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HedgeStreet Brings Derivative Trading To Main Street
The nation's first retail derivative exchange lets online investors hedge or speculate on the price of gas and other economic outcomes
San Mateo, Calif., October 20, 2004 - HedgeStreet Inc., an electronic marketplace that lets online investors trade innovative financial instruments based on economic risks and opportunities in their daily lives, has opened its virtual doors, becoming the nation's first derivative exchange for both individual investors and institutional traders.
HedgeStreet's debut reflects a shift from the traditional derivative-trading environment, just as online discount brokerages have democratized securities trading for a new class of individual investors - 22 million in all - in recent years.
Said John Nafeh, Ph.D., founder and chief executive officer, "HedgeStreet's mission is to expand investor awareness and trading of derivatives, which have long been used by high-net-worth individuals and institutions to augment their portfolios of stocks and bonds. With classic derivative products as well as new types of financial instruments that allow traders to take views on a wide variety of economic indicators and indices, HedgeStreet allows individual investors to have a seat on an exchange and trade financial instruments previously unavailable to them."
Any qualified individual with a $500 initial deposit and an Internet connection can trade on HedgeStreet, whose unique instruments or "Hedgelets" come in contract sizes of just $10. The first category of Hedgelets feature products similar to classic types of derivatives such as currencies, interest rates and commodity-based products.
Exclusive to HedgeStreet is a second category of Hedgelets that lets retail traders take views on unique, underlying indices like the price of gas, real estate values, mortgage rates and inflation, as well as economic activities such as retail sales.
Hedgelets currently trading on HedgeStreet are found in five sectors:
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Finance (currencies, commodities and interest rates); |
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Economics (inflation, and economic activity such as retail sales); |
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Real estate (mortgage rates and residential property); |
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Goods and services (energy); and |
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Income (employment). |
By trading Hedgelets, members invest in the occurrence of a particular economic outcome, which, if it takes place, results in a fixed payout of $10. Hedgelets can also be bought or sold among trading members at market prices before expiration.
The site features an extensive assortment of educational and research tools, and provides live access to all relevant market data.
Added Dr. Nafeh: "By removing the complexity and financial barriers, we are empowering a new class of derivative traders, millions of whom already buy and sell securities online, to make investment decisions based on familiar economic risks and opportunities that are relevant to their everyday lives."
A designated contract market (DCM) and a registered derivatives clearing organization (DCO), HedgeStreet is regulated by the Commodity Futures Trading Commission (CFTC).
HedgeStreet's world-class business and academic advisory board provides ongoing guidance to the company. Among its members are:
- Philip McBride Johnson, former CFTC Chairman, derivatives legal expert, and renowned author;
- Gordon C. Holterman, senior vice president, derivatives trading, Wells Fargo;
- David DeRosa, Ph.D., president, DeRosa Research & Trading, and adjunct finance professor, Yale School of Management;
- Steven R. Grenadier, Ph.D., William F. Sharpe, professor of financial economics, Stanford University Graduate School of Business; and
- Ronald Howard, Sc.D., professor, Department of Management Science and Engineering, Stanford University, and creator of the science of decision and risk analysis.
About HedgeStreet
HedgeStreet Inc. is the nation's first financial market that lets online investors trade innovative financial instruments based on economic risks in their daily lives. A designated contract market (DCM) and a registered derivatives clearing organization (DCO), HedgeStreet is regulated by the Commodity Futures Trading Commission (CFTC). HedgeStreet is a privately held company based in San Mateo, Calif. For more information, visit www.hedgestreet.com
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