Gambling with Finance
By DaveLevy on Mar 16, 2009
CIO Connect, in their winter 2008 magazine, have published an interview with Robin Osmond, Betfair's CEO about his plans to utilise their software platform as a vehicle for trading financial products. They claim to be starting with spread betting, which seems available at http://www.tradefair.com/ but are looking to offer FX trading at some time in the future.
Spreadbetting for financial products has been around for a while and has already played the regulatory arbitrage by being considered as gambling and treated that way by HMRC. Betfair innovated the ambkling world by building a betting exchange, and removing the risk of running a book from their business model. Their software, and more importantly their information systems architectural skills might well apply to financial products exchanges but can they build the trust that'll bring consumers to their site, and solve the problem that the real money is in trading.
I expect that meeting a new group of regulators who in the UK at least have a reputation problem of their own will keep them busy. While it seems a simple diversification to many, I wonder if the difference in customer base, and regulatory environment will make this harder than it would seem.
Tradefair's CTO, Martin Thompson, was also interviewed and talked about building an integrated system, from business logic to silicon. It'll be interesting to see what they've done, if they ever make it public.
I have linked to CIO Connect, above, but they have a wayward re-direct rule set that issues some stupidly long URLs presumably to track activitty and they like to keep their stuff behind their firewall to protect their subscription revenue.