American Civics Exchange Lets Traders Win Real Money Predicting Political Outcomes

Oct 29, 2013, 12:06 ET from American Civics Exchange

Exchange's new platform awards fantasy futures traders up to $5,000 per month

NEW YORK, October 29, 2013 /PRNewswire-USNewswire/ -- American Civics Exchange announced today that it is introducing monthly cash payouts to its otherwise play-money market, beginning November 1.  The Exchange is a developer of policy futures products intended to enable businesses and investors to hedge financial exposure to changes in public policy.

Users of the free service will be able to manage portfolios of binary event futures, each tied to a pending political outcome, including a delay of the Obamacare individual mandate, a second government shutdown, the timing of the Fed taper, approval of the Keystone Pipeline, a reduction in the corporate income tax rate, FDA approval of diabetes drug Forxiga, and Congressional balance of power after the midterm elections.

While traders transact using fake money, the three top performing portfolios each month will be awarded real cash payouts of $5,000, $1,000 and $250. Founder and CEO Flip Pidot said the company plans to list its products for regular exchange trading upon regulatory approval, with the exception of electoral outcomes.

"Policy uncertainty has always been a source of external financial risk to institutions, but rarely with the crippling severity of the current climate," said Pidot.  "With no existing market for that risk, that massive unhedged exposure causes real harm to businesses, investors, employees, and the real economy, as projects are delayed, hiring is frozen, and reliable forecasting becomes farcical."

Even before launching regulated exchange trading, Pidot argued there is economic value to a robust prediction market for policy outcomes.  "If the market is a decent prediction machine, it will help collapse policy uncertainties, meaning affected institutions and individuals can make more informed decisions and avoid that political paralysis."

Recent performance suggests its predictions may be better than decent.  Last month, the exchange launched a government shutdown duration market, where trading activity immediately and consistently predicted the shutdown would last between two weeks and a month, far longer than the early conventional wisdom suggested and more than twice the historical average.

SOURCE American Civics Exchange