CFTC prohibits NADEX political event derivatives contract


The CFTC issued an order on April 2 prohibiting the North American Derivatives Exchange (Nadex) from listing or making available for clearing or trading a set of self-certified political event contracts. The contracts are binary option contracts that pay out based on the results of this year’s elections.

Nadex self-certified the contracts on December 19, 2011. The CFTC initiated a 90-day review period of the contracts on January 3, 2012. As a result of the findings, the CFTC determined that the contracts involve gaining and do not advance the public interest. The contracts cannot be listed, be cleared or traded.

In a separate letter, the CFTC requested that Nadex withdraw its self-certification of related rule amendments that were submitted by Nadex to enable trading the contracts.

Read more about the the CFTC order here.

Photo credit: Chilli media.

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About the Author

Elan Mendel
Elan Mendel is an associate with Shipkevich PLLC, and has done registration, compliance, and enforcement defense work for commodities, futures and forex firms registered with the CFTC and NFA as FCMs, RFEDs, and others. Elan also specializes in domestic and cross-border insolvency issues.

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