Wednesday, December 5, 2012

Why no Stock Market?

We've all heard about the attempts to create a corporate stock market in EVE, none have succeeded. The closest thing in the game right now is the BSAC exchange run by Block Ukx and it's closing. During it's operation I understand it to have functioned as a commodities speculation market, not a corporate stock exchange though. So lets talk about the reasons why a true corporate stock exchange has never sprung up in eve.

The biggest reason is that corporation shares have no method of secure transfer, after that we have concerns over valuation and assumptions that there is no need for a corporate stock exchange in EVE.

As it stands today in EVE, shares themselves are a very odd item. They reside solely in the wallet, a corporate share does not sit in a hangar, it cannot be put on market, traded or auctioned via contracts. All corporations start out with one thousand shares, these shares may be given to other players or corporations. It is possible to hold a vote to create new shares, expel a member, lock/unlock BPOs, select a new CEO and cast a general vote, which are similar to free form contacts of old. This distinct lack of secure transfer capacity makes the share system useless despite it's other strengths.

While judging a corporation's value can be difficult, there are several ways to weed out those that would be of no benefit. In EVE, corporation's can be founded by anyone with the skill “Corporation Management” trained to level one. Corporations can generally be defined as one of three types, alt corps, casual corps and hardcore corps.

An alt corp is a corp comprised of alts for griefing, spying, POS gunning, war dec'ing, or any number of other activities. They were used heavily for war dec'ing back when wars were cheap and for POS gunning back when POSes determined sovereignty.

A casual corp is a corporation usually comprised of friends or individuals with loosely the same interests. Casual corps are quite prevalent in high sec and are usually spread out with little cliques of active players flying together. Casual corps can be broadly defined as corporations that lack dedicated organization and highly motivated leadership.

A hardcore corp is a separate beast entirely. Hardcore corps can be found primarily in nullsec and lowsec, though there are some highly organized incursion and war dec corps in high sec. Hardcore corps are often lead by motivated individuals with a skill for 'herding cats'. They're highly organized, sometimes to their own detriment and are usually well centralized. They're the ones who measure their mining ops by millions of m3, project super capitals across regions and shift markets with their wealth. Hardcore corps can be broadly defined as the movers and shakers of EVE.

Two out of three of these groups would likely not be of any value simply due to the nature of their operations. Hardcore corporations on the other hand would be of tremendous value to investors as they possess the potential to accomplish great things.

While one could argue that there is no demand for a stock exchange simply by the fact none currently exists within the game, one must remember what drove the creation of stock exchanges to begin with; A need for capital. You need only look at the Market Discussions section of the EVE Online Forums to see this need for capital. On any given day in Market Discussions you will see bond offerings. Some are collateralized with a trusted third party such as Somer, others are banking solely on their past ventures. Average bonds range between five and ten billion isk, though on some days you will see bonds as high as fifty or even a hundred billion isk.

These bonds can range from individuals looking to expand market operations to those trying to start capital production projects. They commonly offer between five and fifteen percent interest and prices anywhere from a hundred million isk to two billion isk per bond. A strong etiquette and culture of disclosure has sprung up around these bonds with scrupulous and enterprising individuals able to obtain huge amounts of capital over night. This is all possible despite the risks inherent in entrusting huge volumes of isk to individuals with no possible repercussions beyond perhaps a large bounty should the isk go unrepaid.

The very existence of these large scale public bond measures, and the culture that has sprung up around them invalidates the notion that a stock exchange would go unused within EVE. All that is missing is a secure transfer method.

Special thanks to monolithdigital of reddit for providing the prompt for this post.

1 comment:

  1. The main issue I see with corporation shares is that most corporations are either too small to be worth investing in, or too large for most of the playerbase to invest in. Which makes the number of people this would be useful to very small.

    Additionally larger corporations already have the infrastructure to provide income so why bother issuing stocks and passing revenue out of the corporation into the hands of others.

    Which would mean that a stock exchange would only viably be used to fund individual ventures as bonds do now, except in a more restrictive and possibly less secure way.