Comments on: How does InTrade deal with insider trading? http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/ Prediction Markets For All Thu, 20 Nov 2008 09:41:37 +0000 http://wordpress.org/?v=2.6.3 By: BBC’s Panorama, the most famous investigative TV news show of British television (the equivalent of CBS’s 60 Minutes in the US), will air a segment on sport corruption and insider trading in the world of betting, on Wednesday, July 30, 2008. | http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20992 BBC’s Panorama, the most famous investigative TV news show of British television (the equivalent of CBS’s 60 Minutes in the US), will air a segment on sport corruption and insider trading in the world of betting, on Wednesday, July 30, 2008. | Mon, 04 Aug 2008 21:35:14 +0000 http://www.midasoracle.org/?p=7770#comment-20992 [...] to our commenter for the [...] [...] to our commenter for the [...]

]]> By: medemi http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20864 medemi Sat, 26 Jul 2008 08:34:34 +0000 http://www.midasoracle.org/?p=7770#comment-20864 For those who are interested in all dimensions of the truth. - Quote from betfair forum : - Vital Spark 26 Jul 09:24 Panorama BBC1 on Wednesday 30th July at 9pm............................. ''Racing's Dirty Secrets: Nearly six years after its expose of corruption in horse racing, Panorama returns to the sport of kings to investigate the world of betting. Presented by Paul Kenyon''. ............................................................................................. This should throw some light on the subject? It appears the BHB tried to suppress some of the content. For those who are interested in all dimensions of the truth.
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Quote from betfair forum :
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Vital Spark
26 Jul 09:24

Panorama BBC1 on Wednesday 30th July at 9pm………………………..

”Racing’s Dirty Secrets: Nearly six years after its expose of corruption in horse racing, Panorama returns to the sport of kings to investigate the world of betting. Presented by Paul Kenyon”. ………………………………………………………………………………… This should throw some light on the subject? It appears the BHB tried to suppress some of the content.

]]> By: medemi http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20855 medemi Fri, 25 Jul 2008 20:28:17 +0000 http://www.midasoracle.org/?p=7770#comment-20855 - Since when did the human race become interested in the truth ? :-D - I thought it was the wisdom of the crowds we were interested in, not the wisdom of the cheats. - <em>"We level the playing field and sacrifice price accuracy" </em>- Besides, I think you're "overreacting". 1. You'll never get rid of the insiders completely. 2. My proposal gives them some room while keeping the opportunists out. 3. When we embrace the insiders you should expect a lot of market manipulation. How does that help in our quest for the truth ? 4. Your typical rotten insider won't be moving the prices because it's not in his interests. In stead, he will buy himself time and drip-feed his bets into the market. Only widespread "inside" info (rumors) will move the markets, at which stage we're close to entering the public domain anyway. 5. Markets which are very susceptible to insider trading shouldn't be offered in the first place. They will only result in false markets (see your own link). That is, if you're interested in the truth, like you are. And the rest of the human race. :-) - Since when did the human race become interested in the truth ? :-D
- I thought it was the wisdom of the crowds we were interested in, not the wisdom of the cheats.
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“We level the playing field and sacrifice price accuracy”
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Besides, I think you’re “overreacting”.
1. You’ll never get rid of the insiders completely.
2. My proposal gives them some room while keeping the opportunists out.
3. When we embrace the insiders you should expect a lot of market manipulation. How does that help in our quest for the truth ?
4. Your typical rotten insider won’t be moving the prices because it’s not in his interests. In stead, he will buy himself time and drip-feed his bets into the market. Only widespread “inside” info (rumors) will move the markets, at which stage we’re close to entering the public domain anyway.
5. Markets which are very susceptible to insider trading shouldn’t be offered in the first place. They will only result in false markets (see your own link). That is, if you’re interested in the truth, like you are. And the rest of the human race. :-)

]]> By: http://caveatbettor.blogspot.com/ http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20854 http://caveatbettor.blogspot.com/ Fri, 25 Jul 2008 19:26:09 +0000 http://www.midasoracle.org/?p=7770#comment-20854 Oh yes, I\'ve advocated insider trading here before (see comments): http://www.midasoracle.org/2008/07/15/vice-presidential-search-committee/ Oh yes, I\’ve advocated insider trading here before (see comments):

http://www.midasoracle.org/200.....committee/

]]> By: http://caveatbettor.blogspot.com/ http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20853 http://caveatbettor.blogspot.com/ Fri, 25 Jul 2008 19:25:08 +0000 http://www.midasoracle.org/?p=7770#comment-20853 I am a derivatives trader and I want to make profits. I am a prediction markets advocate and I want the truth. Position limits and insider trading constraints approximate each other, don\'t they? We level the playing field and sacrifice price accuracy.  What\'s the preference, truth or profit? I am a derivatives trader and I want to make profits.

I am a prediction markets advocate and I want the truth.

Position limits and insider trading constraints approximate each other, don\’t they?

We level the playing field and sacrifice price accuracy.  What\’s the preference, truth or profit?

]]> By: medemi http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20848 medemi Thu, 24 Jul 2008 23:21:54 +0000 http://www.midasoracle.org/?p=7770#comment-20848 The only reason why markets hold up reasonably well in the presence of insiders is because people are unaware of the damage insiders cause to their wallets. They prefer not to know. Only an experienced trader, who has been hit a couple of times, and knows he has been hit by an insider, will admit to the problem. So this becomes a long term problem for operators. And it probably becomes a problem for them before it becomes a problem for their customers. There’s this little voice in my head that keeps telling me betfair would love to come on here and confirm this matter. - The real issue is not the presence of insiders per se, it is how many we have and the impact they have on the marketplace. Regulation will see to it that the number of insiders will be contained, which is what we need. - We can’t have an insider (a random individual who accidentally gets hold of some very specific but valuable piece of information) opening an account, betting $1,000,000 and ripping the market apart, causing damage to the entire industry. Therefore we need limits on new accounts. Let them bet $1,000 and get away with it, for all I care. It’s better than persuing someone who just won $300,000 and left behind a path of destruction. - Limited stakes on new accounts will act as a discouragement for insiders and provide me with the protection I need. It will induce trust in the marketplace and improve liquidity without having a negative impact on market accuracy. There’s still something wrong with this picture but it’s very close to a practical and effective solution. The only reason why markets hold up reasonably well in the presence of insiders is because people are unaware of the damage insiders cause to their wallets. They prefer not to know. Only an experienced trader, who has been hit a couple of times, and knows he has been hit by an insider, will admit to the problem. So this becomes a long term problem for operators. And it probably becomes a problem for them before it becomes a problem for their customers. There’s this little voice in my head that keeps telling me betfair would love to come on here and confirm this matter.
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The real issue is not the presence of insiders per se, it is how many we have and the impact they have on the marketplace. Regulation will see to it that the number of insiders will be contained, which is what we need.
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We can’t have an insider (a random individual who accidentally gets hold of some very specific but valuable piece of information) opening an account, betting $1,000,000 and ripping the market apart, causing damage to the entire industry. Therefore we need limits on new accounts. Let them bet $1,000 and get away with it, for all I care. It’s better than persuing someone who just won $300,000 and left behind a path of destruction.
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Limited stakes on new accounts will act as a discouragement for insiders and provide me with the protection I need. It will induce trust in the marketplace and improve liquidity without having a negative impact on market accuracy. There’s still something wrong with this picture but it’s very close to a practical and effective solution.

]]> By: Jason Ruspini http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20846 Jason Ruspini Thu, 24 Jul 2008 22:17:21 +0000 http://www.midasoracle.org/?p=7770#comment-20846 Note that the familiar argument for not regulating against manipulation suggests that one *should* regulate against insider trading. The argument roughly goes that manipulation ultimately increases market accuracy because traders are attracted to markets "subsidized" by manipulators, and this liquidity eventually leads to greater accuracy. Therefore traders would be less likely to participate in markets where insider trading, a negative subsidy by this logic, is allowed, and this would ultimately decrease liquidity and accuracy. You could argue that the decreased long-term information due to discouraged liquidity is less significant than the initial short-term information gains due to insider trading, but then wouldn't the increased long-term information due to encouraged liquidity be less important than the initial short-term information loss due to manipulation? Maybe not, maybe severely so, depending on the details of your assumptions, but there is certainly a tension here. . Also, it would make a difference if insiders were required to immediately report their trades. That might make it easier to infer "information" from price action and mitigate damage to other traders, but as we know with current insider reporting, it's not straightforward to design a strategy based on insider activity, which includes corporate buybacks. Note that the familiar argument for not regulating against manipulation suggests that one *should* regulate against insider trading. The argument roughly goes that manipulation ultimately increases market accuracy because traders are attracted to markets “subsidized” by manipulators, and this liquidity eventually leads to greater accuracy. Therefore traders would be less likely to participate in markets where insider trading, a negative subsidy by this logic, is allowed, and this would ultimately decrease liquidity and accuracy. You could argue that the decreased long-term information due to discouraged liquidity is less significant than the initial short-term information gains due to insider trading, but then wouldn’t the increased long-term information due to encouraged liquidity be less important than the initial short-term information loss due to manipulation? Maybe not, maybe severely so, depending on the details of your assumptions, but there is certainly a tension here.
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Also, it would make a difference if insiders were required to immediately report their trades. That might make it easier to infer “information” from price action and mitigate damage to other traders, but as we know with current insider reporting, it’s not straightforward to design a strategy based on insider activity, which includes corporate buybacks.

]]> By: medemi http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20842 medemi Thu, 24 Jul 2008 20:00:33 +0000 http://www.midasoracle.org/?p=7770#comment-20842 Good. I can see the economists point of view, which is of a theoretical nature. Hopefully they can see mine (ours) too. As for the operators, they should ask themselves who'll bring in the dough. Good. I can see the economists point of view, which is of a theoretical nature. Hopefully they can see mine (ours) too. As for the operators, they should ask themselves who’ll bring in the dough.

]]> By: Chris F. Masse http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20841 Chris F. Masse Thu, 24 Jul 2008 19:30:21 +0000 http://www.midasoracle.org/?p=7770#comment-20841 @medemi: The views of some economists is very different from the views of some (or most) traders. That's the lesson. @medemi: The views of some economists is very different from the views of some (or most) traders. That’s the lesson.

]]> By: medemi http://www.midasoracle.org/2008/07/24/how-does-intrade-deal-with-insider-trading/#comment-20840 medemi Thu, 24 Jul 2008 19:22:05 +0000 http://www.midasoracle.org/?p=7770#comment-20840 If this is going to be one of my solo tours, then fine. But remember, I will not be losing money to insiders in the long run. You will. If this is going to be one of my solo tours, then fine. But remember, I will not be losing money to insiders in the long run. You will.

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