| A FAREWELL TO 2% COMMISSIONS |
|
Next week, Matchbook will dramatically cut commissions by eliminating
our 2% net-win commission system and shifting to a much simpler
volume-based one. Matchbook won't earn as much per trade, but we
believe this change will drive the next phase of growth on the exchange. |
|
| HOW IT WORKS |
|
The new system is based on bet size, regardless of whether your trade
wins or loses. If you accept an offer, the fee is 1.0%. If you post an
offer that is accepted, not only is there no fee, but Matchbook will
pay you 0.2%. As demonstrated lately on many financial exchanges,
liquidity explodes when people are paid to make offers. |
|
| HOW WE CALCULATE THE RATE |
|
Commission rates of 1.0% or -0.2% will be applied to the lesser of your
"bet" or "to win" amount. So regardless of whether you bet $1,000 to
win $5,000, or $5,000 to win $1,000, your bet size is treated as only
$1,000. In both cases, you pay $10 in commissions if you accept an
offer, or you are paid $2 if your offer is accepted. |
|
| WHO THIS HELPS |
| Pretty
much everyone. To start with, 1% on volume costs less than 2% net-win
because of the generous way we define your bet size (see above). If you
post offers, the savings are obviously far greater. And with everyone
incentivized to post offers, we expect to see much tighter, deeper
markets across the board. |
|
| WHO THIS HURTS |
|
Because we charge based on volume instead of net win, scalpers will
need to pay more to accept offers on both sides of the same market. Of
course, they can still trade across markets at far lower cost than
before by taking advantage of our offer-side subsidy. |
|
| FUTURES MARKETS AND BASEBALL |
| Any
long-term markets currently underway will remain on the old net-win
system until expiry. All new long-term markets will be volume-based as
soon as they are loaded. Baseball will continue to be offered at a
discount. |
|
| FEEDBACK |
| We
anticipate fine-tuning the rates for specific sports and market types
as we go forward. Any such changes will be announced in advance on the
website. In the meantime, please send your thoughts on the new
commission system to: ideas@matchbook.com. | |