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How are SP bets settled and when?
How is the money matched?
Can I see the amounts of money to back and lay at SP?
What is the Near Price and how is it reconciled?

  How are SP bets settled and when?

Once the reconciliation process has taken place after the market has been suspended at the start of the event, SP bets are just like normal matched Exchange bets. They will be settled along with every other matched bet.

How is the money matched?

The basic principle of matching bets on the Exchange is maintained for SP bets. Backers are matched against layers. In the case of Starting Price bets, we are matching Starting Price backers (who have specified a stake) and Exchange backers with Starting Price layers (who have specified a liability) and Exchange layers.

Matching takes place between the event being suspended and it being turned in-play using a reconciliation process which determines the SP.

The reconciliation process considers SP bets that have been placed on each selection, taking into account any price limits that have been specified, and unmatched Exchange bets on that selection. The calculation determines the fairest price which will match the largest amount of money risked by backers and layers against each other.

Can I see the amounts of money to back and lay at SP?

Yes. SP bets can be seen in the runner information pop-up, which can be accessed by clicking the graph icon next to each selection in the market view.

In the Traded Table next to the graph, you will see two new columns, backers’ stakes and layers’ liabilities requested at SP. Amounts requested with an odds limit will show in these columns next to the respective prices with backers’ stakes showing as blue and layers’ liabilities showing as pink. (Note this is the opposite to Exchange bets in this table where backers’ money shows in pink under “To Lay” and vice versa)

SP bets on which no price limit was specified will show at 1.01 for SP back bets and 1000.00 for SP lay bets.

The Far Price will give you an indication of the balance between SP backers and SP layers.

Do SP bets where an odds limit has been specified form part of the Betfair Starting Price?

SP bets with price limits are included in the calculation as long as doing so allows an SP to be calculated that has no imbalance between backers’ stakes and layers’ liabilities. For example if SP bets and Exchange bets could be matched at a price of 5.0 with no imbalance between backers’ stakes and layers’ liabilities then SP back bets with a price limit of 4.0 would be included, but SP bets with a limit of 6.0 would lapse unmatched and would not form part of the calculation of the Starting Price.

What is the Near Price and how is it reconciled?

Example 1 – Matching SP backers and Exchange backers with SP layers

Let’s look at a simple example where we have £1000 to back at SP and £6000 of layers’ liabilities on the same selection:

 
Stake / Liability
Odds
Selection Wins
Selection Loses
SP Backers
£1000 (stake)
7.0 (6/1)
+ £6000
- £1000
SP Layers
£6000 (max liability)   
7.0 (6/1)
- £6000
+ £1000

Notice here that whatever the backer wins, the layer loses and vice versa. The Far Price (shown here as 7.0) ensures everyone can always be paid.

At the start of the race, all these bets would be matched, yet there would be a lot of unmatched bets on the Exchange and probably not trading at the price of 7.0. The Far Price would therefore not be the fairest Starting Price.

For this example, let’s assume that there are unmatched back bets at 5.0 on the Exchange. If we calculated a Starting Price of 7.0 we would be matching SP layers at 7.0 while leaving Exchange backers unmatched at 5.0, which would be unfair. By calculating an SP of 5.0, we can match all the money placed at SP, and some of the backers’ money waiting at this price on the Exchange as well. This is how it works:

 
Stake / Liability
Odds
Selection Wins
Selection Loses
SP Backers
£1000 (stake)
5.0 (4/1)
+ £4000
- £1000
SP Layers
£6000 (max liability)   
5.0 (4/1)
- £6000
+ £1500

Notice now that there is not enough money to pay the layers if the selection loses. This is rectified by matching money from backers on the Exchange. (X backers)

 
Stake / Liability
Odds
Selection Wins
Selection Loses
X Backers
£500 (stake)
5.0 (4/1)
+ £2000
- £500
SP Backers
£1000 (stake)   
5.0 (4/1)
+ £4000
- £1000
SP Layers
£6000 (max liability)
5.0 (4/1)
- £6000
+£1500

Now the amounts balance whether the Selection Wins or loses. By decreasing the Far Price to the odds trading on the Exchange at the start of the event we are able to match another £500 worth of Exchange backers. The Near Price here would be 5.0 and this is the Betfair Starting Price that would be calculated at the off.

Example 2 – Matching Exchange layers and SP layers with SP backers

Let’s look at the same example as before but see what happens if the price trading on the Exchange is larger than the Far Price of 7.0 (6/1). Let’s imagine there are unmatched Exchange lay bets available to back at 11.0 (10/1). In this case it would be unfair to match SP backers at 7.0 while leaving customers trying to lay at 11.0 on the Exchange unmatched.

 
Stake / Liability
Odds
Selection Wins
Selection Loses
SP Backers
£1000 (stake)
11.0 (10/1)
+ £10000
- £1000
SP Layers
£6000 (max liability)   
11.0 (10/1)
- £6000
+ £600

As before, the profit and loss does not balance between backers and layers, but this time there is not enough money to pay the backers if the Selection Wins. Therefore we need to match extra money from layers on the Exchange (X Layers) to rectify the situation.

 
Stake / Liability
Odds
Selection Wins
Selection Loses
SP Backers
£1000 (stake)
11.0 (10/1)
+ £10000
- £1000
SP Layers
£6000 (max liability)   
11.0 (10/1)
- £6000
+£600
X Layers
£400 (backer’s stake)
11.0 (10/1)
- £4000
+£400

Now the totals balance once again whether the Selection Wins or loses. Remember that at SP, layers specify their maximum liability whereas on the Exchange they specify the backer’s stake that they would like to try to win.

By increasing the odds of the Far Price to the odds trading on the Exchange at the start of the event we are able to match another £400 worth of Exchange layers.

The Near Price here would be 11.0 and this is what would be returned as the Betfair Starting Price.

We are using simple numbers here to show how the market must balance, but in reality the system would try to match layers on the Exchange at 11.0, then 10.5, then 10.0 etc until enough money was matched to balance the market and ensure everyone would be paid, regardless of the outcome.

 


 
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