]
 

Originally by: Kalrand
Originally by: Block Ukx
Originally by: herot
I really hope that that dosn't also apply to the "virtual isk" that i imagine one would have to deposit in order to trade!


ISK can be withdraw anytime.




The more I think about it, the more I dislike the "roach motel" treatment of hard shares.


care to expand mate, im a little slow.

Kalrand
GoonWaffe
Goonswarm Federation
Posted - 2010.01.20 00:00:00 - [21]
 

Originally by: Ji Sama
Originally by: Kalrand
Originally by: Block Ukx
Originally by: herot
I really hope that that dosn't also apply to the "virtual isk" that i imagine one would have to deposit in order to trade!


ISK can be withdraw anytime.




The more I think about it, the more I dislike the "roach motel" treatment of hard shares.


care to expand mate, im a little slow.


Sure:
Lets say someone holds shares on block's exchange, and is thinking about selling them.

For whatever reason the prices there aren't too hot, so they wait. Then someone comes along and posts in the forum saying "Hey! I'd love to buy some of those widget shares! I'm willing to pay a perfectly reasonable price for them!".

Seems great right?

But the buyer wants hard shares and/or doesn't trust Block.

So no sale, since the "owner" of the virtual shares has no right to reclaim them.



To put it differently, physical shares should command a premium to any virtual shares, since by their very nature, if the virtual price is ever higher, people can virtualize their existing shares to meet that demand.

But that doesn't work the other way. So by definition physical shares will always be equal to or more valuable than the virtual ones.

So why would you virtualize them?


Something like this would be idea for bonds and totally virtual offerings.

Also, it means that the exchange can never shrink in size. 10,000 whatever shares go in, and they never come out.


Make more sense?

LarcatOfRens
Posted - 2010.01.20 00:02:00 - [22]
 

Originally by: Kalrand

Stuff about stock.



Wait.

Why isn't there an ingame stock exchange?

SetrakDark
DarkCorp Citizens Holdings
DarkCorp Citizens
Posted - 2010.01.20 00:04:00 - [23]
 

That's a good point. You might need some fully virtualized offers before you can convince enough people that virtual shares are as safe as "real" (lol) ones.

Breaker77
Gallente
Reclamation Industries
Posted - 2010.01.20 00:05:00 - [24]
 

Originally by: LarcatOfRens
Originally by: Kalrand

Stuff about stock.



Wait.

Why isn't there an ingame stock exchange?


Because CCP sucks, errr well it's something that takes up development time and players can do the same thing without security thus adding risk.

Kalrand
GoonWaffe
Goonswarm Federation
Posted - 2010.01.20 00:06:00 - [25]
 

Originally by: LarcatOfRens
Originally by: Kalrand

Stuff about stock.



Wait.

Why isn't there an ingame stock exchange?


The excuse that usually banded about is that the whole corporate share mechanism is the old, totally impenetrable code, that CCP doesn't want to touch, since it might just break everything.


Block Ukx
Forge Laboratories
Posted - 2010.01.20 01:14:00 - [26]
 

Originally by: Kalrand
... Lets say someone holds shares on block's exchange, and is thinking about selling them.
For whatever reason the prices there aren't too hot, so they wait. Then someone comes along and posts in the forum saying "Hey! I'd love to buy some of those widget shares! I'm willing to pay a perfectly reasonable price for them!".
Seems great right?
But the buyer wants hard shares and/or doesn't trust Block.
So no sale, since the "owner" of the virtual shares has no right to reclaim them.



It will be up to the individual shareholders to virtualize their shares. I'm not stopping people from trading in the forums. If you believe that real-time trading, stock-split feature, and price increases due to secondary trades is not beneficial, then continue trading in the forums. Im offering investors an alternative to trade their shares.

Originally by: Kalrand
To put it differently, physical shares should command a premium to any virtual shares, since by their very nature, if the virtual price is ever higher, people can virtualize their existing shares to meet that demand.


Yes, the premium is because of the very existence of the Exchange, which is exactly my point. Virtual shares will likely increase in price due to increase volume, affordability, and larger market exposure.


Originally by: Kalrand
So why would you virtualize them?

To take advantage of the Exchange.



Ji Sama
Caldari
Tash-Murkon Prime Industries
Posted - 2010.01.20 01:24:00 - [27]
 

Thanks Kalrand :D
I agree.


Block Ukx:
How do you recommend a venture goes fourth with this, since all hard shares are already out in the investors hands?
How would I get them to put them on your exchange?


Kalrand
GoonWaffe
Goonswarm Federation
Posted - 2010.01.20 01:47:00 - [28]
 

Originally by: Block Ukx

Originally by: Kalrand
To put it differently, physical shares should command a premium to any virtual shares, since by their very nature, if the virtual price is ever higher, people can virtualize their existing shares to meet that demand.


Yes, the premium is because of the very existence of the Exchange, which is exactly my point. Virtual shares will likely increase in price due to increase volume, affordability, and larger market exposure.



No. You didn't read my whole post. The price of virtual shares can not be higher than physical ones. I stated the reason in the post you misunderstood.

Block Ukx
Forge Laboratories
Posted - 2010.01.20 03:18:00 - [29]
 

Originally by: Ji Sama
How do you recommend a venture goes fourth with this, since all hard shares are already out in the investors hands?
How would I get them to put them on your exchange?



I need a statement from the CEO approving trade in the Exchange. I also need, a link to the IPO information, number of shares issued and outstanding, and if possible I would like to purchase one share.

Investors would then make the decision as to trading in the Exchange.


Ji Sama
Caldari
Tash-Murkon Prime Industries
Posted - 2010.01.20 03:44:00 - [30]
 

Ok let me think about it, if I go forward with it, I will create a vote, and see what my investors think about this.
I like your initiative, but I have to agree with Kalrand, that the "real" shares will always be worth more than the "virtual" shares.
However speculation and fast turn over might prove more profitable in the short run.

I also fear that such speculations, in the event of a crash would cause a run on IPO managers, forcing them to honour buybacks and causing liquidity problems!


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