Football Index November 2020 Update:
Reaction & Breakdown
Table of Contents
I’ll be the first one to admit, it’s been a difficult time on the index over the last 2 months. Over this period, we’ve seen the removal of the reliance of Football Index buying shares themselves, with the emphasis now on a peer-to-peer market.
During this time, there has been issues with Liquidity, which has bled onto the market in fast fashion. We’ve been on the decline during this period, with some users leaving the platform due to frustration.
We’ve had a product update from Football Index, which I will break down below. It’s quite informative, and hopefully it contains the elements which will bring positive sentiment to the market, alongside a solid plan of action!
Football Index have added two new methods of helping you calculate your portfolio average. In addition to the Buy Price and the Mid Price estimates, we have the following:
Average Offer Price: The average price of all shares that are offered for sale. This price will be refreshed hourly.
I haven’t seen this in action yet, but I would expect some price swings from using this estimate. It’s something that I anticipate would affect the more expensive players, as there’s more shares in circulation (meaning there are more to put up for sale).
90 Day Traded Average Price: The Average price of every share that’s been traded, during a 90 day timeframe. Again, this is refreshed hourly.
Another interesting one, this would give traders a pretty good estimation of their portfolio value, as it bases it on trades that have been completed.
Again, it’s open to fluctuations, especially if a player was to get injured and see his price drop.
On Thursday 19th November, every traders portfolio will be set to the new average offer price function. This should offer a more stable pricing structure, which I hope will cause for less panic on the platform.
Ready to Start Trading?
When you register at Football Index, you can claim a special offer. This will enable you to trade risk free, where any losses up to £500 are refunded, as cash. Remember to use code FIA when you sign up.
The market depth feature that will be added, will show five levels of Bids and offers for each player on the platform. This means that traders will be able to see exactly how many shares need to be purchased, or sold, in order to change the value of a player.
Although this feature is definitely required, I would have liked to have seen a full market depth, not limited to five levels. It’s highly likely here that we will just see five, one penny increments and still not get the feeling of the actual depth of the market.
I hope the five orders is for a limited time, whilst they test the rollout of the new feature.
A Circuit breaker is when Football Index suspend the market, due to extreme volatility. This could occur when a player suffers a nasty injury, or announces a shock retirement. I’m sure there are more causes too, but you understand the type of thing that I’m trying to explain.
These circuit breakers will help to prevent a scenario where a players price immediately drops, due to a high number of traders deciding to list the shares at the same time.
The ‘timeout’ period would enable traders to wait and properly evaluate their position. The idea of this is to prevent you making a rushed decision, which could cost you your profits in the long term.
Average Offer Price
Football Index are adding an average offer price next to every players buy and sell price. This will work out as the average price of the cheapest 900 shares that are offered for sale by traders.
This has been added as a sentiment monitor, so traders can further understand why a player has changed price, up or down.
Nasdaq, IPO’s & Media Monitor
Nasdaq has actually been used on the backend now, with Football Index having successfully used the technology for matching bids.
This is something that we won’t actually notice, as it’s a backend change. However, the Nasdaq update is something which is seen by many traders as a vital, core change.
It won’t bring any new traders in, although this can make it easier for liquidity providers… to provide liquidity.
Auction Styled IPO’s have been mentioned too, although it’s probably still on the backburner. Football Index have quite a lot of things required, and at this point I don’t think new players are vital.
The new media monitor has also been placed ‘on hold’, due to the pressing issues with the matching engine. FI have adknowledged this and will provide an update moving forward.
Trading Restrictions Eased
The market will change on the 19th November 2020, with a new limit to the offer zone.
Instead of being £0.01 below the buy now price, the Offer Floor will be lowered to £0.01 above the instant sell price.
Where there is no Instant Sell price, the floor of the offer zone will be £0.01 above the floor of the bid zone.
The upper limit of the Offer Zone will be £0.50 above the Buy Now Price. This will continue to be the average of the 900 lowest shares that are for sale.
The maximum offers permitted will remain at three, per player.
Commission on Bids
The 2% commission on bids will be implemented on the 19th November. However, there’s a twist.
Traders that submit bids will have their commission refunded, provided they match instantly. You will only pay commission if your bid is sat on the exchange, waiting for a match.
This will allow traders to place bids, knowing that if they bid above the buy now price, they won’t pay commission.
Commission is charged the moment that the bid is placed, to avoid traders having any negative balance. If you decide to cancel the bid, the commission is also refunded.
My Thoughts & Reaction
It’s going to sound like I’m being a little defensive of Football Index, but I honestly didn’t expect too much from this announcement.
You can read that two ways, as it can also be portrayed as a lack of confidence myself, in the current times.
I’m not quite certain what some traders were expecting, but they haven’t taken the update well. It wouldn’t be too surprising to see that they expected dividend increases, or deposit bonuses.
However, that’s not what this market needs. We need liquidity.
It’s also incredibly difficult to measure just how much of an impact the pandemic of COVID-19 is having on this market.
Overall, things are changing on Football Index and they will do for some time. I’ve become used to my portfolio figure, although it’s around 23% less than it was before Order Books.
Since starting writing this, I’ve also noticed that SportStack have introduced their Career markets. This is a dividend structure similar to Football Index, which I believe can be fantastic for our platform.
With Competition, FI will have to improve. This will bring about positive changes as both platforms look to get the upper hand.
As always, I am going to back Football Index to make the correct changes. We need liquidity though, first and foremost. It’s not good seeing the premium holds with no sell price. We need liquidity.