The Head of Marketing at Tradefair agreed to answer some of my questions regarding Tradefair which is Betfair's home for financial betting.
FSB: Tell us about Betfair. Who owns it? Is it a public company? How big is Betfair?
Head of Marketing at Tradefair: Betfair is the world's largest online betting exchange with over 2,000,000 clients worldwide and prides itself on having an exchange that can handle more transactions than the London Stock Exchange. It was launched in 2000 and is a privately owned company with a range of shareholders most of whom still work at Betfair but some are external which includes the likes of Soft Bank in Japan.
FSB: What brought Betfair to the spread betting world?
Head: Betfair moved into the Spread Betting due to the extensive growth in financial trading and wanting to utilize its existing technology and expertise in this sector. Tradefair, the new Spread Betting platform from Betfair also aims to be a low cost alternative to many others (very tight spreads and low margin requirement) whilst also providing fantastic customer service.
FSB: When was the Tradefair site launched? How have your Betfair clients reacted to the launch of Tradefair?
Head: Tradefair was launched in November 2007. Our Betfair clients have reacted very positively to the launch of Tradefair with many existing Betfair account holders opening Tradefair accounts especially our higher end users that have more exposure to financial markets through share portfolios...etc.
FSB: It is our understanding that your spread betting platform is powered by London Capital Group. Please comment. Are there any spread or technical differences which makes your platform different from the LCG platform?
Head: We do use LCG as our platform provider however we've redesigned the platform ourselves making it easier to use (1 click trading when you have the deal ticket open) and have taken our own account management team in-house to improve the user experience. In addition Tradefair has some of the lowest financing costs (+/- 1% of the base rate). We also provide the user with free learning tools like Robbie Burns 'Naked Trader' book and have the ability to offer credit to those customers that require it. In terms of the spread and rolling charges these are the same as those that you would find on LCG's platform.
FSB: In which base currencies can clients trade? Can clients deposit and trade in a currency apart from the Sterling (say Euros or Pounds?)
Head: Customers have the facility to trade in Euro's, Dollars and Pounds.
FSB: What are your typical spreads?
Head: Our spreads are generally very competitive.
1 pt on the FTSE
2pt on Dow
5pt on Brent Crude Oil.
FSB: What are the order types that are available to be placed?
Head: Stop Loss, Limit Orders, GTC (Good Till Cancel) and OCO (One Cancels Other) orders. These can all be placed on the Tradefair Spreads platform.
FSB: Are there limits on how far the stop loss order can be placed from the entry price?
Head: Every market has a minimum distance from the current price at which any Stop will be accepted. You may move the stop further from the current market price provided your account has sufficient funds to do so our platform won't let you move your stop level beyond such available margin.
FSB: Do you use the true market price for triggering stops and limits or your own quotes?
Head: We use our own quotes to trigger stops and limits however these closely mirror the market so you're unlikely to find major instances where a stop is triggered at an unfair price to the client.
FSB: Can one trade out-of-hours?
Head: We do offer 24 Hour trading on some markets e.g. FX, Dow.
FSB: Do you pay the dividends on FTSE rolling positions?
Head: Yes, we do pay dividends. Dividend adjustments are credited to long positions and debited from short positions held at the close of business on the day before the ex-dividend date. Payment is credited/debited to your account on the ex-dividend date. Dividend adjustments apply to equity and index bets.
FSB: What types of clients do you aim to attract?
Head: We aim to attract those clients that are interested in finance and have a good understanding of the market or are looking to learn about the market and how to trade. For this reason we provide technical hints and tips which show users the pit falls of trading in certain ways and how to overcome them.
FSB: Do you accept international clients? In particular is your spread betting product open to clients in Austria and Germany?
Head: Yes, we do accept international clients and have a German platform dedicated for these clients...
FSB: Where are your clients coming from - are they mostly based in the UK? How many of your clients are based outside the UK? Can spread betting find success in other overseas markets?
Head: Currently 30% of our clients are based internationally but we're expecting this to grow strongly in the next few Quarters as Mifid allows German customers to trade on spreads instead of just CFD's making them much more tax efficient for the retail market.
FSB: You are currently using a third party provider to power your financial betting product but there is speculation that you will later convert to your own platform. Please comment.
Head: We do currently use a third party to help provide our platform whilst we're building a CFD exchange which should help to revolutionize the financial trading world giving transparency and tighter prices across the board. This is due to be launch later this year.
FSB: I understand that Tradefair is offering new clients a GBP75 credit when they sign up - is this offer open to our international users as well?
FSB: What markets are most popular with your clients?
Head: Our markets break down as per the following: Indices 64%, Forex 20%, Commodities 8%, Shares 7% and the rest Bonds.
FSB: Is there a way to play the Oil price at Tradefair without suffering from the famous contango?
Head: No, we usually only have the front month available but as we near expiry we offer the next contract month.
FSB: What, from your personal experience in the exchange business, will make Tradefair different from the competition?
Head: We believe that we have the easiest platform to use in the marketplace and are providing an excellent level of customer service with some of the tightest spreads and margins.
FSB: You launched into a market with established competitors. Why were you confident there was room for another player and is the market meeting your growth expectations?
Head: We don't feel this market has properly matured yet and we know that a lot of the Betfair base enjoy trading on lots of different markets. And so we're confident we can meet our growth expectations by leveraging the Betfair customer base and bringing a better level of customer service than others are able to provide.
FSB: What spread betting tip can you offer our readers?
Head: I think the biggest technical tip I can give is to use limit orders as we've found that clients become more profitable if they use them. This can also help with your discipline as you know where you want to get out of the market and don't take you profits too quickly.
FSB: What is the ultimate scope of Tradefair - do you envisage yourself to be the next financial prediction exchange or do you see yourself mainly as a provider of spread betting?
Head: We are confident in becoming a global destination for financial trading for all types of orders and asset classes. We aim to achieve this by firstly bringing a CFD exchange into this market but that will be complimented with other platforms that help the customer maximize their opportunity to speculate and hedge.
FSB: What does the future have in store for the financial spread betting sector?
Head: I believe there is likely to be continued growth in this sector and some consolidation amongst the small players in the market. I think International is going to grow a lot faster than in the UK and I see that those able to offer a broader range of products are likely to fare better than those that only provide spread betting. I also see education becoming more important with training courses offered to enable people to trade rather than being optional.
FSB: Tell us more about your Hi-Lo product?
Head: Tradefair launched its HiLo product in October 2008 and is an entry level product to financial spread betting.There a 3 simple steps:: look at a chart of the FTSE 100 or Dax and decide whether it will move up or down in the next five or 20 minutes, decide the amount to risk, and click on an up or down arrow displaying the total potential profit to place a bet. While the bet is live, you can bank profits - or cut losses - or simply wait until the end of the period.
FSB: It is thought that Tradefair aims to ultimately expand into financial derivatives and contracts for difference by applying the same Betfair exchange technology. Please comment. Do you have any timeframes for its launch?
Head: The launch is scheduled for later this year. We believe the CFD exchange will bring something new and exciting to the market place as well as make the product more internationally appealing. We'll be sure to come back to you with more info on this nearer the time. Watch this space!
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