Shoots, I made a mistake.
I assumed the buy-back period NAV/U -2% for the buy-back price instead of the daily NAV/U -2%. So now I understand period NAV/U is just for the period's ask/sell price, not the buy-back basis.
So period's NAV/U+3% for SELL and daily's NAV/U-2% for BUY-BACK.
Well that changes EVERYTHING in my spreadsheet.
Okay a test then. If the daily NAV/U rises substantially above the period NAV/U, would you change the price of the B.EXCH to the higher NAV/U + 3%? Why wouldn't the sell price be based on the daily and not the period's as it is now?
Good questions! If the daily NAV/U rose substantially over the period NAV/U, I probably wouldn't change anything. Though I have my catch-all in the contract (everything will be done in the spirit of the contact, etc, etc.) there's technically no reason that I would have to change anything.
People would be free to purchase 'cheap' shares of B.EXCH and sell them back at the higher price, netting them a profit. They could do this until the B.EXCH price and the Daily NAV/U less 2% converged.
It would be similar to the times when the bids on MINE/SELL get too high - people buy EXCH and sell the market down until there's no profit to be made - it's a remarkably self-regulating system.
Regarding selling EXCH at the Period NAV/U instead of the Daily NAV/U - this is really just a matter of convenience and feasibility for me as the manager. I'm around most days to issue the report around Noon (something that I wasn't intending to do every day from the get-go, but I see why people want it). However, some days I'm out of the office / house and I wouldn't have a chance to change the EXCH price at Noon.
If I missed it, then there would be the issue of some people having paid too much for EXCH, etc. etc. In a perfect world, I prefer for it to change this way, but it's just not feasible within the bound of Havelock's system. Deprived, who ran DMS, did it this way (he also had to pay divs manually) and there were constantly issues because everyone just can't be at the computer at the same time every day.
The last-round (Day 10+) B.EXCH buys are what really add to the NAV/U - this added value just gets paid to SELL holders at the end of every round though as the fund's excess capital is bled off though, correct? So really, the issue is only an intra-round concern and not a round-to-round anomaly. If people want to buy B.EXCH rather than purchase lower-priced MINE and SELL on the open market, why bother to regulate this? SELL shareholders ultimately benefit as this type of action re-fills the fund to the 200 day required reserve - anything in excess less the 2% mgmt fee is just gravy for SELL holders.