This is how pricing works now



  • Simple explanation:

    Before matching engines & COVID-19 the following system applied:

    There was only one way of buying - which was instantly, at full price. If nobody else was selling, then this purchase was from FI (they create a new share/future/bet). However, if there were shares in the 'sale queue' (see below) then you were buying from another trader. Either way, your purchase would contribute toward increasing the price by 1p (approx. 600-900 shares purchased increased the buy price by 1p)

    There were two ways of selling:

    1. Add your shares to the 'sale queue'. This was not instant or guaranteed, but would result in you achieving whatever the buy price was (or very close to it) when your shares got to the front of the queue and another trader then made a purchase.

    2. Instant sell (IS) - this was instant and guaranteed. The price was dictated by FI (typically 3-10% of the buy price) and you were selling your futures back to FI and they ceased to exist.

    Both methods of sale resulted in decreasing the buy price. Again it was approx. 600-900 sold shares to depress the price by 1p. Incidentally...removing your player from the sale queue increased the buy price.

    I'll ignore what has happened in the last 2 months in reaction to COVID-19. Its no longer relevant or helpful.

    How it works now - since the introduction of the Matching Engine (ME)

    There are now two ways of buying:

    1. The first is exactly the same as the option above (i.e. buy instantly at full price, either from FI or from the sales queue) and the effect on pricing is the same (600-900 bought shares increases the buy price 1p)

    2. Place a bid using the matching engine - you set your bid price, but it is not instant or guaranteed. If your bid is the highest on the market, then this will populate the instant sell price that other traders see and if another trader uses the instant sell option (see below) then the trade is matched. This has NO effect on the official buy price.

    There are still two ways of selling:

    1. To the 'sale queue' - this is exactly the same as before...not instant, not guaranteed...and contributes towards reducing the buy price (600-900 shares added to the queue decreases buy price by 1p)

    2. Instant sell - whilst this has the same name as before, the mechanics are now very different. You are now selling to other traders (via them bidding) and never to FI. It is still instant (obviously) but no bids = no IS, hence no sale price on lots of undesirable players. Since this is the other end of the bid process - it also has NO effect on the buy price.

    This new model offers advantages and disadvantages over the old method. I'll leave that for another time. There are some problems with the accuracy of player prices but it's worth remembering that this is works in progress towards 'NASDAQ powered order books.

    BTW this is just my interpretation - i do not work for FI.



  • The biggest issue I see with it comes when they start enforcing the three year rule. This is going to go over some people's heads...but I'll put it out there anyway...

    Both the new sell methods above described by matt result eventually in no price change... Accepting a bid or a share in the sale queue being bought both mean an offset and no price movement... Shares no longer get disposed so there is no permanent drop in a players price...

    So in effect when Messi reach retirement he wil still be around £5!!

    Imagine a load of holders shares expiring at the same time and trying to shift a retiring Messi at £5? Impossible..

    Beforehand with IS and selling to market it allowed for healthy drops... And if the drops became a big overreaction then buyers got their bargains anyway.

    This isn't doom and gloom... Because these are the issues Phase 2 will fix if FI do it right... Stop unlimited release of shares....enforce the three year rule to maintain true supply and demand... And allow sellers to also set prices not just buyers... So if a 40p wonderkid signs for Man Utd we don't have the rigmarole of 900 shares at 41p....900 at 42p etc... Those that bought in advance can immediately set the players price far higher.

    Div increases can raise the ceiling on market cap... The three year expiry is always the control that prices won't become crazy.

    It isn't sustainable going forward with a system that has unlimited shares available that never depreciate in value... May look good on paper but not when you want to sell.



  • Think your interpretation is spot on.

    My hope is that we'll see an increase in dividends as FI no longer buy shares back, so that's a stack of cash they can put into payouts instead. They want lots of trading as they'll be charging 2% on successful buy bids too so hopefully any increases don't just go straight towards the IPD market.



  • 2 months free commision. Could this be because in 2 months the leagues will have Hopefully finished and then FI can announce a div increase for the new season To coincide with the 2%.....



  • They will be reviewing it every August



  • @Vespasian32 this is exactly the point ive been trying to put across but ive been using shares in circulation to try and explain it. Your explanation is a lot better than mine. At the moment theres no possible way for a players price to truly depreciate, yes it may appear to go down but upon that players retirement the actual money tied up in that player will be significantly higher than his buy price will suggest.

    Im actually very surprised at how toght the spreads are on some of the older players i can only assume that many people are failing to consider exit strategies on these players



  • Prices can go down when players are market listed.

    So... Unless something changes then when Messi retires there will be a humungous sell queue which nobody will buy from. Until price reaches the point when you might as well. For example if you reckon he will make 60p from retirement media then might as well buy at 50p or less just to collect dividends with no exit plan.



  • @mike778 yeh they go down but the money is still in them so they all lose full stake at expiry. Whereas old IS allowed price drops consistently so holders took a hit but not full stake. This is a monumental shift in risk management



  • Retiring players will be impossible to shift so effectively it will be lost money.

    After giving this more thought we are basically trading in the bid zone. Player rises and falls will be few and far between.

    We’ve been forced to accept terms that make a lot of our holds worth less. Hardly any purchases on the market apart from the top end.



  • @mike778 unless thousands of shares are listed for market sale to push the price right down the bid zone wont go as low as 60p on a player like Messi, about £3 will be the lowest possible bid.

    Unless FI decide to base prices on some kind of average purchase price of current holders to push the market buy price down to allow lower bids to be placed. Im sure they will do something but shares listed for sale can only push the price so low before someone sells and the price goes back up



  • @FI-Ads said in This is how pricing works now:

    Retiring players will be impossible to shift so effectively it will be lost money.

    After giving this more thought we are basically trading in the bid zone. Player rises and falls will be few and far between.

    We’ve been forced to accept terms that make a lot of our holds worth less. Hardly any purchases on the market apart from the top end.

    Basically players should trade for what they are worth.

    If player a is expected to generate 50p a year and will probably last 2 more years then he is worth 1 quid. Market valuations were weird before people talked about 10pc yield on a 30 year old as good when in reality it was garbage.

    Player trade price should more accurately reflect what players are worth now. It's fine to buy above player even if you can't sell as dividends cover depreciation.



  • @mike778 yeh so. £5 of Messi into £1 doesn't work without a way of taking shares out of circulation... You might have price £1 but itl still be £4 worth in the queue that is worth nothing.

    People treated 30 as retirement age on the index 😂 now when a player like sancho is still gona have £13.50 or more like £15+ at peak (not even considering a div Inc) of shares... His index retirement age will be about 25



  • @Vespasian32 said in This is how pricing works now:

    @mike778 yeh so. £5 of Messi into £1 doesn't work without a way of taking shares out of circulation... You might have price £1 but itl still be £4 worth in the queue that is worth nothing.

    People treated 30 as retirement age on the index 😂 now when a player like sancho is still gona have £13.50 or more like £15+ at peak (not even considering a div Inc) of shares... His index retirement age will be about 25

    That also brings up another issue. What if Sancho doesnt become the player he is expected to be? What if something happens like a bad injury or money and fame go to his head? I know its highly unlikely his career goes bad it say it does he would remain a very expensive player which wouldnt reflect his real world or FI value



  • @mike778 said in This is how pricing works now:

    If player a is expected to generate 50p a year and will probably last 2 more years then he is worth 1 quid.

    Also this is silly cos who places £1 to win back.... £1 over 2 years? The person knows they will get £0 at sbv.... So theyl want a decent margin like 20% per year on that bet so £1.40 divs for them to bother paying £1 😉



  • @Vespasian32 said in This is how pricing works now:

    @mike778 yeh they go down buy the money is still in them so they all lose full stake at expiry. Whereas old IS allowed price drops consistently so holders took a hit but not full stake. This is a monumental shift in risk management

    Massive change to the game. Glad I'm out of Messi and Ronaldo.



  • @Matt-FI Thank you for the explanation. You a MVP.



  • FI have shifted all that liabilty to the punter and added a huge chunk of of value via increased profitabity to the business ready for selling. And everyone is happy as the punters have a new toy to play with.



  • Presumably full order books will address much of this



  • @Hint yes a few solutions really.

    Enforce expiry dates.. Will keep the flow of shares and prices sensible and a way of taking shares out of circulation continuously so when a player reaches retirement there aren't still £££ worth in the market with no way of selling

    Bring back true IS... Even if its never as competitive as before. Users will still fill the gap but IS is there to allow prices to drop in a healthy way rather than mega long queues that will never sell (as all shares are depreciating assets over time)

    Stop releasing shares... Allow sell orders... Full OB system where the highest bid is the sell price and the lowest sell order is the buy price. (massive complications with this model having not been there from the start)



  • @Tom77

    When they reopened the market they tweeted that our patience hadn’t gone unnoticed... which I took to mean some sort of offer coming?!


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