No GravatarFinance Markets (article written by Khurram Naik):

[&#8230-] Futures exchanges are no longer simply markets, but for-profit businesses, and unlike most for-profit businesses or even most exchanges special considerations must be made. Futures contracts are not like stocks, which can be bought at one exchange and sold at another. Most futures contracts are not fungible between exchanges, and so the survival of a futures contract depends not merely on their utility but their ability to attract market share. Liquidity attracts liquidity, this is the social phenomenon known as network externalities. [*] Interest in commodity exchanges has surged as hedge funds have poured money into these markets and as China announces one of the largest investment programs in history to invest in “strategic assets” such as mining and energy resources. [&#8230-]

[&#8230-] Also, the CME has been approved to offer a credit-event futures, which taps into the enormous over-the-counter credit derivatives market that these banks make handsome profits on. CME and the CBOT both have designs for providing access to real estate derivatives, another large asset class that needs risk management. [&#8230-]

[*] Same can be said of event derivatives traded on our real-money prediction exchanges (betting exchanges) &#8212-they are, of course, a simplified sub-kind of futures exchanges.

NETWORK EXTERNALITIES: Applies to eBay, BetFair, Zopa, CME, NYSE, Economic Derivatives, InTrade-TradeSports, etc. &#8212-any exchange that doesn&#8217-t mess with its traders&#8217- transactions (via automated market makers or else).

Previous blog posts by Chris F. Masse:

  • Is that HubDub’s Nigel Eccles on the bottom left of that UK WebMission pic?
  • Collective Error = Average Individual Error – Prediction Diversity
  • When gambling meets Wall Street — Proposal for a brand-new kind of finance-based lottery
  • The definitive proof that it’s presently impossible to practice prediction market journalism with BetFair.
  • The Absence of Teams In Production of Blog Journalism
  • Publish a comment on the BetFair forum, get arrested.
  • If I had to guess, I would say about 50 percent of the “name pros” you see on television on a regular basis have a negative net worth. Frightening, I know.

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