The new Flexihedge financial betting exchange unveiled today on the 30th anniversary of the City of London’s Financial Big Bang (27 October) is described as a “world first” by the UK financial technology (FinTech) start-up.
The new product is a peer-to-peer (P2P) marketplace intended to be “the eBay of financial market risk”, says Flexihedge’s founder & CEO, Josh miller.
It enables anyone – not just professional money managers – to buy and sell risk among peers on the public platform. It will operate “anytime, anywhere, on any market”.
By democratising hedging and broadening the scope of the sharing economy to risk, Flexihedge claims to open up a new dimension in P2P finance – ‘P2P risk sharing’, as it calls it. However, there are of course winners and losers on both sides of any such P2P hedging transaction, so it is a case of ‘buyer (or in this case user) beware’.
The City of London’s financial ‘big bang’ was exactly 30 years ago today. The famous elimination of face-to-face ‘open outcry’ floor trading on financial markets in the City and associated rise of electronic systems and deregulation attracted many international firms to London, particularly the big American banks, and grew the City into the global financial hub it is today. The associated rise of risky financial instruments, algorithmic ways of trading, and new tools (Flexihedge being the latest example) changed the modus operandi of the City – and its risks to the economy – forever.
New Flexihedge financial betting exchange
Flexihedge insists it is not a spread betting firm or contract for difference (CFD) provider and its aim is to help users. It is applying the betting exchange concept – pioneered by Betfair in the UK – to financial markets to offer innovation and fair participation to all.
Customers can lay and back odds on a pre-specified range of price outcomes (‘strikes’) and dates (‘expiries’), rather than make leveraged bets against pip movements. Intraday price volatility during the interim and the risk of being stopped or wiped out is irrelevant, claims the start-up.
On Flexihedge, customers can:
- ‘make’ their own markets
- go ‘out of the money’
- & take longer term fixed date positions (from one week up to one year ahead), which is not generally possible via spread betting and CFDs.
Flexihedge also enables customers to gain exposure to hard-to-reach asset classes, claims the vendor, which are inaccessible through spread betting and CFDs. For example, Greek government bond yields.
“Four and a half years ago (whilst flicking through the book ‘Liars Poker’) I asked myself ‘if there was an eBay of risk – financial market risk – what would it look like?’. On the 30th anniversary of the Financial Big Bang, the world’s first financial betting exchange (my response) opens for business,” said founder, Josh Miller.
He added that, “there has never been a more dire need to hedge, what with post-Brexit uncertainty, sterling volatility … and a global hunt for yield that is at the very least inflating asset prices.”
Companies have only a limited time to complete their preparations before the UK departs the EU, warns Marsh executive Mark Weil.
Although the EU’s Markets in Financial Instruments Directive (MiFID II) is now better understood by asset management firms, too many grey areas still surround the regulation, claims Linedata.
European insurers are likely to use it increasingly in response to the capital adequacy requirements of the directive, reports Fitch Ratings.
“Corporate treasurers around the world are getting a better cross-border payments experience today,” announced the financial messaging services provider.