Friday, April 09, 2010

No betting. The RBA loses its fun

Can this really be the end?

ASIC has moved to shut down betting on Reserve Bank interest rate decisions, giving the the bookmaker Centrebet until today (FRI) to desist or face the possibility of a court order "shutting down your business".

The letter from ASIC senior manager Jonathan Coultas to Centrebet seen by the Herald says "it has come to the attention of the Australian Securities and Investments Commission that you may be carrying on a financial services business without holding a financial services licence."

"In particular we believe the financial bets you offer over the ASX 200 share index and RBA interest rate changes may be 'derivatives', as defined in the Corporations Act."

The penalties for trading in derivatives without a license include up to two years in prison.

Melbourne Law School professor Ian Ramsay said it would be not be worth the bookmaker's while to run through the hoops needed to get the license. The letter would effectively shut down its market on Reserve Bank board decisions...

Centrebet has removed the ASX 200 and Reserve Bank markets from its website.

It took more than $45,000 on March Reserve Bank board decision and has taken more than $1 million over two years on the outcome of Reserve Bank meetings with the punters marginally in front.

"We didn't know we were selling derivatives," said Centrebet public relations manager Neil Evans. "We thought we were taking bets, the same as we do on the outcome of sporting events and elections."

"We've been doing it for two years without complaint. Now ASIC says it has come to its attention."

Professor Ramsay said ASIC may have turned its attention to the bookmaker following a complaint from a competitor after it set up a market on the ASX 200 share price index in March.

"Once ASIC took an interest it would have reviewed other activities of Centrebet including betting on interest rates, that's a possible scenario for how this unfolded.

Mr Evans said he was shattered and confused. "We have spent hundred of hours doing this since 2008 with not a word said."

ASIC confirmed the existence of the letter but would not comment.

Published in today's Age on line

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