A semi-industrial estate in Tottenham would appear to be an unlikely location for a financial trading revolution, but such are the hopes for spread-betting startup Flexihedge which aims to do for financial spread-betting what betting exchanges did for bookmaking back at the turn of the Millennium.
Flexihedge founder and chief executive Josh Morris admits the concept has been a long time coming, given that spread-betting industry insiders have been talking about the exchange revolution coming to spread-betting for more than a decade now.
Indeed, one of the most influential voices within the spread-betting world is David Buik, ex- of Cantor Fitzgerald, who has been proselytising about the potential for exchange-based financial betting for many a year and who has leant his voice to Flexihedge as a champion of the concept.
“The challenge is to build up the liquidity,” Morris tells GamCrowd. ‘And there is the technology. It is really important and it has taken us four years to get it right.”
Given these two factors, it might be wondered by the incumbents in consumer-facing financial trading – such as IG Index and CMC Markets to mention just two of the larger players in the space – haven’t already taken up the exchange model.
But Morris, whose previous experience is as an economist and latterly as an equity derivatives dealer, says the market leaders have no incentive, given their already dominant position in traditional Contracts for Difference (CFD) and financial spread-betting. He says the sector is ripe for disruption.
“It’s like Kodak effectively failing to enter the digital camera market when they could have done,” he says. “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.”
Morris says Flexihedge is “democratising hedging and broadening the scope of the sharing economy to risk”. “We’re opening up a new dimension in P2P finance, or peer-to-peer risk sharing,” he says.
Getting to the point of launch has been no trivial matter. Morris says the company has taken four years to be market-ready with a fully-functioning site. It’s a development process which has taken some serious investment from an unnamed angel investor who, Morris says, happened to be the “right guy at the right time” when he got involved in the business.
Flexihedge’s target market is traders that are already spread-betting, and although Morris says there is some overlap with “the average punter”, he says the company is keen to distance itself from the ‘spivvier’ end of the binaries and forex trading markets. The company is fully-regulated by the UK Gambling Commission with customer funds segregated and overseen by an independent corporate trust based in the Isle of Man.
GamCrowd has previously written about other consumer-facing innovations in the financial trading space. Pelican was launched earlier this year and is a social financial trading app aimed at bridging the gap between the financial markets and social media applications. (Link to: https://www.gamcrowd.com/news/article/pelican-wades-in-with-social-trading-app).
Morris says Tottenham was the sensible choice as a base given how costly City of London rents are. “Besides there’s a baklava factory opposite,” he adds. Flexihedge will hope its website will be just as sticky with its customers.