Risk Takers Podcast - Ep 57 Alex Kane

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Podcast Link:
hagrinBPR Review Date: 2024-02-13 05:45:00
Rating: 7.75

Notes:
This is the CEO from Sporttrade so it’s all about Sporttrade and it might not be for everyone. However, if you have financial trading / markets experience you’re going to enjoy this podcast. My bias is that this is a perfect cross section of my interests (sports, financial exchange backends, UX/UI, MMing) so this was catnip for me, but might not be for everyone.

~9:00 - The two biggest market makers (MMs) are its two biggest investors

~13:15 - MMs have signed a service agreement re: providing liquidity

~15:20 - Interesting comment about when you open up a sportsbook that the first x set of customers are largely sharp. I do wonder if sportsbooks are doing any type of profiling adjustments on super early sign ups. (host chuckles the word "toxic", but it's actually a very astute word to use as their order flow would be seen as toxic to MMs. Toxic flow being two types generally - sharp vs stale pricing and then arbitrage flow).

~21:00 - LiquiBoost - RFQ style product (request for quote) where you can hit the MMers up for a quote. For the crypto people, this is Paradigm, but for sports wagering.

~24:00 - Very interesting point being made. Everything before this really describes building out a sports betting exchange using a very close facsimile to a financial market exchange, but now transitioning to a UX/UI discussion about how to make the app so normal user friendly that the experience locks these normal users in. Alex talks about the Coinbase UX/UI experience, the Coinbase UX/UI is a disaster with many several year bugs so that was funny. Just appreciate the honest assessment that the goal is to get retail order flow, not everyone would be honest enough to admit.

~46:00 - Pretty interesting section to me. Host brings up the very tight spreads being offered. Would have loved a follow up here about the worries of stale quotes on these super tight spreads because this type of liquidity offering can attract toxic flow ( see - FTX/Alameda). Alex answers the question about MMs by saying the order flow is actually matched without a UUID which they only get at T+1. I do wonder about the conflict of interest here - remember the MMs are also your 2 largest investors & trade log investigations at the MM level and the company level are likely different. Wonder how those lines get blurred. Also, this is just a minor extraction away from Alameda and FTX being in the same office literally being able to look across the desk at the order flow. Not saying it's the same thing, but I would understand some people having FTX related PTSD. Especially when you see the name Jump.

~51:00 - Cool feature for VWAP market order fills.
~57:00 - new features coming - time expirys on providing liquidity and some price protection on stale orders where MMs have to compete for that stale order.


The host is clearly very informed on the space which is excellent - having an informed host to interact with the interviewee is so important. This was my first exposure to this pod, pleasantly surprised by the host's knowledge which you don’t always get. My constructive criticism would be, as someone (me) who sounds awful on recorded audio, you have a chance to make this a really top tier risk podcast, just dial it in some - practice, maybe additional prep, etc to just get the questions out more efficiently. Host has the hard part down - the knowledge, just dial in the execution. Really good concept though, some good follow ups.