IEM Prospectus: 2024 U.S. Presidential Winner-Takes-All Market

On Saturday, May 20, 2023, the Iowa Electronic Market (IEM) will open trading in a winner-takes-all market based on the 2024 U.S. Presidential election.

The payoffs in this market will be based on the popular vote received by the official Democratic and Republican nominees in the 2024 U.S. Presidential election. Payoffs are NOT affected by votes received by nominees from other parties, the outcome of the electoral college or any vote taken by the House of Representatives should such a vote be necessary.

This document describes the market 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.

Contracts

The financial contracts initially traded in this market are:

Determination of Liquidation Values

This is a winner-takes-all market. The payoff will be determined by which of the two nominees receives the larger share of the popular vote cast for the Democratic and Republican candidates in the 2024 U.S. Presidential election.

Contracts associated with the nominee who does not receive the larger number of popular votes in the election will pay off $0. Contracts associated with the nominee that receives the larger number of popular votes will pay off $1, provided that there have been no contract spin-offs in the market. In the event of spin-offs, payoffs are determined as described below.

The election data posted on the New York Times official website at 5pm CST on Wednesday, November 6, 2024, or as soon after as available, will be the official source used to determine payoffs. In the event that the two parties’ popular votes are not reported at that website by midnight, Wednesday, November 6, 2024, the Washington Post official website will become the official source. Should neither source report popular vote by midnight Wednesday, the information reported in the print version of the New York Times on Thursday, November 7, 2024, or as soon thereafter as reported, will be used. In the event that the election is delayed or postponed, liquidation will take place in a timely fashion after the close of polling sites for the popular vote.

Liquidation formulas can be viewed while you are logged into the IEM trading system by clicking on the market name, PRES24_WTA, at the upper right hand corner of the market window.

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

Contract Spin-Offs

The IEM reserves the right to introduce new contracts to the market as spin-offs of existing contracts. When a contract spin-off occurs, an original contract will be replaced by two or more new contracts which subdivide the payoff space of the original contract. Contracts may be split to correspond to different vote share levels. For example, the contract DEM24_WTA could be split into two contracts, DEM24_WTA_G55 and DEM24_WTA_L55, where DEM24_WTA_G55 denotes the case in which the Democratic nominee receives the most popular votes AND that the Democratic vote share is 55% or more of the total two-party vote, while DEM24_WTA_L55 denotes the case in which the Democratic nominee receives the most popular votes AND that the Democratic vote share is less than 55% of the total two-party vote.

Alternatively, the contracts may be split to correspond to different potential nominees. For example, the contract DEM24_WTA could be split into two contracts, DNAME24_WTA and a new DEM24_WTA where DNAME24_WTA denotes the case in which the Democratic nominee receives the most popular votes AND the official nominee at the Democratic Convention was NAME, while the new DEM24_WTA denotes the case in which the Democratic nominee receives the most popular votes AND the official nominee of the Democratic Convention is not the specifically named candidate. DEM24_WTA may be split repeatedly as other interesting named candidates emerge. Contracts associated with named Democratic candidates will liquidate at $1 if the Democratic nominee receives the most popular votes AND the official nominee at the Democratic Convention was NAME. DEM24_WTA will liquidate at $1 if Democratic nominee receives the most popular votes AND the official nominee of the Democratic Convention is not one of the specifically named Democratic candidates.

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.

Outstanding bids and asks for the contract which is to be split will be canceled just prior to the spin-off.

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 an Announcement on your IEMXchange login screen.

Contract Bundles

Fixed price contract bundles 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 each fixed price contract bundle is $1.00. Because exactly one of the listed U.S. Presidential election outcomes will result from the election, the total payoff from holding a fixed price contract bundle until the market closes is $1.00.

To buy or sell fixed price contract bundles from the system, use the “Bundle Orders” option from the Trading Console. Select “Pres24_WTA” and the radio button “Buy at Fixed Price” from the Bundle Orders list to buy bundles. Select “Pres24_WTA” and the radio button “Sell at Fixed Price” to sell bundles.

Bundles consisting of one share of each of the contracts in this market may also be purchased and sold at current aggregate market prices rather than the fixed price of $1.00. To buy a market bundle at current ASK prices, use the “Bundle Orders” option as above but select “Pres24_WTA” and the radio button “Buy at Market ASK Prices.” To sell a bundle at current market BID prices, select “Pres24_WTA” and the radio button “Sell at Market BID Prices.”

Bundle purchases will be charged to your cash account and bundle sales will be credited to your cash account.

This market will remain open until contract liquidation. Liquidation values will be credited to the cash accounts of market participants.

Market Access

Current and newly enrolled IEM traders with U.S. dollar accounts will automatically be given access rights to trade in the 2024 U.S. Presidential Winner-Takes-All Market. Access to this market is achieved by logging into the IEM and choosing “PRES24_WTA” from the Navigation Bar.

Funds in a trader’s cash account are fungible across markets so new investment deposits are not required. Additional investments up to the maximum of $500 can be made at any time by using the “Adding to Your Investment” link found under “My Account” while logged into the IEM software. New traders can open accounts using the “Open An Account” button found at the IEM website, https://iem.uiowa.edu. There is a one-time account registration fee of $5.00, and investments are limited to the range of $5.00 to $500.

Requests to withdraw funds may be submitted at any time by completing the IEM’s Online Withdrawal Request form. Additional information about requesting withdrawals is available at the IEM website at https://iemweb.biz.uiowa.edu/accounts/withdrawals.html.