The distorting impact of XM on Tennis
I was trying to think of a better headline, but that will have to do!
XM means ‘cross matching’ and while I was trading some of the activity in the pre-off markets this evening on the US Open Tennis men’s final I switched it on and off to have a look underneath the main market. Cross matching is the complicated, in most cases unnecessary, process that Betfair uses to offer bets on both sides of the market. On Tennis, being a two runner market, it is most prominent. With XM, if you back at one price, a lay bet of the opposite type appears on the other side.
I thought it was worth showing what distortion this brings to the market. People often get confused why an order hasn’t been matched, despite thinking they are near the front of the order queue.
In the first image on the left you can see 16k waiting at 2.32 to get matched and 2.37k waiting at 2.38. Switch on XM and that magically transforms to 38k and 37k. Where did this money come from? The short answer is the other side of the book. Somebody backing or laying the other player. Have a look at 2.42, only £78 is sitting there but with XM on that’s £33087, that’s some change.
This gets confusing as because if you put an order in at 2.38 you are only behind 2.37k of money, or are you behind 37k? Nobody really knows and Betfair comment they will match by bet reference, which you can’t know or reliably monitor. So you could, or could not, about to be matched. I hope that’s cleared it up for you! There is also a rounding error with this type of matching, as not all money gets matched at exactly the opposing price. The money from the rounding error ends up in Betfair’s coffers.
Putting XM to one side, take a look also at the money set up before the event has started. There is tons that has been kept over ready for when the match starts. People have put it there so they are certain of a match when the price reaches that point. Note also the amounts that are in use as well.
Tennis is pretty dull before the start of a match, 90% of money is traded in-play. So for a dull market it actually contains a fair bit of information.
Category: Tennis
