CFTC Bars Nadex From Listing Political Event Binary Options

BinaryOptionsNow | Published on April 13, 2012 at 9:36 am

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BinaryOptionsNow – On April 2, 2012, the US Commodity and Futures Trading Commission (CFTC) issued a directive to prevent the North American Derivatives Exchange (Nadex) from offering so-called “political event outcome binary options” to retail investors. The US binary option exchange had self-certified these binary contacts on December 19, 2011 and the CFTC had initiated a 90-day review of their compliance of its policies shortly thereafter. This latest directive is the result of that 90-day inquiry.

These event binary options had enabled people to specualte on the outcome of the 2012 US presidential race, for example, by investing in who the winner would be.

Here is a link to an article we had written about these exotic instruments back in January that details how these binary options functioned.

In its statement, the CFTC stated that “the contracts involve gaming and are contrary to the public interest, and cannot be listed or made available for clearing or trading.”

In response, Nadex issued a statement saying that “While we will review the CFTC’s decision, we felt strongly that these products met all legal and regulatory criteria for listing, and that the public would benefit from having these products traded on a well-regulated exchange…”

The US binary exchange still offers all-or-nothing options on the outcomes of economic events such as the level of the monthly Non-Farm Payrolls Report and the weekly Jobless Claims released by the Department of Labor and the Federal Reserve Funds Rate.

Nadex is located in Chicago, Illinois and is regulated by the CFTC and thus must submit to its directives. Traders and investors can invest on pricing changes in the currency, commodity and equity markets via Nadex listed binary options contracts online via its website. New clients can take advantage of a free $25,000 demo account.

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