Binexx Interview

10/10/2006 - Please note that this article is out-dated. Mr Martin Slaney (who has now moved to GFT Global Markets) is no longer the managing director of Binexx.

Financial-Spread-Betting: Mr. Slaney, please tell us a little about yourself.

Martin: With bookmaking in my blood and a keen interest in the City, I began my career in the financial betting industry around 10 years ago. I have been involved in setting up a betting operation in Australia, was a founder member of a rival spread betting company and now head up binexx.com.

Financial-Spread-Betting: Tell us why City Index decided to plunge into the binary bets business. When did Binexx first open for business?

Martin: City Index was keen to expand its product range by entering the betting exchange sector, as it felt the existing betting exchanges had largely ignored the area of financial markets. The most suitable product for this was felt to be the binary betting format, which is also growing rapidly in popularity. Binexx.com first launched in March 2004, and has launched a new and improved version of the site in September 2004.

Financial-Spread-Betting: Is Binexx operated independently of City Index? Are you located in the same office buildings?

Martin: Binexx.com Ltd is a wholly owned division of City Index (Holdings) Ltd. We are located in the same office building in the heart of the City of London.

Financial-Spread-Betting: What is exactly a binary bet? Can you tell us in simple terms how it works?

Martin: A binary bet is a bet on the percentage chance of an event happening. If the event occurs the binary market settles at 100, if not it settles at 0. A typical such event is the "Up/Down" market, e.g. FTSE 100 to close up on the day, week or even hour. So if you believe the FTSE will close up you Buy that market, and if you believe it will fall you Sell.

Clients can easily "open" and "close" bets to realise a profit or cut a loss in much the same way as a spread bet. However, a binary price is effectively equal to a "fixed odds" type bet and are classified thus.

Because binary markets, by their nature, have to settle at 0 or 100, they are often very volatile. This volatility, combined with the fact that risk is always controlled and maximum loss is always known, proves especially attractive as a betting format.

In addition to Up/Down type markets, we offer Touch markets - a betting exchange first. The markets are settled as soon as an underlying market trades at ("touches") a certain level.

Financial-Spread-Betting: To whom do you think the binary betting will appeal most?

Martin: Binary betting appeals both to seasoned professionals and novice punters alike. It's a particularly useful tool for day traders, or indeed anyone struggling to profit from sideways-trending markets. Its simple odds format is far more easily understood than traditional fixed odds and this widens its appeal further. Above all binary betting is a great adrenalin rush!

Financial-Spread-Betting: What has been the clients' reaction?

Martin: Very positive. They find the website extremely easy to use and enjoy the advantages offered by betting in the binary format combined with the transparency of a real-time exchange. Plus they adore the concept of high volatility combined with controlled risk.

Financial-Spread-Betting: Do you consider binary bets as a trade or a pure gamble? Is it targeted to gamblers or professional traders?

Martin: That's the beauty of City Index Binaries: On the one hand it appeals to those looking to have an exciting punt, on the other the on-line platform has been designed to appeal to City professionals.

Financial-Spread-Betting: Are City Index binary bets limited to UK residents?

Martin: Currently, yes. However we will shortly be reviewing this policy.

Financial-Spread-Betting: How does one exactly create and fund a CityIndex binary betting account? Is it instant? Do you require fax forms...etc ? And does one need to fund his account to be able to create an account?

Martin: Opening an account with City Index Binary Bets is easy; the on-line registration process takes only a few minutes and accounts are opened instantly; currently there is no need for faxes etc. Funding the account by debit card is also possible on-line. You can create an account without funding it but when you do come to place an order, the maximum potential losses for that bet are required up front.

Financial-Spread-Betting: What is the minimum deposit required to open an account? Is there a maximum deposit?

Martin: There is no minimum or maximum deposit.

Financial-Spread-Betting: How can you one fund his/her City Index binary betting Account?

Martin: On-line via debit card (Switch, Visa Delta and Solo). Off-line via cheque or bank transfer. We are also introducing an e-wallet solution in the very near future, which will enable clients to deposit by credit card.

Financial-Spread-Betting: What instruments are available to bet on at City Index Binary Bets (formerly known as Binexx)? What is the minimum and maximum bet amounts?

Martin: You can choose from FTSE, DAX, Wall St, S&P, NASDAQ 100, Brent Crude and various topical economic & political markets. The binary product range includes up/down markets, touch markets, handicap markets, daily, weekly and even hourly markets. There are no maximum/minimum bet amounts as such; you can bet as much as is on the bid / offer at the time.

Financial-Spread-Betting: Is after-hours trading available? Do you offer binary betting on credit?

Martin: The markets are open 24 hours, although liquidity is generally at its best between 0700 and 2100 London time. All accounts are deposit-based.

Financial-Spread-Betting: Are there any administration fees? - fees for opening or closing an account, or a yearly maintenance fee...etc - are accounts closed due to inactivity? What are your commissions for opening a position? Is this a fixed commission per trade?

Martin: The only fee is a fixed commission of 0.5 times your "risk per point" (equivalent to just half a tick on the price). For example, if you buy £10 a point at 50, you are charged a commission of just £5. In this way, commissions do not increase with profit and clients are always aware of exact potential profits/losses. All data on the site, including a live feed for the underlying financial markets, is free.

Financial-Spread-Betting: What about the software that runs the site, how do you update the technology? i.e. do you manually update the selections...etc

Martin: The technology was developed in association with TradingSports Exchange Systems plc, and is state-of-the-art technology for the betting exchange industry. We are constantly developing the site to improve the user experience. We endeavor to settle all markets quickly.

Financial-Spread-Betting: Could you give us some insight about how a binary bet is priced?

Martin: Binary bets are essentially very short term options and hence can be linked to expected volatility. As binexx.com is an exchange, every client can be a market maker, so the price of the binary market is as it is perceived by clients. We do also have specialised market makers who add liquidity to the exchange.

Financial-Spread-Betting: What affects the binary betting prices? Pure customer speculative activity or probability?

Martin: The exchange is very much order-driven; prices will move with client activity.

Financial-Spread-Betting: Lately there have been discussions on the forums where traders expressed their concerns that their orders were being delayed (i.e. routed to a dealer for approval) because they were winning consistently? [this seems to have happened with IG Index]

Martin: Again, as binexx.com is an exchange, orders are never rejected; if you miss a price, your order will be added to the bid or offer of the market depth. Furthermore, on City Index binary betting price improvements are possible

Financial-Spread-Betting: Please explain how you handle re-quotes and order confirmation times. And fast markets?

Martin: This does not affect binexx.com as it is a betting exchange. Orders are either matched or not matched. If it is a fast-moving market you may of course find the price has moved when you have submitted an order, but you will be "filled" as soon as the price is back at your level

Financial-Spread-Betting: Do you hedge client positions and if so could you please shed more detail on the hedging process?

Martin: As far as I am aware, our exchange market makers do not hedge.

Financial-Spread-Betting: Since binary bets are fixed odds bets these don't fall under the FSA regulations, what protections are available for clients at City Index Binary Betting? - protected accounts for clients' money or segregated accounts.etc? Is Binexx backed up financially by Cityindex?

Martin: For every bet placed, the maximum potential loss is required up front; we do not offer credit. These deposits are kept secure in a segregated bank account. Our binary bets are offerd by City Index so enjoy the financial security that this status offers.

Financial-Spread-Betting: Over the last few weeks I've been dabbling on the Footsie and found the market very volatile. Do you think the liquidity will improve as City Index binaries builds up a larger customer base?

Martin: The binary FTSE markets are always volatile! That's the nature of the game. Whilst I would suggest that liquidity is already fairly high, naturally the larger the client base, the narrower the spreads will become. Already it is not uncommon to see spreads of just a point or less.

Financial-Spread-Betting: Do you plan to continue specializing in the financial markets and exotic bets (like politics, commodities..etc) or are you looking to offer binary bets on sports as well? Also, will you be offering individual stocks as opposed to just index 'baskets'?

Martin: We have had much client interest in increasing our range of financial products to include such markets as individual shares, and in offering sports markets. You will see developments in this area soon.

Financial-Spread-Betting: Who is predominantly making up your customer base at this time?

Martin: A wide variety of City professionals, seasoned gamblers and novice punters.

Financial-Spread-Betting: Are there traders who make a living through binary bets at City Index Binaries? What is the trading style and methods that these traders use for winning consistently?

Martin: To be honest I don't have information on this, but I can say we do have clients trading very regularly and in good size, which would suggest they have a bit of time on their hands to devote to binary betting!

Financial-Spread-Betting: What else are you offering as products and services that puts you a bit ahead of your competition?

Financial-Spread-Betting: How do you compare yourselves to BinaryBet and Betonmarkets if such a comparison can be made?

Martin: Binary betting is a fast-growing format for betting and it is inevitable there will be more competitors. Without getting into specifics it is clear that binexx.com is an exchange, thereby offering transparency in market pricing, whereas the 2 companies you mention are bookmakers.

Financial-Spread-Betting: It is my understanding that you use the TradingSports exchange platform who explicitly state that liquidity is improved by the participation of several business members. Does this mean that all TradingSports end users (i.e. which includes Binexx and other exchanges who may use the TradingSports platform) are on the same dealing engine? i.e. some of the volume that we might see on Binexx might not actually due to Binexx clients?

Martin: Binexx.com currently has its own matching engine based with TradingSports, so that all orders are matched with binexx clients. We may choose to adapt this in future through the flexibility of the TradingSports systems.

Financial-Spread-Betting: As of now, what trends do you see in the markets people choose to trade? Are there certain markets that clients seem to prefer? Do you think this will change over time?

Martin: The most popular markets we offer are the FTSE hourly markets. These are markets based on the movement of the FTSE from hour to hour and are highly volatile. This would suggest that clients are tending to prefer the shorter time scales. All we can do is respond to this, and we will shortly be offering hourly Wall St markets too. Our Brent crude market also attracts a lot of attention for obvious reasons.

Financial-Spread-Betting: There are many sayings in the markets, do you have a favorite one?

Martin: Nobody ever went broke taking profits.

Financial-Spread-Betting: What challenges do you see ahead? How do you see Binexx in 2 years time?

Martin: Competition will naturally increase but I am a firm believer that competition is healthy for a market. It's our job to establish binexx.com as a market leader and to anticipate market trends, so I'll keep those thoughts to myself! Suffice to say that although binaries are a relative newcomer to the betting scene, and much education of the market is required, I foresee an explosion in the popularity of binary betting.

Financial-Spread-Betting: Are there any books and/or resources you would recommend to our readers?

Martin: As a good all-round web site, yahoo finance is a good start for gathering info & news on financial markets. CNBC and Bloomberg TV are very useful ways to monitor market moods. Finally, for a cracking read and an insight into the mind of traders it has to be "Market Wizards" by Jack Schwager.

Financial-Spread-Betting: Do you trade on a personal basis? Have you made any mistakes along the way that you have learned from? If so, would you describe them?

Martin: I do have the odd punt now and then - both on sports and financials. If I make a mistake it's often because I am not disciplined enough in cutting my losses.

Financial-Spread-Betting: And a curiosity - could you please confirm or reject the 'Sunday Lunch Story'?

Martin: Not sure whether the lunch happened or not, but as binexx.com is a P2P exchange there are often big differences in market opinion!

Financial-Spread-Betting: Any remarkable incident/ trade that happened you could share with us?

Martin: None that I should repeat here...

Update 13th January 2006

Announcement - Binexx Platform integrated into City Index Main Site

We would like to inform you of the developments concerning Binexx.com. From 16 January 2006, City Index Ltd. (owners of Binexx.com) will be closing the Binexx.com website for betting and redirecting the binary product through the City Index platform. City index will be the sole Market Maker and there will no longer be an exchange basis of betting.

As you have a City Index Spread Betting account, if you wish to continue betting on binary markets you simply need to log into your City Index account online and select 'Binary Markets' from the 'Live Trading' tab. You should ensure that you have read and understood the new City Index Terms and Conditions, Term 16 of which relates to binary betting. Please note that even though City Index is authorised and regulated by the Financial Services Authority, the binary products are deemed to fall outside of the regulatory framework.

If you would like to transfer your Binexx available funds to your City Index account, please reply to this email instructing us to transfer the funds, and we shall do this for you.

If you do not wish to transfer your funds to your City Index account, the Binexx site will remain open for you to withdraw them back to your bank account. If you have any questions regarding binary betting with City Index, please do not hesitate to contact us.

Telephone: 0207 550 8580

Email: enquiriesATcityindex.co.uk

We wish you the best of luck with your binary betting,

Yours faithfully,

Client Services

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