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Ok, I've had my @IndexRover style meltdown. Now I'm going to document my thoughts on the announcement and the ramifications thereafter. 1/
Ok, I've had my @IndexRover style meltdown. Now I'm going to document my thoughts on the announcement and the ramifications thereafter. 1/
Firstly, I am disappointed at the removal of IPDs, as recently they were a profitable and fun way of trading for me. I'm sure I'm not the only one. They engage me on a day-to-day basis that PB doesn't. 2/
This ultimately leads me to the argument that they are too expensive for FI. This is absolutely the case, no doubt, the yields are ridiculous. But that is only in part because of the 2p/per GC. The main reason the yields are crazy is due to the massively suppressed prices 3/
Now you will see arguments that IPDs are suppressing prices, but this is simply not the case, or at least the entire picture. Remember, IPDs at 1p worked when prices were much higher. Prices have been depressed because of FIs shoddy mechanism. 4/
Now, I won't go into what's wrong with the mechanism as it's been discussed at length by @JohnNellis_ and @FiGuide in the recent months, but the crux of it are - it's the shoddy mechanism has caused the massive price depression in recent months, symbolised by brown Sunday 5/
Equally, the mechanism isn't entirely at fault, only 85-95%. The remaining % is due to traders, undercutting eachother in bids, selling to buy back cheaper etc. Which, is ultimately an issue with the mechanism anyway. 6/
So, ultimately, yes it does make sense for CHANGES to be made to IPDs. But what changes could have been made, prior to complete cancellation:
Make IPDs buy now only
Reduce IPDs to 1p
Reduce eligibility to 20-25 days or a max number of games.
7/
Make IPDs buy now only
Reduce IPDs to 1p
Reduce eligibility to 20-25 days or a max number of games.
7/
Anyway, so they've been cancelled. Here are my thoughts on the ramifications of this, both immediate and medium term.
1) straight away a lot of traders will feel severely let down. They have seen their ports tumble through changes to the mechanism.
8/
1) straight away a lot of traders will feel severely let down. They have seen their ports tumble through changes to the mechanism.
8/
1. cont) these traders have then changed their technique in order to trade their way out of a hole. And now the rug has been pulled out from under their feet at 30 days notice. Yes their may be a replacement, but that hasn't been announced (more on this later)
9/
9/
2) IPDs have been providing some much needed liquidity to the market. Perhaps with the "undercutting" but we have discussed ways around this above.
3) IPDs are the easiest thing to understand and make the most logical sense.
10/
3) IPDs are the easiest thing to understand and make the most logical sense.
10/
So to conclude this bit. Ultimately traders have been shafted by the short term nature of this announcement.
Now we move on to the medium term ramifications:
11/
Now we move on to the medium term ramifications:
11/
The medium term ramifications are all related to the reputation, confidence and trust that users and new joiners have in FI.
They have announced the removal of IPDs without announcing what will replace it. All we've been told is that it will come. /12
They have announced the removal of IPDs without announcing what will replace it. All we've been told is that it will come. /12
This is likely to ensure they can generate some market activity and bring in some dividends. This is such a poor business decision, their cash reserves can't be that bad that they need a few extra £k. For a few £k they are losing the trust of users and their confidence. 13/
It also just looks sly and makes them look desperate for cash.
On top of this, they have instilled a sense of doubt in the market. How do people trade for specific strategies without fear it may be take away in a a few months.
14/
On top of this, they have instilled a sense of doubt in the market. How do people trade for specific strategies without fear it may be take away in a a few months.
14/
So they look sly and people can't trust their strategies going forward.
So, what's to say, FI won't change the matrix to make it suit players who have very low previous all tike highs, meaning they can massively rack in minting and comms balances. The trust is gone.
15/
So, what's to say, FI won't change the matrix to make it suit players who have very low previous all tike highs, meaning they can massively rack in minting and comms balances. The trust is gone.
15/
So, just from today's decisions, we now don't know what we can and can't trust.
If we then look at this in conjunction with the decisions made in the last year it does not make for pretty reading
16/
If we then look at this in conjunction with the decisions made in the last year it does not make for pretty reading
16/
IS was removed with little to no notice - fair enough due to COVID
Mechanics been tinkered with all year, resulting in no liquidity, crashed prices etc
"Announcement index"
Over promising under delivering.
17/
Mechanics been tinkered with all year, resulting in no liquidity, crashed prices etc
"Announcement index"
Over promising under delivering.
17/
That last one is important, because it is what's happened again, we've had a dividend removed with no notice, no replacement announced just a vague promise of a new system in 30 days. We've had Germany conveniently mentioned (to make the shit sandwich) 18/
@TheFILawyer has done some good analysis of this, saying it has backing - which is good. BUT.
Why now. We haven't heard about Germany in months and now it's the reason for a major change. And with the record of not delivering...
The UK market hasn't even been cracked yet 19/
Why now. We haven't heard about Germany in months and now it's the reason for a major change. And with the record of not delivering...
The UK market hasn't even been cracked yet 19/
This again just drives conspiracy of having no money etc and looks bad if it doesn't come true.
Again, just makes FI look untrustworthy and destroys confidence - something markets need.
20/
Again, just makes FI look untrustworthy and destroys confidence - something markets need.
20/
So what would I have done?
Be honest. Come out and say that we have X amount of cash reserves, at current prices IPDs are too expensive. Therefore we've removed IPDs but have implemented xyz dividend/payment to give confidence to those IPD players
21/
Be honest. Come out and say that we have X amount of cash reserves, at current prices IPDs are too expensive. Therefore we've removed IPDs but have implemented xyz dividend/payment to give confidence to those IPD players
21/
To summarise, IPDs were unsustainable, but due to FIs mistakes, not users. FI is losing trust and confidence fast. Markets can't function without either
/22
/22
However, I hope the replacement is sufficient to stimulate the market. I suspect there will be a form of tiered PB. Ie every 500/1,000 or whatever interval of PB points amassed provide a payout. It means EVERY single player has value. 23/
Love to hear peoples thoughts. I think we have two camps. Those who have ports set up for PB and youth who are buzzing. And ST traders who are fuming. Neither is right, both were trading what the current market allowed
