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§ Private Profile · San Mateo, CA, USA
CFTC-regulated online exchange for retail traders offering binary options and spreads on forex, commodities, indices, and economic events.
Key people at HedgeStreet.
HedgeStreet operated an online, CFTC-regulated exchange for retail traders to buy and sell binary options and spreads on various financial instruments, originally based in San Mateo, California. The platform provided low-cost, limited-risk contracts, such as $100 binary options, for hedging or speculating on price movements in forex, commodities, and stock indices, generating revenue through low trading and settlement fees of $1 per contract. In March 2007, the company received a $10 million investment from Susquehanna International Group and DRW Trading Group, with the Chicago Board Options Exchange also holding a minority interest. HedgeStreet later became part of IG Holdings Group plc and was subsequently renamed North American Derivatives Exchange (Nadex) in June 2009, continuing its operations as a CFTC Derivative Clearing Organization. HedgeStreet was launched in October 2004 by founder John Nafeh.
Key people at HedgeStreet.
HedgeStreet was a pioneering US-based electronic derivatives exchange launched in 2004, designed to democratize access to futures and options trading for retail investors.[1][2][3] It offered low-risk "Hedgelets"—binary options and event futures on commodities like crude oil, gasoline, and precious metals, as well as unique instruments tracking housing prices, CPI, and mortgage rates, with trades fully collateralized to limit losses to deposited funds.[1][2][3][4] The platform targeted everyday risks, enabling small investors to hedge or speculate without traditional futures' high leverage dangers, under CFTC regulation as the first retail-focused designated contract market.[2][3][5]
Founded in 2004 by John Nafeh in San Mateo, California, HedgeStreet emerged from the idea that retail investors, empowered by stock trading booms, would seek accessible derivatives for economic events and price movements.[2][3] Nafeh coined "Hedgelet" to describe these affordable, low-risk contracts, aiming to build liquidity through small-stakes trading on non-traditional underlyings like gasoline prices or jobless claims.[2][3] Early traction included CFTC approval as a registered derivatives clearing organization, partnerships like CBOE's 17.6% stake in 2006, and a $10 million investment round in 2007 from Susquehanna International and DRW Trading, who also became market makers.[1][5]
HedgeStreet rode the early 2000s wave of online retail trading democratization, bridging stocks to derivatives amid rising individual investor interest post-dot-com.[2][3] Its timing capitalized on commodity volatility (e.g., oil spikes) and demand for prediction markets, influencing later platforms like Nadex, Kalshi, and Polymarket by proving retail binaries viable under CFTC rules.[2] Market forces like electronic trading shifts and IG Group's 2007 acquisition for restructuring amplified its legacy, evolving it into a forex/commodities binary hub now under Crypto.com since 2022.[2]
HedgeStreet shut down in late 2007 and relaunched as Nadex under IG Group, expanding binaries before Crypto.com's 2022 buyout, signaling crypto's push into regulated prediction markets.[2] Next, expect Nadex to integrate blockchain for faster settlement amid rising retail crypto-derivatives demand, shaped by trends like decentralized finance and event-based betting (e.g., elections, climate events). Its influence endures as a blueprint for accessible risk tools, potentially evolving retail trading toward hybrid Web3 platforms while navigating CFTC scrutiny. This retail derivatives pioneer set the stage for today's $trillion prediction economy.
