Financial Exchanges

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MarvinS

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Are any forms of financial fixed odds or binary exchanges doomed to failure?
Betfair seems to of rapped up the exchange market and are roumered to be listing at between £500m to £700m. Is there any room for financial exchanges?
 
Whatever business there is in financial betting exchanges, binexx have that pretty much sewn up - they offer global markets, 24 - 7...
 
Binexx are owned by City Index and offer a comprehensive Binary bet exchange. However binaries are a relatively new market and to have an exchange based around a newish product, is a bit of a challange.
I say good luck to them, however the question still needs to be answered, are financial exchanges the way forward?
 
binexx do certainly NOT have the financial markets sewn up, what a ridiculous thing to say!

liquidity on betfair FTSE + DJIA daily/midday/hourly betting is FAR higher than on binexx, by several orders of magnitude! Most of the hourly FTSE's on betfair reach £150k+ in matched volumes, whereas binexx struggles to get above £500 a lot of the time!

binexx has very little activity, whenever I go their site the volume is often 0 for the latest FTSE/DJIA hourly future
 
Have a look at intrade they are another binary exchange! No one's got anything sewn up but binexx are fairly slick, just a shame the volume isnt around. I suppose with other firms offering Binary's binexx and intrade will be venues for other SB's to hedge with. Remember bookies like IG usually take it on the chin but smaller firms will be required to back some of the risk off.
Anyone trade the more Exotic products like tunnels? In actual fact these are not really that exotic binaries they are really very simple equations. If anyone wants to know more on pricing give me a shout.
 
intrade also suffer from very low volume, i just had a look at FTSE up/down for today and only £25 had been matched!

i don't think anyone can compete with betfair really, plus I've also heard that betfair have plans to heavily promote their financial markets
 
There are currently about 6 sites which can be used to hedge financial binaries:

www.forex-options.com
www.binarybet.com
www.intrade.com
www.binexx.com
www.spreadfair.com
www.betfair.com

Binarybet's way of quoting the eg. FTSE UP/DOWN doesn't quite make sense. Their UP quotes are simply the opposite of their DOWN quotes, you can't hedge them within the same company.

I think Betfair should change its financial products to a way similar to Binexx and Intrade's, value per pip, so there can be more avenues to hedge. If the companies complement one another they may attract more arbitrageurs to use them all. NYMEX doesn't monopolize the crudes even with IPE around.
 
Intrade multiply the actual size by 10 so it makes it look like they have larger volume. I reckon Binexx should do the same, traded per tenth. £25 on the up/down is very poor.

Betfair have sewn it up - when are they listing, any info?
 
Anonymous - what is wrong with binarybet's system? Surely if the probability for FTSE to rise for a particular hour is one value, the probability for it to fall is such that when you add them both you get 1 ?
 
i personally find binary bets more confusing to work with than fixed odds, which may be one of the reasons why binexx and intrade have such low volumes

also, betfair allow smaller bets
 
jules101

Take for example Binarybet's FTSE Up at 12 pm and Down at 12 pm

They are quoted thus:
Sell Buy
49.5 55.4 FTSE UP at 12:00pm
44.6 50.5 FTSE DOWN at 12:00pm

If you sell FTSE UP at 49.5 and sell FTSE DOWN at 44.6, you immediately make a loss.

The combinations don't allow you to make a profit.

On the other hand look at Betfair's FTSE Daily UP or Down:

If you lay "and Above" at 1.9 and lay "Below" at 1.9 you can make a profit, although not a big amount.

Binaries are quite easy to calculate, buy at 1.0 and sell at 2.0 you make 1.0, excluding fees.
 
erm, you are unlikely to be able to lay at 1.9 simultaneously on both sides on betfair very often, people aren't stupid!

why would you want to lay and back simultaneously on binarybet?! of course you will make a loss, they have a margin so they make a profit
 
fixed-odds is more straight forward though, you only have to calculate how much you win if you back or lose if you lay
 
You will be surprised if you look closely at the bets on Betfair. Sometimes the odds do give an immediate profit by laying both or backing both, actually I should say often.

What's the use of having a trading exchange if you can't lay both or back both to make a profit within the same trading exchange? A trading exchange allows the user to trade like a bookie, although strictly speaking he is just "expressing opinion on the probability of something occurring". Why use a trading exchange to take a blind gamble?

As for Binarybet, that's precisely the thing. Why does Binarybet quote both UP and DOWN when quoting UP is sufficient? If you think it's going up you buy UP, if you think it's going down you sell UP.
 
I was thinking that, why quote 2 up/down prices - 1 for up and 1 for down - when it's a 2 way price anyway. I suppose it's extra spreads. And why are the spreads so wide with IG? This is 10% of IG's revenues - so they keep their spreads wide. You can trade a 6 month option with a spread less wide than than a 1 day binary, it is ridicolous.
I suppose the advantage to the exchange is that you dont have to pay full spread!
Jules just turn the binary into a fixed odds price is simple.....
 
49.5 - 55.4 = 12% spread - wow that is huge on a daily contract!!!!!
Already paying away 1/16 odds to the bookies, so they love it......
 
I wouldn't take some of the 'volume' figures quoted too seriously on any of the platforms. The figures for the financials on Betfair often look unlikely at best. Recently sizes and spreads on BF have also been very poor - an admission of the fact that binaries are more intuitive for financial trading? Or perhaps they don't see any profit there compared with sport?
 
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