PODCAST INTERVIEW: Russell Andersson of HedgeStreet

The Options Insider (streamlined audio on the site – MP3 file):

Mark Longo chats with Russell Andersson, co-founder of the on-line derivatives exchange HedgeStreet.
- HedgeStreet’s Unique Approach To Binary Event Derivatives
- HedgeStreet’s Struggle To Overcome The Stigma of the DARPA Terrorism Futures Exchange
- Can HedgeStreet Avoid Offending Its Customers As It Expands Into Potentially Questionable New Markets
- Why Is It So Difficult To Find Liquidity Providers For Binary Derivatives
- The Triumphs & Tribulations of HedgeStreet’s Partnerships With CBOE, SIG & DRW.
- What The Future Holds For The Binary Derivatives Market

- The binary event derivatives are “structurally interesting”.

- The rise of the “prediction markets” helps HedgeStreet.

- Markets are extremely useful as information aggregation mechanism.

- Human market making at HedgeStreet.

- “Perception” [??] that the size of the spread is too wide.

- “Building an exchange is challenging.” Be patient. It is complex. “It will take time.” The retail derivatives market has a huge future.

- The new [??] HedgeStreet CEO has a background in consumer products, not in derivatives.

- Originally, HedgeStreet was seen as the eBay of risks. Now, they want to go after the active traders. They will be less consumer-oriented in the future. They will focus on the “active segment”, which is growing —the financial event derivatives.

- EPS prediction markets – M&A prediction markets – etc.

- Credit event derivatives – HedgeStreet won’t do them.

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Two issues weren’t addressed: the market design of the HedgeStreet prediction markets, and the prediction markets on sports and politics.