I’m in the market for a new sofa for the orangery mind u so they might want to hand on “calling in the receivers” (nb companies do not actually call in receivers - their creditors appoint receivers)
We got one from them years ago and it has been awesome. I strongly suspect that they are now taking money off people for products which have not yet been made (fine, this often happens) but also from suppliers who are just not delivering. No idea of delivery dates 6 weeks after purchase with a 2-4 week delivery stated on purchase. Looked them up on Companies House and the two directors of the company are mid 30s. Smells very whiffy.
if you do it for small money on a betting exchange this is called gambling. If you do it for big money using an ISDA document opposite one of the big banks, it’s called credit insurance which is different.
think we bought our current lot from sofa workshop, which has also been bust at least once
it’s weird because custom built to measure sofas is definitely a thing for which there is a market - but the retailers go bust often. So often that they are see. as bellweathers - Lowndes Queensway (sofas to carpets) famously the harbinger of the early nineties downturn.
for most people a new sofa is a discretionary purchase I spose.
I strongly suspect that they are now taking money off people for products which have not yet been made (fine, this often happens) but also from suppliers who are just not delivering. No idea of delivery dates 6 weeks after purchase with a 2-4 week delivery stated on purchase.
This happened with Made.com. If you paid by credit card you could make a s75 claim if they do go insolvent without refunding you or providing what you paid for.
The most important thing being a derivatives lawyer is that rather than give the parties to your documents sensible names, you have to calm them Party A and Party B so that mere simpletons can’t work out what you’re talking about.
"but might you actually be in possession of Material Nonpublic Information?
If so — that complicates things "
Go on, explain the relevance of this in the context of a company which isn't traded on an equity market.
For the benefit of hanners who seems ignorant of what a private company and a plc are - a plc is also a limited company so the OP makes no sense but I think we've managed to work out what you were trying to ask.
Er,.yes, of course you can have an unlisted plc. Which is why the question "rather than" makes no sense so he doesn't "get there". Only been doing this for a quarter of a century but, well, detail.
In order for a derivative to have commercial sense wouldn't you need the underlying asset to be tradeable on some market somewhere. If you don't have that then how on earth will (a) the seller be able to deliver the asset, whether notionally or otherwise, at a future date, and (b) the buyer be able to to calculate their loss in the event the seller breaches their obligations?
You might get around it by agreeing some sort of a pricing mechanism in advance but it would be quite artificial.
Er,.yes, of course you can have an unlisted plc. Which is why the question "rather than" makes no sense so he doesn't "get there". Only been doing this for a quarter of a century but, well, detail.
They seem to be talking about a Big Short style credit default swap, which would just require the company to default and wouldn't require any "tradeable" underlying asset (?)
Not that I know what I'm talking about here but, even if it were possible to persuade a bank to enter into a contract like this with a random lawyer, I suspect a pretty fat fee would be charged. Hardly seems worth the grief and cost on a hunch.
Go on, explain the relevance of this in the context of a company which isn't traded on an equity market
Whoops. You’re obviously right. I just remembered this issue coming up on deals I was involved in in the past, but this one is different, as you rightly (and gleefully) point out
In order for a derivative to have commercial sense wouldn't you need the underlying asset to be tradeable on some market somewhere
I think that what GG says is correct
The instrument would have a specified term and — if during that term — there were an Insolvency Event (or whatever the applicable term is in derivative parlance) there would be a pay out in favour of our friend the Face guy
Btw — in my post above I referred to ‘naked’ short selling
This reference may also incorrect, if it’s the option seller (presumably Face guy’s counterparty) that has to own the share (and who knows, maybe Face guy’s counterparty is so bullish that he wants to bet on the company’s success via his shareholding and via the contract with Face guy?)
Anyway, I seem to remember that naked short selling was a big issue during the GFC (to which Gordon Brown objected), but I never understood why this was an issue if the underlying shares are not actually in play for the purposes of the trade
Naked short selling is an issue because the shorter will go bust if it doesn’t already have (and have paid for) the asset as the price of fulfilling the contract will, by definition, have gone completely the other way from the way they expected. Even if they are solvent, a GameStop type short squeeze could be triggered by all the short out of the money players trying to find enough shares to buy to meet their contracts, which then impacts every other derivative or contract for difference related to the share price, having unintended consequences.
One issue in the GFC (and earlier in the reinsurance market) is that everyone thought they were diversifying using derivatives, when in fact they were often trading with their own colleagues via intermediaries. This is the reason most derivatives have to be cleared now - the clearing house can see a participant’s overall position.
Also to the OP you are not really on to something. All sellers of large discretionary goods are feeling the heat now (Currys’ UK sales down 10+%, same for Halfords, BRC figures show non-food sales declining in even the most generous nominal cash terms) and you don’t have sufficiently up to date information to judge how it is impacting the retailer’s cash position.
If you want to short something, short the UK economy with an inverse UK exposed ETF. The Tories have created an undereducated workforce crippled by a weak currency and trade barriers with the country’s closest neighbours, with a massive debt burden that costs almost as much in taxes as the entire NHS, and an unfunded public sector pension commitment of £2 trillion.
You absolutely can have a derivative where payments are made by reference to something other than an asset that either party owns. You can have derivatives that pay depending on what the weather’s like.
Not a reg expert but struggling to see why MNPI is a relevant concept if listed securities not involved.
It's an interesting question but surely for all practical purposes the answer is "no." Assuming the OP just wants to have a relatively quick "punt" without spending too much money, in the way that you could on something like eToro.
I said for all practical purposes. Unless you find a random individual to take this bet then the type of counterparty that you need would either tell you to go away and/or only be prepared to do it with huge size and fees (?)
It's just a bet that they go pop (within a certain timeframe presumably). You'll just need to find someone happy to take the other side of the bet. Basically you need a bookie who is sufficiently confident as to the prospects of sofa.com to offer you some odds.
In answer to the OP, and having only skimmed the posts above, and assuming he is asking for himself as an individual and not on behalf of a company or family office:
If they are not traded on an exchange, there is no way to short the company's shares in the commonly understood sense (i.e. borrowing the shares, selling the shares, buying the shares back at a lower price and delivering them back to the lender). Neither would there be any option to enter into short positions on retail trading platforms.
A privately-arranged derivative e.g. a put option wouldn't work unless both parties could agree on some reliable means of valuing the untraded shares at the outset and the exercise date and (assuming they are a financial institution and not just another random punter taking the opposite side of the bet) the party on the other side had some means of obtaining the (privately-held) shares in order to hedge itself.
A credit default swap referencing the company or its debt obligations is feasible, but is not accessible to retail investors (you'll be like the two guys going into DB's lobby asking for an "I-S-D-A Agreement").
"Truth is like poetry, and most people f*cking hate poetry"
"Look at his eyes, I'll give you a hint. His name is Yang. He won a national math competition in China. He doesn't even speak English! Yeah, I'm sure of the math."
"Who are you, a drug dealer or a banker, because if you're a banker you can f**k right off."
"I was really asking if there was an easy and above-board way. I CBA with anything complicated."
There really is no way for you as a retail investor that I can see, easy or complicated. Other than Laz's suggestion to find another individual willing to take the other side of the bet.
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with a privately negotiated derivative instrument, yup
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I’m in the market for a new sofa for the orangery mind u so they might want to hand on “calling in the receivers” (nb companies do not actually call in receivers - their creditors appoint receivers)
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How much hassle and money would this be? How much would I need to bet?
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Quite a ballache unless you can find someone to take your bet on one of the exchanges.
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We got one from them years ago and it has been awesome. I strongly suspect that they are now taking money off people for products which have not yet been made (fine, this often happens) but also from suppliers who are just not delivering. No idea of delivery dates 6 weeks after purchase with a 2-4 week delivery stated on purchase. Looked them up on Companies House and the two directors of the company are mid 30s. Smells very whiffy.
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if you do it for small money on a betting exchange this is called gambling. If you do it for big money using an ISDA document opposite one of the big banks, it’s called credit insurance which is different.
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think we bought our current lot from sofa workshop, which has also been bust at least once
it’s weird because custom built to measure sofas is definitely a thing for which there is a market - but the retailers go bust often. So often that they are see. as bellweathers - Lowndes Queensway (sofas to carpets) famously the harbinger of the early nineties downturn.
for most people a new sofa is a discretionary purchase I spose.
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Recently watched The Big Short again on the plane. Great film. Feel like I know about ISDAs now.
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My favourite film of the last 20 years.
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This happened with Made.com. If you paid by credit card you could make a s75 claim if they do go insolvent without refunding you or providing what you paid for.
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The most important thing being a derivatives lawyer is that rather than give the parties to your documents sensible names, you have to calm them Party A and Party B so that mere simpletons can’t work out what you’re talking about.
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is Big Short the one with W.B Robbie in the soapy bath
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money to be made in any recession buying the brand of a bust sofaco I reckon. Just try to sell at the top.
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They are a Sports Direct company are they not?
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i feel like if more people know about this scene the GFC would be better understood.
she could run an entire public education series of films about the city
https://youtu.be/wlHrSZ7BVFI
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Heh.
./.
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desk may tip over here
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All the biros have just rolled off mine
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A naked short on Sofa.com
Interesting, but random
You talk about your ‘hunch’ and perusing the Companies House website, but might you actually be in possession of Material Nonpublic Information?
If so — that complicates things
PS — wasn’t there a guy, whose RoF name was Supes and who seemed like a decent fellow, who knew about derivatives?
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It’s tricky.
For the first time in a while, wot Laz said.
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“in a while”
😎
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i’ve not seen that film. that clip is sensational
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It’s all stitched together with a light enough touch to stop it getting too preachy.
There are some great liens too:
But wait, you *are* the bank, I mean, you work for the bank. I bet your margins are pretty nice and fat.
Let's not talk about my margins by the way. Being nice and fat... That's a nice shirt, do they make it for men?
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heh @ liens
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Heh
I’m trying to imagine what would constitute a great lien. It’s a difficult area to get excited about…
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"but might you actually be in possession of Material Nonpublic Information?
If so — that complicates things "
Go on, explain the relevance of this in the context of a company which isn't traded on an equity market.
For the benefit of hanners who seems ignorant of what a private company and a plc are - a plc is also a limited company so the OP makes no sense but I think we've managed to work out what you were trying to ask.
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Heh. If you don’t come in for your tea now kids, it’s going to charity.
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it’s not hanners buzz, it’s the homophobe fka as thomas pink sale
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ofc u can also have an unlisted plc so arguably the op gets there on the final 2 words, even tho “rather than” is inkorrekt
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Point about MAR only applying to instruments that are TOTV is fair play though
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Nothing spells thwarted ambition quite like an unlisted PLC being acquired by private equity
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Er,.yes, of course you can have an unlisted plc. Which is why the question "rather than" makes no sense so he doesn't "get there". Only been doing this for a quarter of a century but, well, detail.
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Oh, is this TPS? Isn't he, er, employed by a listed plc? Oh dear...
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There was a man
Shouting and screaming from an upper storey window
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In order for a derivative to have commercial sense wouldn't you need the underlying asset to be tradeable on some market somewhere. If you don't have that then how on earth will (a) the seller be able to deliver the asset, whether notionally or otherwise, at a future date, and (b) the buyer be able to to calculate their loss in the event the seller breaches their obligations?
You might get around it by agreeing some sort of a pricing mechanism in advance but it would be quite artificial.
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that’s just wot i sed!
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They seem to be talking about a Big Short style credit default swap, which would just require the company to default and wouldn't require any "tradeable" underlying asset (?)
Not that I know what I'm talking about here but, even if it were possible to persuade a bank to enter into a contract like this with a random lawyer, I suspect a pretty fat fee would be charged. Hardly seems worth the grief and cost on a hunch.
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Whoops. You’re obviously right. I just remembered this issue coming up on deals I was involved in in the past, but this one is different, as you rightly (and gleefully) point out
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I think that what GG says is correct
The instrument would have a specified term and — if during that term — there were an Insolvency Event (or whatever the applicable term is in derivative parlance) there would be a pay out in favour of our friend the Face guy
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Btw — in my post above I referred to ‘naked’ short selling
This reference may also incorrect, if it’s the option seller (presumably Face guy’s counterparty) that has to own the share (and who knows, maybe Face guy’s counterparty is so bullish that he wants to bet on the company’s success via his shareholding and via the contract with Face guy?)
Anyway, I seem to remember that naked short selling was a big issue during the GFC (to which Gordon Brown objected), but I never understood why this was an issue if the underlying shares are not actually in play for the purposes of the trade
But I may have misunderstood how this works
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Naked short selling is an issue because the shorter will go bust if it doesn’t already have (and have paid for) the asset as the price of fulfilling the contract will, by definition, have gone completely the other way from the way they expected. Even if they are solvent, a GameStop type short squeeze could be triggered by all the short out of the money players trying to find enough shares to buy to meet their contracts, which then impacts every other derivative or contract for difference related to the share price, having unintended consequences.
One issue in the GFC (and earlier in the reinsurance market) is that everyone thought they were diversifying using derivatives, when in fact they were often trading with their own colleagues via intermediaries. This is the reason most derivatives have to be cleared now - the clearing house can see a participant’s overall position.
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Also to the OP you are not really on to something. All sellers of large discretionary goods are feeling the heat now (Currys’ UK sales down 10+%, same for Halfords, BRC figures show non-food sales declining in even the most generous nominal cash terms) and you don’t have sufficiently up to date information to judge how it is impacting the retailer’s cash position.
If you want to short something, short the UK economy with an inverse UK exposed ETF. The Tories have created an undereducated workforce crippled by a weak currency and trade barriers with the country’s closest neighbours, with a massive debt burden that costs almost as much in taxes as the entire NHS, and an unfunded public sector pension commitment of £2 trillion.
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No
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And I'm not employed by a PLC, listed or otherwise.
HTH
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You absolutely can have a derivative where payments are made by reference to something other than an asset that either party owns. You can have derivatives that pay depending on what the weather’s like.
Not a reg expert but struggling to see why MNPI is a relevant concept if listed securities not involved.
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Pinko, see my thread addressed to u re monitor ta
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It's an interesting question but surely for all practical purposes the answer is "no." Assuming the OP just wants to have a relatively quick "punt" without spending too much money, in the way that you could on something like eToro.
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no, the answer is not no, the answer is as per the above - yes if you can find a private counterparty willing to take your bet
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I said for all practical purposes. Unless you find a random individual to take this bet then the type of counterparty that you need would either tell you to go away and/or only be prepared to do it with huge size and fees (?)
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It's just a bet that they go pop (within a certain timeframe presumably). You'll just need to find someone happy to take the other side of the bet. Basically you need a bookie who is sufficiently confident as to the prospects of sofa.com to offer you some odds.
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congrats on the new job pinko 👍
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In answer to the OP, and having only skimmed the posts above, and assuming he is asking for himself as an individual and not on behalf of a company or family office:
If they are not traded on an exchange, there is no way to short the company's shares in the commonly understood sense (i.e. borrowing the shares, selling the shares, buying the shares back at a lower price and delivering them back to the lender). Neither would there be any option to enter into short positions on retail trading platforms.
A privately-arranged derivative e.g. a put option wouldn't work unless both parties could agree on some reliable means of valuing the untraded shares at the outset and the exercise date and (assuming they are a financial institution and not just another random punter taking the opposite side of the bet) the party on the other side had some means of obtaining the (privately-held) shares in order to hedge itself.
A credit default swap referencing the company or its debt obligations is feasible, but is not accessible to retail investors (you'll be like the two guys going into DB's lobby asking for an "I-S-D-A Agreement").
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"no, the answer is not no, the answer is as per the above - yes if you can find a private counterparty willing to take your bet"
so, as per my previous post, he's looking for a random punter willing to bet the opposite way to him.
any takers?
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I was really asking if there was an easy and above-board way. I CBA with anything complicated.
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Other great liens:
"Truth is like poetry, and most people f*cking hate poetry"
"Look at his eyes, I'll give you a hint. His name is Yang. He won a national math competition in China. He doesn't even speak English! Yeah, I'm sure of the math."
"Who are you, a drug dealer or a banker, because if you're a banker you can f**k right off."
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"I was really asking if there was an easy and above-board way. I CBA with anything complicated."
There really is no way for you as a retail investor that I can see, easy or complicated. Other than Laz's suggestion to find another individual willing to take the other side of the bet.
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