“There has been a great deal of negative press surrounding binary options, CFDs and the unfair treatment of clients. That’s why these futures contracts are pinned to a digital currency to offer a degree of tangibility to the product” – Adam Cole, CEO, Football INDEX
Today marks a milestone in connectivity to diversified markets for retail traders as Football INDEX has formed an exclusive partnership with multi-asset platform integration and liquidity management solutions provider Gold-i to create a new and highly innovative tradable market in which retail customers using the MetaTrader platform will be able to buy or sell futures contracts based on the value of football players.
The new product is being developed by Football INDEX and Gold-i in response to the growing synergies between retail foreign exchange brokers and the footballing community, as evidenced by the football sponsorship deals in the industry.
Today, FinanceFeeds spoke in detail with Adam Cole, CEO of Football INDEX at a very poignant time during which traditional asset classes are not only part of a saturated market but are under pressure from regulatory proposals, hence the need to diversify.
Over the last two years, there has been a great need for MetaTrader brokers to diversify their asset classes. Usually this refers to stocks and equities, however live market connectivity via Gold-i to a new tradable market in futures contracts that are based on the value of football players is a completely different dimension. Which brokerages do you think are likely to take it and how will it be delivered to clients?
The cost of acquiring a new client for a retail FX broker has increased significantly over the last few years. A number of large brokers have now turned to football sponsorship as a means of client acquisition. However there is no tangible cross over from sports betting to spread betting and FX trading. This solution offers brokerages a way of helping the client to transition across.
With our new offering, we hope to help brokers to attract a new audience to trading – people who may eventually use their experience gained through trading via Football INDEX on MetaTrader to trade currencies and other financial instruments. We also believe there will be many existing FX traders who will welcome the opportunity to try out this unique football-based form of trading.
We believe there will be strong demand for the product wherever football is popular, and that’s a lot of territories. In addition to the UK, we’ve had initial interest from China and Turkey too.
MetaTrader 5 has now begun to gain ground, and is more comprehensive in its ability to provide a real multi-asset solution to brokerages, with some brokers connecting it to futures exchanges in emerging regions. Does Football INDEX align itself with this ideology, and will retail brokerages be able to attract futures traders which usually have larger initial deposits?
Yes absolutely, this product is being offered for both the MT4 and MT5 trading platforms as we believe the appeal with be far reaching.
What is the target market for Football INDEX’s listing on MetaTrader? We know that many exchange-listed futures platforms stipulate a minimum deposit of $50,000, whereas the average MetaTrader 4 OTC FX brokerage (outside America) deposits $3,800 and has a lifetime value of 6 months. By offering a contract that is not a spot product, will this attract seasoned futures traders or will it appeal more to sports betting customers?
The target market is clients who bet on sports and have an interest in the Financial Markets. Sports fans understand their sport and can use their knowledge to place bets. However many are apprehensive about trading Financial Markets as they don’t fully understand the way the markets work. This offering is designed to help people to get a better understanding of how financial markets work by relating the core underpinnings to a subject they are familiar with.
As the regulatory authorities in major regions begin to invoke stringent leverage restrictions and are now looking at the way that CFDs are traded, could Football INDEX’s integration into MetaTrader be a boon for brokers in England where CFD trading is very popular and spot FX is rare, in that Football INDEX contracts would not be subject to the FCA’s proposals to restrict the method by which CFDs are traded?
There has been a great deal of negative press surrounding binary options, CFDs and the unfair treatment of clients. That’s why these futures contracts are pinned to a digital currency to offer a degree of tangibility to the product. It is not just a bet on the price movement of a player. We feel transparency is the key to customer confidence, hence publication of prices.
We will publish a guide price driven by performance data, and traders will be able to take positions above and below that price. However, the spot price itself will be driven by forces of supply and demand just like any other market.
Brokerages offering Football INDEX to retail clients may have to approach the marketing of such a diversion from OTC FX that MetaTrader users are accustomed to in a comprehensive way. Can retail traders be on-boarded which are not existing FX traders thus bringing brokers a new client base, or will retail FX traders with aversion to exposure to risk go toward Football INDEX because it is not a leveraged spot product?
Essentially both. This product is seen as a fusion between the two to help clients understand market movements and volatility. These won’t be offered as leveraged products – the number of contracts an individual can buy will be limited – the idea is to acclimatise the individual, so they develop confidence and knowledge.
How will risk management be conducted on futures contracts operated in non-currency markets on MetaTrader platforms?
Firstly limiting the quantity of contracts that any individual can hold, also a UI into the Football Index exchange will be made available to brokers to help them manage their risk.
What is the plan for 2017 in terms of connecting this system to other electronic trading infrastructure via Gold-i’s integration solution?
Initially we will focus on MT4 & MT5. We also plan for brokers to have their own UI so clients can trade directly with the Football Index exchange.
#Adam Cole, #CFDs, #Football Index, #futures contracts, #MetaTrader