The Division of Market Oversight of the Commodity Futures Trading Commission authorized the Victoria University of Wellington, New Zealand to operate a marketplace for the trading of certain winner-take-all event contracts, and to offer such contracts to US persons without registration as a trading facility under relevant law and CFTC rules.

The university’s contracts—often generically known as binary options—are designed to help predict (1) events related to the selection of the US president and vice president, as well as which party will control Congress, and (2) decisions of the Federal Open Market Committee regarding the federal funds target rate.

In its approval, DMO distinguished the university’s political event contracts from those proposed by the North American Derivatives Exchange and disapproved by the CFTC in 2012. The university, said DMO, unlike Nadex, did not claim that its proposed contracts could be used for hedging or as a price-basing utility. Instead, they are proposed solely as “an academic exercise demonstrating the information gathering and predictive capabilities of markets.” Moreover, said DMO,

…because participation levels and maximum allowable investments in the University’s proposed contracts would each be capped at very low levels, the University’s proposed political event contracts would not have the same potential for compromising the integrity of elections as would Nadex’s disapproved political event contracts, which were much larger.

In connection with its proposed marketplace, DMO will not require the university to register as a designated contract market, swap execution facility, or foreign board of trade. DMO condoned limited advertising that prominently discloses that the marketplace is “unregulated, experimental and being operated for academic purposes.”

In 1993, the CFTC’s Division of Trading and Markets approved a smaller-scale non-for-profit marketplace listing binary political event and economic indicator options by the University of Iowa.