Jacopo Werther

SpiffX’s Claudia Farrugia: The 5 Best Ways of Boosting Exchange Liquidity

spiffx-ClaudiaFarrugiaClaudia Farrugia, Operations Manager of listed operator SpiffX, discusses the challenges of liquidity for betting exchanges and the best ways of ensuring good liquidity on the market.

For bettors and professional traders, betting exchanges are usually the obvious choice due to the strategical freedom that they allow. The question is usually which exchange to choose. Various elements determine the player’s choice, ranging from the website design and ease of navigation, to customer service, to cash-out facilities, to commission percentage, and so on. However, the crucial issue for every professional bettor is betting liquidity.

In simple terms, liquidity is the amount of money available on a market and is vital to the success of a betting exchange. It usually takes a professional bettor a few minutes of navigation on the site to get a good picture of the liquidity level of the betting exchange. These are a few ways how SpiffX builds its liquidity.

1) API solution to place bets

Some betting exchanges offer business solutions that enable bettors to integrate directly to the betting exchange system. This API trading makes it easy to create a personal script, placing orders and canceling orders automatically, based on a player’s specific strategy. As a result the API interface enhances the number of transaction and allows players to hedge and balance risk as soon as it looms in.

This allows smart routing traffic to execute real-time hedging in the back and lay exchange and to create advanced trading models in the market. Such business solutions develop an automatic type of trading and as a result, allows bets to be placed at a faster rate and the betting volume to increase rapidly.

2) Creating Price models that are interesting for traders/arbers

A betting exchange only really works if there are enough users and liquidity to form markets. So, as obvious as it might sound, a betting exchange must have a good player base. The equation is simple: a trader is more likely to see an order matched if the betting exchange has a high number of users already trading on it.

Players are also usually used to certain liquidity patterns and build their expectations accordingly. When a market opens the prices are usually not very competitive. This often improves as game time approaches. Most websites in fact display the amount of money already matched on an event and the amount waiting to be matched. SpiffX further enhances this by showing only net prices in the back and lay exchange, thus making it easier for bettors to calculate the hedging tactics.

As sports bettors become more informed shoppers, it is essential to create price models that attract traders and arbers. Data mining plays an important part here. Studying the player patterns and strategies will help to target the price models in the right direction. Such techniques will lead to improved pricing for players and a self-fulfilling cycle of increased business for the betting exchange.

3) Work with professional market makers

The player base is usually not sufficient alone to guarantee a good liquidity level. Market makers are necessary to fill-in certain gaps. These liquidity providers are usually bookmakers and various individuals who trade in sports and financial markets on a regular basis. SpiffX has tapped this market by creating an approach that allows not only a person-to-person platform but also a bookmaker-to-bookmaker system; a dynamic system that can work for both players and bookmakers.

This benefit is two-fold. Sportsbooks can use the market for pricing and strategies rather than using their own books for hedging, and at the same time act as a marketmaker on the exchange. This model has opened the doors for odds to be traded on a large market and to diminish liquidity issues to a minimum.

4)  Amplifying the traditional betting exchange model

Exchanges tend to concentrate their liquidity on a few popular markets, and consequently do not always deliver a sufficient liquidity pool across all betting markets, especially ancillary ones.

This could unveil a significant hole in the idea of a betting exchange as a one-stop shop for betting. The punter might have to resort to bookmakers to bet on a specific market, combining transactions on betting exchanges and bookmakers. As an example, a trader might lay at a low amount on a betting exchange and then back at a higher price with a bookmaker to secure a profit.

The new concept that SpiffX has introduced to the market rests specifically on the notion of broadening the traditional betting exchange model and creating a different perspective. If an exchange can work as a bridge between P2P, B2B and P2B then the player can benefit of a larger and more competitive market and a deeper liquidity level.

5) Intelligent Tools to place multiple orders

The trading system typically attracts mostly strategically-oriented bettors to the marketplace, some of which seek a fast way of placing bets to maximise profits through multiple orders and automated bets.

This has been facilitated at the SpiffX exchange through the introduction of various intelligent features and order types that accelerate the process of matching transactions. Some examples are:

  • The ‘Mid-Price Acceptance’ feature – enables players to share the spread between themselves;
  • The ‘Fill or Kill’ – allows players to match their order if it can be matched, otherwise it will be cancelled;
  • The ‘Fill and Kill’ – allows players to match the amount of their order that is available and cancel the rest;
  • The ‘Floating Order’ – allows the system to automatically move the player’s order when the index changes.

All the above elements allow more flexibility and assist traders with a more intelligent and automated way of betting. They create a reliable platforms that gives rooms for bettors to broaden their betting strategies more efficiently.

 

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