IEM PROSPECTUS: MX_Winner
2000 Presidential Election in Mexico
Winner Market

In Español

At noon CDT on Tuesday, May 2, 2000 the Iowa Electronic Market (IEM) will open trading in a market based on the plurality winner of the 2000 Presidential Election in Mexico scheduled for July 2, 2000.

Initially, four contracts will trade in this market, three representing specific candidates and the fourth representing all candidates for the election except for these three. The liquidation values of each contract will be determined as $1.00 for the contract representing the election winner, and $0.00 for all other contracts.

This document describes that market and should be viewed as a supplement to the IEM Trader's Manual. Except as specified in this prospectus, trading rules for this market are the same as those specified in the Trader's Manual for the Iowa Electronic Market.


CONTRACTS

The initial financial contracts traded in this market are as follows:

     Symbol            Contract Name
     PAN_Wins          1$ if Partido Accion Nacional candidate Vicente Fox 
                          is the plurality winner, $0 otherwise
     PRD_Wins          1$ if Partido de la Revolucion Democratica candidate 
                          Cuauhtemoc Cardenas is the plurality winner, $0 otherwise
     PRI_Wins          1$ if Partido Revolucionario Institucional candidate 
                          Francisco Labastida is the plurality winner, $0 otherwise
     MXrof_Wins        $1 if a non-listed candidate is the plurality winner,
                          $0 otherwise
      

The contracts PAN_Wins, PRD_Wins and PRI_Wins are associated with the nominees of the respective political parties. If any of those candidates withdraw from the campaign and are replaced by other nominees from the parties, all rights and interests in the contracts will transfer to the new candidates.

The contract MXrof_Wins represents all duly registered and qualified candidates for the election who are not separately identified by individual contracts as of the close of the market.

The IEM reserves the right to spin off new contracts from the MXrof_Wins contract at any time. If a new candidate should emerge with sufficient viability, then a new contract will be created to represent this new candidate and it will be introduced as a spin-off of the MXrof_Wins contract. Specifically, each share held in an original MXrof_Wins contract will be replaced by two shares, one in the new, candidate-specific contract and one in a continuing but revised MXrof_Wins contract. No holder of the pre-spinoff contracts will be adversely affected. Traders will receive the same number of each of the new contracts as they held in the original, and the sum of the liquidation values of the new contracts will equal the liquidation value of the original. Decisions to spin-off a contract will be announced at least two days in advance of the spin-off. The new contract names, the specifications regarding liquidation values and the timing of the spin-off will be included in the announcement. This announcement will appear as a News Bulletin on your WebEx login screen. All limit orders to buy or to sell MXrof_Wins will be canceled just prior to the spinoff.


DETERMINATION OF LIQUIDATION VALUES

This is an Election Winner market. A contract will earn a post-election liquidation value of $1.00 if any candidate represented by that contract wins a plurality of votes in the nationwide election; if no candidate associated with that contract wins a plurality, the value of the contract will be $0.00.

The candidates represented by the MX_rof_Wins contract include all candidates who are not associated with the PAN_Wins, PRD_Wins or PRI_Wins contracts or any contracts introduced as spinnoffs. "Plurality" here means a greater number of votes for a single candidate than for any other single candidate in the election.

The Instituto Federal Electoral (IFE) will be the official source for election results. It is the intention of the Institute to have the vote count substantially completed by Wednesday, July 5 and to make that count public on that day. The last vote count reported by the IFE in their official announcements on Wedenesday will be taken as the official and final vote count for determination of liquidation values. Recounts, revisions and more complete results appearing subsequent to that Wednesday announcement will have no bearing on liquidation values.

The judgment of the IEM Governors and Directors will be final in resolving questions of typographical or clerical errors and ambiguities.


MARKET CLOSING

This market will close at 11:59 pm CDT on Saturday, July 1, 2000 in anticipation of the election in Mexico the next day. Contract liquidations will be made on or about July 6, after the official election results (as described above) become known. Proceeds from these liquidations will be credited to the cash accounts of market participants. Traders may then use those funds for participation in other IEM markets, or they may withdraw those funds and close their accounts. Consult the IEM home page or the market home page for information on withdrawals.


UNIT PORTFOLIOS

Bundles, or unit portfolios, consisting of one share of each of the contracts in this market can be purchased from or sold to the IEM system at any time. The price of such bundles is $1.00. Since contract liquidation values are determined as $1.00 for the winner and $0.00 for each of the others, the total of the liquidation values earned by all the contracts in a bundle will be exactly $1.00, the same as the original price of the bundle. Thus, the IEM system with neither make nor lose money on the sale or repurchase of these bundles.

To buy or sell unit portfolios from the system, use the "Market Orders" option from the Trading Console and select the MX_Winner bundle.


MARKET ACCESS

Current and newly enrolled IEM traders will automatically be given rights to trade in the MX_Winner market. Access to this market is achieved by logging into the IEM and choosing "MX_Winner" from the Navigation Bar. Funds in a trader's cash account are fungible across all markets so new investment deposits by existing traders are not required. New traders can open accounts on the IEM OnLine Account Application page, https://iemweb.biz.uiowa.edu/signup/ . There is a one-time account registration fee of $5.00, and investments are limited to the range of $5.00 and $500. Additions to your investment account, up to the $500 limit, can be made at any time. Requests to withdraw funds may be submitted at any time by completing the IEM's Online Withdrawal Request or by completing and mailing the paper version of the request form. Additional information about requesting withdrawals is available at /accounts/withdrawals.html.