The Death of a Market

InTrade has stopped doing business. What does this mean?

InTrade is either an online betting site, or futures site, or predictive market site—depending on your priors—that allowed participants to take small positions on political futures, weather futures, and other obscure items. They abruptly shut down their site on Sunday. In November, the US Commodities Futures Trading Commission compelled the Irish company to close its site to Americans, because they were offering betting contracts on gold and oil.

The results were predictable: trading volume fell off a cliff. The CFTC later reversed itself, but the damage was done. On their website the company cites financial irregularities, and a lot of people are speculating that InTrade’s segregated accounts got co-mingled with company funds. After all, revenues were falling, all that money was just sitting there. Who would be looking? This is partially what happened at MF Global.

Which raises a good question: whenever a new financial instrument requires you to write a check and send it off, it’s a good idea to ask, who’s checking them out? If you don’t like the answer, don’t send the money.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-03-13T09:07:05+00:00 March 13th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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