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Screenshot of a breaking news alert e-mail from Q2 2017
The shift in interest between Europe and its Transatlantic counterpart has been quite remarkable over recent months, in that binary options platform providers which are responsible for the vast majority of provision of software to the hundreds of brands had stuck firmly to the OTC principle, with their respective brands being centered in Cyprus, the Middle East and the Asia Pacific region.
Until recently, many binary options brands and platform companies had no plans to enter the exchange-based US market, however a dramatic change has taken place and platform companies SpotOption, TRADOLOGIC and TechFinancials have all developed solutions that are compatible with Cantor Exchange and become market makers on the Chicago-based dedicated binary options venue.
The interest in participating was immediate, and Forest Park BX was quick off the mark to offer binary options via Cantor Exchange, using the venerable SpotOption platform, marking itself out as the very first market maker to provide retail binary options to a US audience.
Forest Park BX CEO Justin Hertzberg looks at the lucrative prospects for binary options in the land of opportunity that is America.
Last month, another LeapRate guest editorialist published an article entitled, “Did Cantor Fitzgerald just Legalize Gambling in the US?” While it was an eye-catching title (it caught mine), the sensational title missed what is truly sensational about the CFTC registered Cantor Exchange, in that it has revolutionized the way binary options are traded.
Binary options aren’t new. The U.S. binary options market has existed since 2004 when the North American Derivatives Exchange (“NADEX”, then HedgeStreet) offered the first binary options called Hedgelets. Outside the U.S., there are a number binary options brokers from which traders can choose. But both on-shore and off-shore binary options venues have their shortcomings.
NADEX, for example, has more or less held a monopoly on the U.S. binary options market since its inception, but it has largely floundered, failing to capture the interest of introducing brokers and traders alike. Perhaps it is the large minimum contract size ($100/contract), or the fact that the trading platform can be difficult to navigate, or that NADEX charges $1,000 for its API specs or that, despite being an exchange, market making is reserved for only a few institutional entities.
Whatever the reason(s), the U.S. market has not particularly gravitated to NADEX and binary options trading.
Outside the U.S., however, dozens of brokers, offering a myriad of platforms and a casino-like atmosphere have given binary options a ‘sex appeal’ that has led to strong growth in the sector. But like any casino, the house always has the edge. For binary options traders, this often means having to risk $100 to make $77 on a trade, which is tantamount to a Vegas croupier asking a bettor to place $100 on red or black…only with much worse odds.
Enter the Cantor Exchange, a non-intermediated binary options exchange that enables every participant (trader) of the exchange to be a market maker. As a result, traders are no longer forced to be price takers always playing against the house. In fact, there is no house.
The Cantor Exchange does not act as the counterparty to your trades; rather it functions merely as a centralized exchange where participants can buy and sell from one another in a fair and open environment. And with binary option contracts worth only $1, traders large and small can participate on the exchange.
Moreover, traders can freely use the Cantor Exchange’s API specs to develop their own market making or trading algorithms or trade through a customized front-end platform developed by industry leader SpotOption. And with plans to add trading platforms from other major platform developers like TechFinancials, and TradoLogic, the Cantor Exchange is positioning itself as the most accommodative binary options venue in the world.
And the timing of the Cantor Exchange could not be better. In a post-SNB world where OTC traders are fearful of broker insolvency, commingled funds, debit balances and counterparty risk, the Cantor Exchange offers traders the ability to trade FX, Commodities and Index (coming soon) binary options via segregated accounts in a fully-paid for, broker-free exchange.
While time will tell just how disruptive the Cantor Exchange will be to the U.S. binary option landscape, the investor in me thinks the Cantor Exchange will end up deep in the money.
This is a guest editorial which was compiled by, and represents the views of Justin Hertzberg, CEO, Forest Park BX.