Will Spreads Ever Be The Same Again?



  • Not that it's a huge thing as IS becomes less and less relevant due to the OB addition, but it was only a couple of months ago that spreads were maybe 2/3% for a lot of players and no higher than 10% for most - Pogba and the super volatile aside.

    I guess they will shrink to an extent but do you think they will go back to their original sizes and is it relevant with OB being introduced?


  • Banned

    Yes I think they will.



  • No.

    Spreads were based on best offer from FI. Now they are based on best offer from traders. So will never be the same again.

    You will probably see a much wider range of spreads now depending on circumstances. Some players will be tight others will be at the max 60 percent is it of buy price.



  • @Lukeroro no. I think at first we will see some big fluctuations but once everyone gets to grips with the system id be surprised to see spreads under 10% because the only bids that will be accepted are those on players people want out of quick, so players that have become undesirable and traders are only going to put low bids in because that player is considered undesirable



  • @mike778 said in Will Spreads Ever Be The Same Again?:

    No.

    Spreads were based on best offer from FI. Now they are based on best offer from traders. So will never be the same again.

    You will probably see a much wider range of spreads now depending on circumstances. Some players will be tight others will be at the max 60 percent is it of buy price.

    My thoughts exactly 👍☝️


  • Banned

    Spreads on the top players will be 2.1%.

    There will be no IS available on the lower players.



  • Once proper order books are allowed (sell orders as well as just buy orders) then spreads on the top few hundred players will largely converge IMHO & only show large spreads in exceptional circumstances. This currently proposed halfway house of just buy orders will need time to settle but should result in narrow spreads in the popular, highly traded players but those less liquid markets may see a stand off between buyers & sellers which is why i am slightly concerned that FI seem to have distanced themselves from their reassurance that they wouldn't withdraw the IS function entirely.

    Without FI or some sort of market maker being a "buyer of last resort" then some illiquid, less traded players MAYBE left without an exit price, which significantly changes the terms on which the bet was taken but given this is FI & consistency isn't one of their strong suits I will reserve judgement until we see how they finally choose to implement the full system, just glad it's NASDAQ not FI in charge otherwise the entire system could crash!



  • Depends entirely on liquidity. Where there is a brisk market for a player with decent demand on the buy and sell side you should see quite narrow spreads. If FI ever becomes a monster trading platform with serious investors then there's no reason spreads on these players couldn't be less than 1% - orderbooks makes this a market proposition after all - so you could (in time) see a player like Sancho operate with a 1p spread. Right now, this is unthinkable on current liquidity levels - you only have to see how long it takes to market sell some relatively popular players to see that we don't have a true pricing model right now. Order books will begin to change that but it's a slow process.

    What it means for players who have little interest to general traders is less good. You only have to take a look at some of the spreads on Betfair to see what happens in a low liquidity market.



  • @MrWh1te said in Will Spreads Ever Be The Same Again?:

    Spreads on the top players will be 2.1%.

    It will be very rare to see this because if a spread ever gets that tight its because no one is willing to sell that player. Therefor people will have no choice but to pay full price which pushes up the buy price which widens the spread

    If however the player has a sell queue and a tight spread like that occurs those that are trying to sell are likely to accept that so they remove shares from the sell queue which pushes the buy price back up and they accept the bid order which which then pushes the IS down to the next bid order which will also widen the spread

    If the spreads ever go as tight as you suggest they it would be momentary before they increase again



  • @SDB-Dunwell that would be impossible because you get charged 2% when you get a bid matched.


  • Banned

    @Black-wolf
    And this is where we disagree, time will tell I guess.



  • @Tom7471 Yes you're absolutely right, my hypothesis was without factoring in commission!



  • @SDB-Dunwell

    i think it highly likely FI will drop the 2% "buyers commission" as it makes no sense & reduces demand for a product that is currently in a high growth phase.

    The sooner true order books are installed, leading to a proper, clean market clearing price the better IMO but in the short term I think they will be forced to retain some form of IS or install market makers to solve the illiquid players conundrum that you highlight.



  • The spreads will be larger in the top players with the longest queues.

    It's logical to assume this as lots of people already have them up for sale so are looking to take cash out from them.

    The power would be with the buyer who knows this by assessing the player graphs since instant sell was suspended & assessing the peak price - which will be shares in existence.

    There will be offers on most players I'd presume, as people with cash balances look to snap up some bargains.



  • @MrWh1te said in Will Spreads Ever Be The Same Again?:

    Spreads on the top players will be 2.1%.

    There will be no IS available on the lower players.

    This wouldn't make any sense at all.

    Let's say a player is 10 quid. You put in a bid of 2.1 percent below that. This saves you 1p if my maths are right.

    Two scenarios.

    1. Player scores a hat trick and jumps up to 11 quid. Chances are bid isn't matched and you miss the rise.

    2. Player does his acl. Drops to 8 quid. You bid is matched immediately and you are looking at a big red number.

    So basically you are taking all the downside and risk and aren't benefitting from price jumps. All for 1p. Doesn't make any sense at all.

    Whilst the commission of 2pc is in play, it's probably not worth taking on the risk unless you are undercutting by about 10 percent.


  • Banned

    @mike778
    People dont make sense though, thats the point.

    I am just going off ALL the other trading platforms that have liquidity.



  • @NewUser159387 said in Will Spreads Ever Be The Same Again?:

    @SDB-Dunwell

    i think it highly likely FI will drop the 2% "buyers commission" as it makes no sense & reduces demand for a product that is currently in a high growth phase.

    The sooner true order books are installed, leading to a proper, clean market clearing price the better IMO but in the short term I think they will be forced to retain some form of IS or install market makers to solve the illiquid players conundrum that you highlight.

    Hopefully...

    The worry is we see a very stagnant market with traders money tied up in lots of bids which will probably never be matched.



  • @MrWh1te said in Will Spreads Ever Be The Same Again?:

    @mike778
    People dont make sense though, thats the point.

    I am just going off ALL the other trading platforms that have liquidity.

    The only comparison is betfair which is the only market trading bets like FI. On betfair the commission is on your profit per market so people can scape the margins trying to get a 1 point rise. It worth doing a trade on betfair if you buy and sell and end up with 0.1 percent profit as you just pay a percentage of that 0.1.

    Therefore the spreads can be extremely tight.

    On football index, if you are trying to buy and sell like that you would need 4 percent to cover costs. So there is far far less scope for trying to get negligible gains.

    You might be right... Maybe people will try and save 1p for the fun of putting in a bid in and seeing if it is matched. But rationally it wouldn't make sense.

    Financial markets aren't really comparable.


  • Banned

    It is all comparable. People aren't likely to start acting differently just because it is FI.
    The more liquidity, the less the gap.


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