Former Vanguard Canada CEO Atul Tiwari and other Canadian finance leaders have set out to build the country’s first investment dealer focused exclusively on prediction markets.
The news: Verdx filed an application this week seeking registration with the Canadian Securities Administrators as an investment dealer and membership with the Canadian Investment Regulatory Organization to build a regulated platform capable of offering such contracts. The move was first reported by The Globe and Mail and confirmed by BetaKit. Tiwari teamed up with experienced CFO Jim Andriopoulos and Michael Williams, who has held chief compliance and risk roles at Richardson Wealth and HSBC, to found Verdx. Should it receive approval, the company intends to function as an order-execution-only investment dealer, facilitating trades but not providing investment advice.
From the source: “I had read the book The Wisdom of Crowds by James Surowiecki and was interested in the concept,” Tiwari told BetaKit over email. “Then when I learned [prediction] markets were being created in a more fulsome way, I wondered how we could do this in Canada. It reminds me of the early days of ETFs. Prediction markets aggregate disparate views and probabilities to create one market price to trade on. ETFs aggregate underlying securities prices to create one market price to trade on.”
The context: Tiwari knows the exchange-traded fund (ETF) market well—he played a pioneering role in its growth in Canada, launching Vanguard’s Canadian ETF business and BMO ETFs, which he said have since captured almost 40 percent of the market. Interest in prediction markets has been booming lately. With this filing, Verdx has signalled its intent to join Toronto’s Wealthsimple and US-based Interactive Brokers in bringing such event contracts to Canada. Regulators are still figuring out how the controversial industry fits into Canada’s securities framework and have limited legal betting to contracts linked to economic indicators, financial markets, and climate trends, but not sports and entertainment.
Final thought: Tiwari believes that he, Andriopoulos, and Williams “are the right team to present the positive side of prediction markets” given their long track record in financial services and compliance. The Verdx CEO is betting that focusing fully on event contracts rather than offering prediction markets as a product within a larger business will be an advantage.
Feature image courtesy Unsplash. Photo by Yashowardhan Singh.