Hi John, I felt moved to respond (inline below) to some points you raised. However, before reading further, please see:
http://www.wikipedia.org/wiki/Exchange_rate ******** John of Cambist said on Wednesday, June 25, 2003 11:43 AM: [...] > When Omnipay instituted their new "straddled spread" pricing > policy (meaning > they charged on both inexchange and outexchange instead of > selling at spot + > x% and buying back at spot) I wrote a letter to Doug Jackson > and others at > e-gold/Omnipay recommending that they not follow this policy, > and that it > was more important to e-gold's circulation to support a > policy to buy at > spot. It used to be that $1,000 worth of e-gold would get you > $1,000 US from > anyone, but now it gets $990 or $980 depending on if you use a regular > provider or Omnipay. That has some users, like your customer, > wondering. Please observe that: If you exchange USD for EUR, the market maker captures a spread. If you exchange EUR for USD, the market maker captures a spread. If you exchange GBP for EEK, the market maker captures a spread. If you exchange EEK for GBP, the market maker captures a spread. If you exchange AUD for CAD, the market maker captures a spread. If you exchange CAD for AUD, the market maker captures a spread. [etc, regardless of exchange cross, regardless of market maker] Market Makers straddle spot to... 1) minimize exchange rate risk so that... 2) they are less likely to lose money and... 3) more likely to make money This practice has been a commonplace long enough to border on common sense. For these reasons, if you choose OmniPay as an exchange counterparty: If you exchange USD for AUG, OmniPay captures a spread. If you exchange AUG for USD, OmniPay captures a spread. If you exchange JPY for AGG, OmniPay captures a spread. If you exchange AGG for JPY, OmniPay captures a spread. If you exchange AUG for PDG, OmniPay captures a spread. If you exchange PDG for AUG, OmniPay captures a spread. [etc] > Back in November I also predicted that eventually exchangers > would migrate > to -1% outexchange fees, and they would also have to lower > their inexchange > fees, Wow, me too! :) I have faith in other people's common sense... > although some companies pledged to continue accepting > e-gold at spot > and charging 4%+ on inexchanges because their customers > valued their service > that much. Some companies *still* have Asks of 15% above Spot for credit card Remittances. Risk associated with Remittance method should *definitely* be factored into the spread of any business who'd like to live to see [fill in the blank with your preferred annual holiday]. e-gold may be non-repudiable, but payments rendered by most other payment systems are not! Why would a business that accepts repudiable Remittance methods try to match the InExchange rates of OmniPay, who has not accepted any repudiable Remittances since 2000? > Instead, most exchangers have lowered their > inexchange rates and > now only buy back e-gold at -1%. The new policy also put the > squeeze on > exchangers because when Omnipay lowered their rate from 5% to > 2% but they kept the wholesale e-gold > rate at 1%. Corrections: 1. OmniPay's retail Ask for AUG was previously 4% above Spot and was lowered to 2% above Spot at the time OmniPay straddled Spot. 2. OmniPay's wholesale Ask for AUG was previously 2% above Spot and was lowered to 1% above Spot at the time OmniPay straddled Spot. > This > means that to match Omnipay's prices your margin went from 4% > (5%-1%) to 1% > (2%-1%). You are using the wrong OmniPay numbers (see above): 4 - 2 = 2 2 - 1 = 1 plus your argument is oversimplified anyway since it: 1. Assumes that exchange services obtain all their AUG on an external market rather than acquiring some portion on their own market on their own terms. 2. Assumes that other exchange services must match OmniPay's rates to get business. > I think due to this in part several exchangers have > closed their > business or sold their business, and I hear a few other exchangers are > wanting to sell out. > > I haven't ordered straight from Omnipay for a little while, > but if they no > longer offer a wholesale rate, that puts additional pressure > on providers. OmniPay still offers wholesale InExchange rates to accredited exchange services provided they meet wholesale minimums. Your business is always welcome. If/when we make any modifications with regard to rates that affect our wholesale customers, we will notify them via the private OmniPay list they are all subscribed to (so you should be among the first to know). > I > said last year the new pricing structure would force many > providers out of > the market, and maybe that was Omnipay and e-gold's goal, I > don't know. OmniPay does indeed have competitive impulses, tempered by these facts: 1. Some of OmniPay's best customers are other exchange services 2. OmniPay is a service of G&SR, who serves as Operator of the e-gold system. 3. There is an intersection between the set of G&SR Directors and the set of e-gold Ltd Directors. 4. e-gold Ltd totally agrees (see your comments below) that a vibrant, diverse exchange market for the currencies it issues is and will always be in its best interest. 5. G&SR bootstrapped the worldwide exchange market for the currencies e-gold Ltd issues by offering sweetheart deals to those who were willing to hang out their shingle and make a market. Perhaps you could view our recent Spot straddling move as "tough love". :) Or if all that mushy stuff grosses you out, try this: When you think of e-gold, think... AUG When you think of e-silver, think: AGG When you think of e-platinum, think: PTG When you think of e-palladium, think: PDG Then reread: http://www.wikipedia.org/wiki/Exchange_rate > I > never got any response to the issues I raised in my letters. > I think e-gold > needs a vibrant exchange provider network for worldwide > coverage and for > providing a wide variety of ancillary services. > I will also say that > Omnipay's pricing methodology isn't exactly transparent on > how many percent > you are paying on outexchanges unless you work out their > rates compared to > spot with a calculator. [...] OmniPay Bid, Ask and Spot are posted here: http://www.omnipay.net/currentexchange.asp Applicable rates are also quoted on preview screens (for all types of exchange) prior to confirmation, as are OmniPay's precise fulfillment amount expressed in the currency units applicable to the fulfillment amount. And in the unlikely event the User doesn't know what calculations to perform on his calculator [:)], we specifically provide these on OmniPay preview screens as well. [Ever since we started straddling Spot - not in response to this post!] That's pretty transparent! Regards, Reid Jackson Managing Director, G&SR Director, e-gold Ltd P.S. Want to part with e-gold AUG at Spot? Then buy a book, or a pocket knife, or a magazine subscription, or webhosting, or handmade jewelry, or a vacation to the Caribbean, or a coffee maker [or whatever...] from one of the many merchants who prefer Better Money (TM). Exchange services aren't the only businesses that accept AUG! P.P.S. Want to lay your hands on e-gold AUG at Spot? Then *accept* (nay, prefer!!) e-gold AUG for your goods or services. Technically proficient or have the means to pay somebody who is? See: http://www.e-gold.com/unsecure/sci_home.html Prefer to leave the more arcane technical stuff to somebody else?: http://www.mals-e.com/support/egold.htm P.P.P.S. Read the disclaimers: http://www.e-gold.com/unsecure/links.htm ... Perform your own due diligence, use your best judgment, be slow to trust (then never all the way), always... --- You are currently subscribed to e-gold-list as: [EMAIL PROTECTED] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
