2007 Philadelphia Democratic Mayoral Primary Election - Vote Share Market
At 11:59am, Central Standard Time, Tuesday, April 3, 2007, the Iowa Electronic Market (IEM) will open trading in a market based on the vote-shares received in the 2007 Philadelphia Democratic Mayoral Primary Election. 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 votes cast in the 2007 Philadelphia Democratic Mayoral Primary Election. At market open, there are six contracts in this market representing five named candidates and rest-of-field. Other named candidates may be added to this market according to the contract spin-off procedure described below. The liquidation value of each contract will be based on the percentage of popular vote cast for each of the named candidates and rest-of-field. For purposes of determining payoffs, write-in votes will be considered part of rest-of-field.
CONTRACTS
Initially the market will consist of six contracts: five representing named candidates in the 2007 Philadelphia Democratic Mayoral Primary Election and one representing all other candidates in that primary.
The initial financial contracts traded in this market are:
| Code | Contract Description |
| BRADY_VS | $1.00 times the percentage vote share received by U. S. Rep. Bob Brady |
| EVANS_VS | $1.00 times the percentage vote share received by State Rep. Dwight Evans |
| FATTAH_VS | $1.00 times the percentage vote share received by U. S. Rep. Chaka Fattah |
| KNOX_VS | $1.00 times the percentage vote share received by Tom Knox |
| NUTTER_VS | $1.00 times the percentage vote share received by Michael Nutter |
| PDROF_VS | $1.00 times the percentage vote share received by all other candidates in the primary |
PDROF stands for 2007 Philadelphia Democratic Primary Rest of Field and represents all candidates not separately listed in this market and all write-in votes.
As the 2007 Philadelphia Democratic Mayoral Primary Election campaign progresses, new candidate-specific contracts may be introduced as spin-offs of the PDROF_VS 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 the end of the market when all contracts are liquidated.
DETERMINATION OF LIQUIDATION VALUES
This is a Vote Share market. Contract payoffs will be determined by the proportions of total official vote share that each candidate received in the 2007 Philadelphia Democratic Mayoral Primary Election. Specifically, each contract will pay off $1 times the associated candidate's proportion of the total official vote count. For purposes of this market, all write-in votes will be counted as part of rest-of-field.
For instance, the contract, EVANS_VS, will be liquidated for $1.00 times State Representative Dwight Evans' share of the vote cast in the primary as reported in the official vote count. Similarly, other candidate-specific contracts will be liquidated for $1.00 times that candidate's vote share. The contract PDROF_VS will have a liquidation value of $1.00 times the vote share received by all other candidates named on the ballot plus all write-in votes.
The official final vote count for the primary certified by the Philadelphia City Commissioners will be the IEM's official source for primary results. This vote count is expected to be released no later than 20 days after the election.
After the official results are tabulated for the 2007 Philadelphia Mayoral Democratic Primary are reported, contracts will be liquidated based on the vote-shares associated with each contract. All write-in candidates will be considered part of rest-of-field.
Liquidation formulas can be viewed while you are logged into the IEM trading system by clicking on the market name, PDPRIM_VS, at the upper right-hand 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 PDROF_VS contract. When a contract spin-off occurs, each PDROF_VS contract will be replaced by two new contracts: a candidate-specific Democratic Primary candidate contract and a new PDROF_VS contract. The new PDROF_VS contract will represent all remaining un-named Democratic Primary candidates in the market.
For example, suppose that the PDROF_VS contract is split into (1) a named Democratic Primary candidate designated by NAMED where NAMED represents the new, named Democratic candidate and (2) a new PDROF_VS contract which represents remaining unnamed Democratic Primary candidates. The new contract NAMED will liquidate at $1 times the percentage of the official vote count for that named candidate.
No trader of pre-spin-off PDROF_VS 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 PDROF_VS contracts may change when new candidate-specific contracts are spun off, all outstanding PDROF_VS bids and asks will be canceled at the time of the spin-off.
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 news coverage of the candidate indicating the candidate's viability.
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 total vote-share is 100%, 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 bundles from the IEM exchange, use the Market Orders option from the trading Console. Select the option PDPRIM_VS (buy at fixed price) from the Market Orders list to buy bundles. Select the PDPRIM_VS (sell at fixed price) option to sell bundles. Purchases will be charged to your cash account and sales will be credited to your cash account.
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 "Market Order" option as above but select the option "PDPRIM_VS (buy at market prices)". To sell a bundle at current BID prices, select the option "PDPRIM_VS (sell at market prices)."
MARKET CLOSING
This market will remain open until contracts are liquidated. When official primary vote counts 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 2007 Philadelphia Democratic Mayoral Primary Election Vote Share Market. Access to the market is achieved by choosing PDPRIM_VS 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 page at http://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 to $500.
Requests to withdraw funds may be submitted at any time by completing the IEM's Online Withdrawal Request form (www.biz.uiowa.edu/iem/accounts/withdrawalrequestform.html) or by completing and mailing the paper version of the request form. Additional information about requesting withdrawals is available at the IEM website at http://www.biz.uiowa.edu/iem/accounts/withdrawals.html.
