Martin Thompson, Engineering Director at TradeFair:
Every sub-millisecond counts for our customers. They need to be able to pull a price, if the market moves, in order to reduce the risk and allow them to run the spread tighter. Also, algorithmic traders want the lowest latency, so they can see a price [change] and spot the difference, in order to take the price.
Statements like “every sub-millisecond counts for our customers” make me wary. He is probably talking about arbitrage, but it sounds like people are being emboldened to over-trade based on noise, while racking-up fees for the exchange. If you give CNBC a hard time, you should be sensitive to that sort of thing.
So why are trades with betfair from European customers (as opposed to UK customers) being rerouted resulting in an additional – what was it, 30 milliseconds?
Basically Mr. Thompson is admitting that European customers are at a significant disadvantage. And one has to wonder how many people are aware of it.
“He is probably talking about arbitrage”
Doesn’t he speak from a web usability perspective?
His statement bears resemblance with Jakob Niesen’s constant talking about lean websites that load very fast.
http://www.useit.com/alertbox/
I tend to be indifferent to a sub-millisecond or two in terms of my user experience. The most justifiable interpretation is that traders are racing after some arbitrage, but it is still suggestive of encouraging traders to piss away fees on noise.
“I tend to be indifferent to a sub-millisecond or two in terms of my user experience.”
OK, he might have exaggerated a bit… Let’s talk about tenths of seconds…
Jason,
I sort of agree with your sentiment.
But every millisecond counts when you’re trading the flies-around-shit markets. That’s what a friend of mine used to call them. In-running tennis, snooker, darts etc it is all about speed.
Seducing people to get involved, creating a perception that one can beat his opponent merely on speed is what made betfair big, IMO. Providing the opportunity to customers to rip each other off, that’s the secret of success. I always opposed it because this irresponsible behaviour by the operator, this buyer-beware attitude, gives the wrong signal to society – it is not one that teaches people about integrity (in betting). Betting integrity is what is needed if we’re going to offer sports markets succesfully around the globe.
Of course, this perception is just that, a perception. Reality shows us we’re trading against court-sided people using laptops, bots, even some intercepting satellite transmissions. That is not how the game should be played.
Some of us customers, who have been banned from betfair’s forum, care a great deal more about the future of prediction markets than betfair do. But I think you already know that.