Not a bad idea, but not the best idea they could have.
The EPS prediction markets were a better idea, because they have many more primary indicators.
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Where did this primary indicator theory come from anyway ? Who do I need to beat up ?
And it’s not a better idea. People don’t trade EPS because most people don’t care about EPS.
Good news from betfair, finally. Although I get a sense they will find a way to screw this one up as well.
Prediction markets on stock markets already exist; they’re called derivatives.
As I’ve long maintained, virtually any other prediction market is doomed to fail. Prediction markets can’t beat existing markets in the long run.
That said, there may be enough interest and thus liquidity in markets around quarterly results to warrant trading in them. And for smaller investors, it is another way to trade/gamble their cash with Betfair.
Stock derivatives are not retail.
Jed,
exchange betting has different characteristics from futures or options trading when you look at risk, spreads etc. For betfair to be competitive they need to start these markets with reduced commission rates of 1% (transaction charges would be a better way) so they will attract people from the financial industry, and not just gamblers. Spread betting is not allowed in some european countries, as I’ve tried to point out, for a reason.