Flexihedge licensed by UK Gambling Commission.
30 years on from the 1986 deregulation of financial markets in the UK – the so-called Big Bang – the City of London saw the launch this week of what is claimed to be the worlds first online financial peer-to-peer financial betting exchange.
Reporting on the event, the business publication Fortune explained that Flexihedge is to risk what eBay is to junk; a P2P marketplace.
It quoted founder Josh Miller – a former equity derivatives trader and a senior economist at the Royal Institution of Chartered Surveyors – who began thinking about the project some time ago with the question ‘if there was an eBay of financial market risk – what would it look like?’.
In the currently volatile and challenging financial markets he is confident that there will be plenty of interest in the project, which he started with help from angel investor Jignesh Patel.
The company will make its profits by using the now well-known betting exchange formula pioneered by Betfair, where the company acts as a ‘facilitator’ between parties for a small rake. As such Flexihedge becomes the fifth betting exchange in the UK licensed by the Gambling Commission.
Miller emphasises that Flexihedge is not a spread betting or CFD provider, pointing out that his company allows punters to make their own markets, go out of the money and take longer-term fixed date positions in arrangements with other customers.
Customers can back as well as lay odds across a pre-set range include markets from currencies, commodities, stock market indices, share prices, bonds, alternatives, central bank policy rates and macro data.
He claims that the only reason that none of the spread betting operators have moved into the betting exchange arena is “for fear of cannibalising their existing business model”.
Millers new venture appears to have excited the attention of veteran City financial commentator David Buik, who said of the launch:
“The market has waited a long time for a financial betting exchange, which many participants will eagerly want to add to the arsenal of their dealing weapons to take on the vagaries of these tempestuous times we live in!”
Miller says that all customer funds at Flexihedge are held not only in a fully segregated bank account, but are also protected by an independently administered corporate trust (trustees are First Names Group – Isle of Man) which has the highest protection rating achievable by the Gambling Commission.
Millers future ambitions include a ‘Series A’ funding initiative and a possible listing for Flexihedge on the LSE’s Alternative Investment Market (AIM) in the next 12-18 months.