One of the emblematic cases, related to the topic has been solved this month with the decision of The Commodity Futures Trading Commission (CFTC).
Last Monday, the commission issued an order prohibiting the North American Derivatives Exchange (Nadex) from listing binary options on political events.
At the end of the last year, Nadex self-certified a set of political event derivatives contracts. The self-approved financial instruments are binary options, offering a pay out based upon the results of various U.S federal elections to be held in 2012.
In order to test the demand and adequacy to the binary options market needs CFTC initiated a 90-day review period of binary options in early January. Based on a review of the complete record the commission determined that the aforementioned binary options on political events embark on gaming and are contrary to the public interest. As a result, CFTC stated that these political event derivatives contracts cannot be listed or made available for clearing or trading.
Nadex has been requested lately to withdraw its self-certification rules, related to enabling trading of the contracts.