Hidden Commission in the ME
I genuinely apologise if this is a topic talked to death. I wasn't around much when ME was introduced and have not seen it discussed. If it has, move on and just put this down as a doofus moment :)
I am trying to sell one player at the moment whose current buy price is 1.63 and his IS is 1.40. Not very nice at the moment. So I went on our seller thread and someone said they would take him at 1.54 which was nice. Then I realised because I dont need to get rid of 300, the IS price would be lower than 1.54. But if I IS at this lower price, he would still be paying 1.54. So where does that money go?
I have just run some basic numbers on the assumption that there are 100 offers at 1.54, and 200 at 1.40 (for sake of argument). When I do this I get the following:
This means from a 154 pound purchase, FI would keep 12.2 pounds, which is 8%! And that is on todays terms and not taking into account the further 2% they will be adding on so in reality they would be taking 10% of this.
I just wanted to see whether people are aware of this because I certainly wasn't!
Splurger_Dan last edited by
@Dr-Jan-Itor dont think that's how it works. The purchaser can get a lower price than they bid but not a higher one. That's why it says 'accept price movement'. So I think whatever price you get(before commission) is what the seller will have paid unless it's a gremlin in the ME.
@Splurger_Dan Thanks for the response. I'm not suggesting though that the purchaser spends more than they originally signed up for.
But to clarify. If person A puts in a bid for 100 futures at 1.54 which creates an IS at 1.45. And then person B IS 100 at 1.45. Does person A then get 100 at 1.45? I thought they still got them at 1.54 which they offered at?
@Dr-Jan-Itor Highest bids are always matched first.
If there are the following bids placed
The IS price will show as £1.40 as its the average but if i then want to sell 50 and click that IS price of £1.40 I actually sell them for £1.50 and the average buy price will drop and show about £1.38.
If im the buyer i will only get the shares for whatever i offered so if my bid was the one at £1.50 then i will have received 50 shares, if im the one at £1.40 regardless of whether I placed it prior to other bids my order remains unmatched
In your above scenario you will have received £1.54 as long as the person how placed the bid order was honest and placed a bid for 100@£1.54. If they placed email@example.com and firstname.lastname@example.org you will have received the corresponding amounts
@Black-wolf Just did a test with 1 future. You are right, thanks! Move along.
@Dr-Jan-Itor when selling do so in batches so you dont get caught out from lack of depth. A 300 share average isnt a great indicator of depth. Ive had some absolute bargains from placing low ball bids way under the IS price because the are likely getting matched off the tail end of someone ISing 300 in one go
@Black-wolf Cheers man. Ive been fortunate that my port has performed very strongly the last few weeks so haven't needed to sell since ME came in. But it is at that stage where it needs a restructure so extremely helpful and good advice! Thank you