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You're coming at it from the angle of, practically speaking, what do large exchanges require from their listers to agree to the process? While I'm talking about

by beaner 5y ago

You're coming at it from the angle of, practically speaking, what do large exchanges require from their listers to agree to the process? While I'm talking about the literal definition and pure concept of a DPO. There's no reason such high early liquidity is mandatory.

darawk 5y ago
Sure in a theoretical world that doesn't exist you could have a DPO where nobody sells any shares. I'm not sure what relevance that has to our evaluation of the actual world that exists, though.
- beaner 5y ago
  You haven't heard what I've said. My point is not that in the real world a market would exist without sales occuring (even though that is true). My point is that the idea that some people "must" sell shares for there to be a market is false. "Must" implies: regardless of price. If sales are not sold at opening-market prices, what happens is that offer prices increase until they are attractive enough to be filled. This is a fill by mutual market price-discovery interest, rather than a fill by obligation. ("Must.") My point is that "must" is incorrect, because even without it, trades would take place. The idea that some group of insiders need to agree to liquidate no matter what on the first day is wrong, because natural market dynamics would incentivize it to happen anyway.
  - darawk 5y ago
    > If sales are not sold at opening-market prices, what happens is that offer prices increase until they are attractive enough to be filled. This is literally exactly what happens in a direct listing. There is no obligation anywhere. Each person selling is selling because the price offered is attractive to them. It's not that a group of insiders has to liquidate because there's a DPO. It's that there's a DPO because a group of insiders wants to liquidate.
    - beaner 5y ago
      This is not what you said. You said: "He sold a small fraction of his holdings, so that there would be shares to trade."

by beaner 5y ago

darawk 5y ago

Sure in a theoretical world that doesn't exist you could have a DPO where nobody sells any shares. I'm not sure what relevance that has to our evaluation of the actual world that exists, though.

beaner 5y ago
You haven't heard what I've said. My point is not that in the real world a market would exist without sales occuring (even though that is true). My point is that the idea that some people "must" sell shares for there to be a market is false. "Must" implies: regardless of price. If sales are not sold at opening-market prices, what happens is that offer prices increase until they are attractive enough to be filled. This is a fill by mutual market price-discovery interest, rather than a fill by obligation. ("Must.") My point is that "must" is incorrect, because even without it, trades would take place. The idea that some group of insiders need to agree to liquidate no matter what on the first day is wrong, because natural market dynamics would incentivize it to happen anyway.
- darawk 5y ago
  > If sales are not sold at opening-market prices, what happens is that offer prices increase until they are attractive enough to be filled. This is literally exactly what happens in a direct listing. There is no obligation anywhere. Each person selling is selling because the price offered is attractive to them. It's not that a group of insiders has to liquidate because there's a DPO. It's that there's a DPO because a group of insiders wants to liquidate.
  - beaner 5y ago
    This is not what you said. You said: "He sold a small fraction of his holdings, so that there would be shares to trade."