Liquidity; Why it matters & how you can help find it?

  • Liquidity, why does everyone talk about it as the solution to the current market malaise? It’s what lubricates a function market, what allows traders to trade & what attracts investor types to buy into the attractive dividend yields on offer. Yields are demonstrably the highest & best value (given the relative low player prices) they have ever been but only an idiot would buy into them if there was no prospect of a future exit strategy for that money. Why do only idiots send money to that Nigerian Prince who’s offering unbelievably returns on the money he wants you to send him to trigger the payment? Great yields are nothing without liquidity or the prospective of it being sustainable. The FI market has slowly been bleeding liquidity since the start of the year & it will only get worse unless some action is taken. This is why most players have no IS price right now.

    Why was FI so popular & successful previously? largely due to FI backed IS, which in effect provided a guaranteed exit, at a reasonable price in almost unlimited supply, in other words certain liquidity both now & in the future. This is understandably a model many traders hanker to return to, either permanently or even temporarily, but the bad news is FI has withdrawn it & it won’t be returning EVER, it’s the past. There were good business reasons to remove their IS liability & transition to an order books model but they have managed the change woefully & ineptly, to the point of bringing a successful, booming product to its knees but it can still be saved. How? Liquidity; FI could provide it along the lines of the old model, even a scale down version but they can’t/won’t/aren’t it doesn’t really matter as the problem is too serious & has gone beyond the level of help FI/MM/LP1 could resolve anyway. Any level of IS they provided would just be taken by the queue of frustrated & disillusioned sellers who have finally lost patience with the way they have been treated & who could blame them.

    The ONLY SUSTAINABLE solution is for liquidity to come from traders & it’s in our own best interests to provide it, as we not only benefit most from it, we also take control of the market from FI (who used to control it by setting market & IPO prices through determining IS levels). Who would you rather trust setting prices traders or FI, given their woeful recent track record? The size of the market was £125m not long ago & whilst I suspect it has dropped to maybe £80/90m now that all represents traders money invested in current players, so is a substantial amount (vastly more than FI or any market maker could muster), that if only a fraction of it was freed up it would create the liquidity which is the lifeblood of a properly functioning market.

    How can we access that cash, most of which is currently stuck in illiquid holds, many of which have no IS or exit price at all? This where FI’s help is required as they need to make the market function better by bringing buyers & sellers closer together by simultaneously making buying & holding players more attractive & incentivising sellers to lower their asking price. It can be shown by the new “average offer price” display that many players have a disconnect between what sellers want to sell for & the price buyers are willing to pay, as an example Sancho has a market buy price around £7 but average offer price around £10, this gap needs to close to generate liquidity.

    Sellers can be persuaded to lower their expectations by offering them a realistic exit option into cash, buyers can be persuaded to pay more by making the player more attractive to hold, which is where FI need to act. Most players can only derive any value from IPD’s (as they’re unlikely to be challenge for PB/MB/TOTM) so these need to enhanced. The 5x promo demonstrated how a player price rose, often rapidly when getting G/A/CS, this increased demand was buyers chasing the more attractive IPD eligible dividend yield, so FI need to return to this as the temporary answer. It can be achieved with increased payouts, extended period of eligibility, non market refresh option, buying/selling to yourself to regain eligibility or a combination of any/all these but an extra, boosted reason to buy these players will mean increased demand, which in turn will allow sellers a more realistic exit price & start to free up liquidity. Other traders have suggested a temporary “credit IS price” that allows sellers to exit a player for an FI backed IS but into a reinvestable credit (that could then buy another player but NOT be withdrawn) rather than cash, I see some merit in the principle but it does add further complexity to an already increasing complex product, however, I’m willing to consider anything that can help.

    We could also generate the required liquidity from new or existing users depositing further cash into the market, now this has always traditionally been FI’s answer (deposit or net spend bonus’s) but I would suggest that this route is rather unlikely given the current state of negative sentiment towards how the platform has been mismanaged. There are however many creative ways to add liquidity & start to regenerate the essential confidence & positive market sentiment that will revive the current turgid, illiquid market, obviously the return of proper football matches is an ideal time to capitalise on this new dawn but it does require some leadership & strategic direction from those at the top of FI, which has been clearly lacking recently but if you want or even need FI to survive & flourish again, even if only to achieve an acceptable exit strategy, you can help by sending any or all of these suggestions out on social media, slack, discord or directly to CS, many voices are more likely to see the correct action taken.

    So be like water & attack this common liquidity problem from as many angles as possible, add your own solutions & we can all help turn around the current s***show.

  • @Geronimo159387 have you passed this on to the powers that be?

    I was watching @Noirx4 stream yesterday and a so called insider spilled the beans about issues FI are having with NASDAQ and MMs. They sound like they could do with all the solutions they can get hold of.

    Dont suppose FI called you or @Coriolanus yet?

  • @Westy

    @Noirx4 Stream was a fantastic watch (anyone who has a spare 4 hours! could do far worse than give it a watch IMHO), he & guests speak a lot of sense, I agree with most of what was said. Regarding the ex employee, almost everything that he said in the comments box chimes with my understanding of both events & expected timeline, so albeit with the caveat he was not verifiable, I see no reason to disagree or disbelieve any of what he wrote.

    I have long held the belief that FI senior management have done a great job getting the concept to where it was at the start of this year & now, for the good of everyone involved, that they need to step aside to allow a new team to reestablish a growth path for the future. I think my belief has been both vindicated & thoughly justified by how the last 10/11 months have been played out.

  • There definitely needs to be some sort of upward pressure on prices. I don't think encouraging those who've put players for sale at higher prices should be encouraged to drop their prices - it's upward, positive momentum we need, closing spreads and giving a reason to buy at the buy now price.

    I agree some sort of extended or increased IPD payout would definitely help this. At the other end of the market, I feel a beefed-up TOTM offer would help to reward those traders in long-term top-end holds and would also in turn stimulate the lower end/IPD players as divs get reinvested.

    Lots of people are complaining about the 2% commission on bids, but as spreads close this will also be a further incentive to go straight in at the buy price, and will hopefully stimulate some price rises. I personally can't believe traders are being so bitter about the 2% commission given the absolutely outrageous and stingey bids some people put in!

  • Im not usually a fan of "in house credit" however in this situation, its better than a boot in the balls. Anything to help free up dead money, the hit sucks but right now some great talents out there who have a "fair" chance of winning divs for their price right now.

    Not saying you should chase loss's, but in some situations its prob better to cut and run and try and fix the damage with a better hold who has more potential. Rather than wait on the year + it might take for that hold to recover.

  • Great post I fear though FI are not listening, still not sure whether to remain patient or bail out.

  • @Kanzz it certain cases I would cut and run, but there is no way I'm selling certain players for the prices being bid at. Is the downward pressure due to the bid floor being too far from the buy price you think? Some thread on here said they should scrap the bid zone, where I would think making it tighter would help sellers and get this shit moving

  • @Mick-The-Pie I'm the same now , but cant go this far and leave can we?

  • @Geronimo159387 cracking post

  • @Geronimo159387 great post 👍

  • @Geronimo159387 good stuff dude.

    the liquidity is going to start with a beer later and a closer look at what's going on for the weekend.

  • @Geronimo159387 Great post, very good read. Hopefully the return of domestic football brings with it some great matches, lots of goals and loads of IPD!

  • @AndydfopT Out of 22 holds most all negative, only 2 I'd maybe cut and run on. As I know by the time they get back to being good holds I prob could have did alot better with the money elsewhere.

  • They gonna have to do something, Literally all thats being achieved is the same queues / stand offs just at a lower price points.

  • @Geronimo159387 Agree with this and well spoken. As one who suggested the idea of credit that must be reinvested, I thought I would add the link below where I suggested it for those that missed it. Agree it is a bit complex and a bit clunky, but right now would take anything that works. I also agree with lots of the other solutions. Whatever the case it needs to be a multilayered solution given the amount of cash that needs to be unlocked and the variety of strategies and motivations from traders. One fix won't fix all.

    The bit about NASDAQ and MMs from @Westy is interesting, and sadly not surprising anymore. Though I feel very frustrated by this. The change to order books feels like it was largely done to appease either existing whales, or to get those big $$$$ investors/institutions on board. Presumably on favourable contracts which I personally have no issue with as we all benefit from them investing. BUT what is frustrating is that they should have been ready to go, contracts agreed at least in principle, and not much of a gap between implementation of order books and them getting invested. Yet apart from LP (which may be a FI subsidiary anyway?) they are not here. And we've been in the order book stage for months now even if all the different bits weren't sorted. It's not like this has been the first week of it and we are jumping the gun, they've been implementing it for months.

    So all they have done is piss of a large proportion of their existing user base, slashed their portfolios, and the people they want to get on board aren't here anyway. Now they be just waiting for NASDAQ full integration which is fair. But then did they still need to put us through this with their own in house tech (which they botched)? And even if I were to give them huge benefit of the doubt, and that it was all a necessary evil and that NASDAQ will bring them on board, they still haven't even told us when NASDAQ is happening!!! We have no idea when this ends. It could be days away. it could be months away. Well they did actually tell us when I forgot. It will be happening two months ago according to Adam.

    I also find it interesting in their latest comms that they say "In response to your feedback" and then proceed to list a bunch of changes that have barely been mentioned by the community, if at all. If they really were going to listen to our feedback, they would be hearing an awful lot about liquidity. And not just complaining about it. But lots of constructive ideas on how to improve it. Given every change they have made has only dipped the market further, maybe it is time to listen to these ideas? Not all are a winner, but there is plenty there to work with.

    And you touch upon a really good point, that it is traders that need to get us out of this. It's one of the questions I've asked those that are super positive and saying the market is gonna flatten and boom. And that is, where is the money coming from to do that? If most people are largely sitting on their ports except for IPD refreshing (which polls have shown the majority are happy to sit), and that there aren't any big liquidity providers coming (which may be a drop in the ocean anyway), and there isn't a huge amount of fresh cash around due to Christmas coming up +COVID, then what money is gonna push it onwards? I'm sure there is answer there, but to me right now it is really unclear.

  • @Dr-Jan-Itor Sorry I didn't credit you with the IS credit swap solution I hadn't seen your original post, just heard the idea on a podcast, so credit where its due, I agree anything that can help must be explored.

    On NASDAQ I have always suspected that the main problem was integrating it with/onto FI's platform, I'm not an IT expert but I know what seems simple in principle can be fiendishly difficult to achieve in practice & that seems to have been confirmed on the Noir livestream. The idea that we could still be 9 months + away from it arriving, if ever, seems plausible given FI's woeful past record on delivering what has been promised. Which is why sustainable market liquidity is vital to maintain the platform in the interim, however long that NASDAQ tech might take. Any delay is bitterly disappointing as it would open a myriad of exciting future growth tools & options but we need to deal with the in house system that currently operates, not the place FI promised, as it doesn't exist & may never.

    Ultimately FI need to build a future around their existing traders, not one for some potential future band of high fliers, because if they continue to neglect & abuse the current userbase as has happened recently there may well not be a platform to build from. I know FI are currently in a strong financial position, have a great product idea but are suffering from woeful mismanagement, so if we can all collectively improve the latter & at least stabilise the market, then everyone will benefit long term.

  • @Geronimo159387

    I've gamed out various 'Store Credit' type schemes in the past and I think they could work but agree with you that it adds a layer of complexity and the product is already far more complicated than it should be. I think the latest Rebate idea was a worthy attempt by FI to inject liquidity. If they just beef that up a bit.... it could fix the problems.

    Step 1.) Make it 5% commission on all buys and 5% on all sales for a year**

    Step 2.) Give a 9% Rebate for a year

    Step 3.) Stagger the days that people receive their rebate, so that there's a sizeable amount of dividends hitting the market every day rather than once per week

    Obviously the 10% commission would sound bad, but you'd be getting 9% back,

    I'm sure there's flaws with what I'm saying but I'd like to see it in action.

  • @Toptom give it a bit of time. There are no reasons to rush the buys right now. We now have a better operating market than we did a few weeks ago in my opinion. A few weeks ago, in the early ko we saw Bruno go down in price after having a score of 200+ at half time. Tomorrow's early kick off sees Newcastle v Chelsea. In this new market we will now see rises if the same was to happen (such as Werner or ziyech score a brace and have 200+ at half time. Ofcourse they will come back down if they went on to post a mediocre score but that's how it should be) as long as we see rises for good performance that will bring back atleast some confidence. We all want it to go back to rockets but unfortunately it's going to be a slow process but I think if you believe in the players you hold be patient and sell on the spikes

  • Great article and FI need to restructure the management team as they are a shambles, there are some wise people on this forum who could give them plenty of brain storming ideas to get the index and company back on its feet but do they ever listen NO

  • @Geronimo159387 Might be a good idea for you to send your suggestion to as there is a high chance of information getting lost on the forum with nothing happening.

Log in to reply