Contract Challenge Details

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Many people ask, what does MarketsWiki.com do?

At its core, MarketsWiki is an informational site that works collaboratively in bringing news and information to you in a new and unique way. With participation from the financial community, it is the collective knowledge of everything we know about this business – people, exchanges, events, terms and strategies. To date, we have more than 2,200 pages of content and have had more than 500,000 page views since the project began its development last year, and was launched in January 2008.

The next futures, options or ETFs

Beyond its informational purpose, MarketsWiki also can be used to develop ideas, manage and solve problems. This may be its biggest contribution to the financial markets and the start of a major shift in the way business is done in the industry. So here’s what we propose:

MarketsWiki invites and challenges you to invent the next great contract – futures, options or equities product on our platform.

We currently have – among the readership of the John Lothian Newsletter and Environmental Markets Newsletter – one of the greatest collections of financial wisdom, innovation, knowledge and creativity in the world. We have thousands of readers all over the planet who no doubt have been thinking of a contract that could become the next Eurodollar futures, S&P 500, crude oil or carbon contract.

Exchanges historically have not had a high degree of success in developing new contracts. No doubt they have experienced product developers. Yet, even if their ideas are genuinely good for the marketplace, even if they try their best to expose those ideas to numerous customers before the launch, most contracts fail. The MarketsWiki team thought we could help by creating an open forum which will facilitate universal participation.

The MarketsWiki.com challenge uses a “wisdom of the crowds” approach that will not only create the next new contract, but allow everyone to see it, weigh in on it equally and improve it before it ever makes it to the market. And when it does, we hope the entire industry knows what it is, how it works and how it might benefit customers before it’s ever launched.

It is product creation, development, marketing and the launch all in one.

Yes, launch. We’ve already discussed the idea with several exchanges who have said they would list the best contract ideas they see on their markets. Beyond that, we also will hold a vote for the best idea in each category. Of course, that puts the impetus on you to come up with something new, tradable and unique.

The goal is to unveil the winners of the contracts at the next FIA Expo in November.

Will it work?

We believe this will succeed for several reasons – namely that it is proven that open, collaborative industry efforts come up with better ideas and solutions in a fraction of the time and money it takes a traditional company to formulate, develop, market and launch a product on its own.

Just take the unprecedented example from the IT industry, in which Linus Torvalds brought forth his now famous Linux operating system for all to see, improve and ultimately use for the betterment of the industry. If it can work in the highly competitive and proprietary IT world, it should work in the financial world.

So what is the next great new contract? No idea is too big or small. Perhaps the next big commodity contract is water – Chinese water, Australian water, Western States water. Or perhaps it’s a heath care futures contract that allows all of us, and the companies we work for to hedge their health care costs. Or maybe it’s the next big Asian equity or commodity index. Or perhaps more relevant in today’s market, it is a new mortgage-backed derivative that heads off the next credit crisis.

So what do you win? There will not be a cash award. Rewarding the winners would be difficult if a collaborative effort involved dozens, or hundreds of contributors. As you may recall, the Linux inventor never got paid for his idea. Instead, he became rich for being the guy who invented open source hardware for the world. We’ve contacted every major exchange about our idea and they will be watching and perhaps participating with you in the development of a new contract. Other firms will also be tuning in to see who is coming up with innovative ideas.

Along this vein, it’s your time to shine and share and create. Let’s work on it and ultimately, make the next great contract!

Rules?

There are relatively few rules to this contest. The first rule is that you have to be paid subscriber to the John Lothian Newsletter or Environmental Markets Newsletter. We insist on this because our readers are the right people for this contest. Opening it up to the larger internet population would likely be counterproductive. Anyone, however, can see what is being worked on.

We also will have several categories to choose from – equities, options, futures and OTC products. Just go to the proper category by clicking the link on the front page of MarketsWiki.

Finally, there are a few things to consider when putting your contract ideas out there:

  • Contract ideas must serve some economic purpose. Sports related binary options would not serve enough of an economic purpose.
  • Think about liquidity and the ability for the contract to attract buyers and sellers. Many contracts fail because they often have buyers but no sellers, or vice versa.
  • Try to consider distribution. How useable or scalable and marketable is your contract for an exchange or on the OTC market?

As for participation, we welcome all to chime in on an idea. This is a building process, not a chat room to be critical of your peers. If you like an idea but think it needs a tweak, say it. If you have a completely different idea about the same commodity or financial instrument, by all means, please put it out there.

This is your chance as an industry to help build the next new contracts. Welcome and good luck!

John Lothian
President and publisher of John Lothian & Co.

Jim Kharouf
Editor-in-chief
John Lothian & Co.