On Friday, March 27, 1998, the Iowa Electronic Market (IEM) will open trading in contracts based on Spring movie box office receipts. This document describes those contracts and should be viewed as a supplement to the 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.
All contracts in this market are winner-takes-all contracts. Liquidation values for these contracts will be determined by box office receipts during the period April 3, 1998 to and including April 30, 1998.
Two separate sets of contracts will be traded: contracts related to "Lost in Space" (New Line Cinema, expected opening: April 3, 1998) and contracts related to "Mercury Rising" (Universal, expected opening: April 3, 1998).
The contracts related to Lost in Space (denoted LIS) are:
| Code | Liquidation Value |
| LIS20L | $1.00 if Lost in Space's official box office receipts for the 4/3-4/30 period are lower than or equal to $20 million; zero otherwise |
| LIS30L | $1.00 if Lost in Space’s official box office receipts for the 4/3-4/30 period are higher than $20 million and lower than or equal to $30 million; zero otherwise |
| LIS40L | $1.00 if Lost in Space’s official box office receipts for the 4/3-4/30 period are higher than $30 million and lower than or equal to $40 million; zero otherwise |
| LIS40H | $1.00 if Lost in Space’s official box office receipts for the 4/3-4/30 period are higher than $40 million |
| Code | Liquidation Value |
| MR10L | $1.00 if Mercury Rising's official box office receipts for the 4/3-4/30 period are lower than or equal to $10 million; zero otherwise |
| MR20L | $1.00 if Mercury Rising's official box office receipts for the 4/3-4/30 period are higher than $10 million and lower than or equal to $20 million; zero otherwise |
| MR30L | $1.00 if Mercury Rising's official box office receipts for the 4/3-4/30 period are higher than $20 million and lower than or equal to $30 million; zero otherwise |
| MR30H | $1.00 if Mercury Rising's official box office receipts for the 4/3-4/30 period are higher than $30 million |
The IEM reserves the right to introduce new contracts, and to move price quotations to alternate trading screens should it become necessary. Once a contract is listed, it will remain listed until liquidation.
The liquidation values for these contracts will be determined by box office receipts for the period April 3, 1998 to April 30, 1998 as published in Variety's Domestic Box Office Report under the heading "Cumulative Reported B.O." In the event that the movie is not listed in this report, we will use FILMSOURCE from AC Neilsen EDI, Inc. (www.entdata.com), the official source for the box office receipts reported in Variety, as our source. The judgment of the IEM Governors and Directors will be final in resolving questions of typographical or clerical errors in these reports.
If a movie fails to open by the ending of the period, then the lowest demoninated contracts for that movie will pay $1 and all others will pay $0.
Liquidation formulas can be viewed on the IEM trading screen by first selecting Display Options and then choosing Liquidation Formulas.
All decisions to spin-off a contract will be announced at least two days in advance of the spin-off, and the new contract names and the timing of the spin-off will be included in the announcement. This announcement will appear as a News Bulletin on your IEM screen.
The market will close at noon on Friday, May 1, 1998. At that time, liquidation values will be declared and funds will be credited to the cash accounts of the market participants following soon thereafter.
For each movie, unit portfolios consisting of bundles of contracts whose payoff is guaranteed to be $1.00 can be purchased from or sold to the IEM system at any time. The price of each unit portfolio is $1.00. Use the "Purchase" option from the TRADING MENU and enter the bundle name as the contract name to buy unit portfolios. Use the "Sell" option from the TRADING MENU, with the bundle name, to sell unit portfolios. Purchases will be charged to your cash account and sales will be credited to your cash account. Unit portfolios for Lost in Space are named LIS1$; unit portfolios for Mercury Rising are named MR1$.
To buy Lost in Space unit portfolios (1 share each of LIS20L, LIS30L, LIS40L and LIS40H) from the system, use the "Purchase" option from the TRADING MENU and enter LIS1$ as the contract name. To sell unit portfolios to the system, use the "Sell" option from the TRADING MENU and enter LIS1$ as the contract name. Purchases and sales of Mercury Rising unit portfolios are made similarly, using the contract name MR1$. Purchases will be charged to your cash account and sales will be credited to your cash account.
Movie-specific unit portfolios in the Spring Movie Box Office Market may also be purchased from and sold to other traders at current market prices. Use the Purchase and Sell options as above but enter LIS.MKT or MR.MKT as the contract name, depending on the movie portfolio you wish to trade. The price charged for market portfolio purchases will be determined as the sum of current ask prices, and the price received for market portfolio sales will be the sum of current bid prices. Should no corresponding bid or ask be present for one of the two contracts in a particular movie unit portfolio, that contract will be excluded from the portfolio. Otherwise the number of contracts purchased or sold will be the same in each contract.
Current and newly enrolled academic IEM traders will automatically be given access rights to the 1998 Spring Movie Box Office Market. Access to these markets is achieved via the "Market Selection" option on the Login, Market, and other Menus. Funds in a trader's cash account are fungible across all markets so new investment deposits are not required. Additional investments up to the maximum of $500 can be made at any time. With five days' advance notice, funds may be withdrawn on the 15th of any month.