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Nadex Derivative Exchange Asks Permission to Trade Political Contracts

Written by:
Aaron Goldstein
Published on:
Dec/26/2011
Nadex Derivative Exchange Asks Permission to Trade Political Contracts

Intrade.com has been doing it for years, but now Nadex wants to get in on the act.  The popular derivative exchange Nadex asked the federal Commodity Futures Trading Commission for permission to sell contracts involving the predicted outcome of next year’s US Presidential race as well as which political party will control the House and Senate come next November. 

From USA Today

The markets allow users to swap contracts with a "yes" or "no" outcome. Under the Nadex proposal, a contract that correctly forecasts the winner of next year's presidential election would have a settlement value of $100. Get it wrong, and the contract is worth $0. Participants would be allowed to trade as many as 2,500 contracts, theoretically allowing a maxed-out trader with perfect predictions to walk away with a $250,000 post-election payout.

Nadex is emboldened by Congress' 2010 financial-regulation law, which forbids contracts linked to terrorism, assassinations, war and illegal activity but is silent on contracts tied to elections. "We think … the regulatory environment allows it now," Nadex CEO Yossi Beinart said.

Commodity Futures Trading Commission officials are said to be reviewing the Nadex request.

- Aaron Goldstein, Gambling911.com

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