Prospectus: DCONV20 2020 Democratic Convention Nomination Winner-Takes-All Market

On Friday, January 10, 2020, at 11:00am CST, the Iowa Electronic Markets (IEM) will open trading in a market based on the Presidential nomination process of the 2020 Democratic National Convention.

This document describes that 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.

Contract liquidation values in this nomination market will be determined by the outcome of the 2020 Democratic National Convention. At market open, there are six contracts in this market representing six possible unique outcomes. Other contracts may be added to this market according to the contract spin-off procedure described below. The liquidation value of the contract which represents the actual outcome of the 2020 Democratic Convention will be $1.00. All other contracts will have a value of $0.00.


The initial financial contracts traded in this market are:


Code Contract Description
JBID_N20 $1.00 if Joe Biden wins the nomination;
$0.00 otherwise
PBUT_N20 $1.00 if Pete Buttigieg wins the nomination;
$0.00 otherwise
AKLO_N20 $1.00 if Amy Klobuchar wins the nomination;
$0.00 otherwise
BSAN_N20 $1.00 if Bernie Sanders wins the nomination;
$0.00 otherwise
EWAR_N20 $1.00 if Elizabeth Warren wins the nomination;
$0.00 otherwise
DROF_N20 $1.00 if another candidate wins the 2020 Democratic Convention nomination;
$0.00 otherwise

DROF_N20 stands for Democratic Convention Rest of Field and represents all candidates not separately listed in this market.

As the 2020 Presidential campaign progresses, new candidate-specific contracts may be introduced as spinoffs of the DROF_N20 contract as described below. The order in which contracts appear on the trading screen may also change. However, once a contract is listed it will remain active until after the convention when all contracts in the market are liquidated.

Determination of Liquidation Values

This is a Winner-Takes-All market. The contract that denotes the actual outcome of the 2020 Democratic Convention will have a liquidation value of $1.00, all others will have values of $0.00.

The contract, JBID_N20, will be liquidated for $1.00 after the 2020 Democratic Convention if Joe Biden is elected by the convention delegates as the official Democratic nominee for the presidency. If he is not named as the Democratic nominee, the liquidation value of the JBID_N20 contract will be $0.00. Similarly, other candidate-specific contracts will be liquidated for $1.00 or $0.00 depending upon whether or not the associated candidate becomes the Democratic Presidential nominee. The contract DROF_N20 will have a liquidation value of $1.00 if some candidate not listed in this market is the Democratic Convention nominee; its liquidation value will be $0.00 if one of the listed candidates is the nominee.

The New York Times website will be the official source for nomination results.

Liquidation formulas can be viewed while you are logged into the IEM trading system by clicking on the market name, DCONV20, at the upper righthand corner of the market window.

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

Contract Spin-Offs

The Directors of the IEM reserve the right to introduce new contracts to the market as spin-offs of the DROF_N20 contract. When a contract spin-off occurs, each DROF_N20 contract will be replaced by two new contracts: a candidate-specific Democratic nominee contract and a new DROF_N20 contract. The new DROF_N20 contract will represent all remaining un-named Democratic candidates in the market.

No trader of pre-spinoff DROF_N20 contracts will be adversely affected. Traders will receive the same number of each of the new contracts as they held in the original contract, and the sum of the liquidation values of the new contracts will equal the liquidation value of the original contract. Because the value of the DROF_N20 contracts may change when new candidate-specific contracts are spun off, all outstanding DROF_N20 bids and asks will be canceled at the time of the spinoff.

Decisions to spin-off contracts will be based on the judgment of the IEM directors. One input into the decision will be the degree of national news coverage of the candidate indicating the candidate's viability. National news sources to be used include The Los Angeles Times, The New York Times, USA Today, The Wall Street Journal, and The Washington Post.

Spin-offs will be announced at least two days in advance. 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 WebEx login screen.

Contract Bundles

Fixed-price 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 bundle is $1.00. Because only one official Democratic nominee will result from the convention process, the total payoff from holding a bundle consisting of one of each contract 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 "DCONV20" and the radio button "Buy at Fixed Price" from the Bundle Orders list to buy bundles. Select "DCONV20" 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 contract bundle at current ASK prices, use the "Bundle Orders" option as above but select "DCONV20" and the radio button "Buy at Market ASK Prices." To sell a contract bundle at current market BID prices, select "DCONV20" and the radio button "Sell at Market BID Prices."

Market Closing

This market will close at 12:00PM, C.D.T. the day after the final Presidential nomination ballot at the Democratic Convention. At that time, or as soon thereafter as results are available, liquidation values will be declared and funds credited to the cash accounts of market participants.

Market Access

All current and newly enrolled IEM traders with US dollar denominated accounts will automatically be given trading rights in the 2020 Democratic National Convention Market. Access to the market is achieved by choosing DCONV20 in the "Market Selection" pull-down menu on either the Login-Welcome screen or at the bottom of the Trading Screen.

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. New traders can open accounts using the IEM OnLine Account Application. 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 or by completing and mailing the paper version of the request form. Additional information about requesting withdrawals is available at