What is the purpose of the American Civics Exchange?
To offer a reliable, market-based political risk management solution to businesses and qualifying individuals.

How does it work?
Market participants buy and sell binary futures contracts on a web-based trading platform, similar to those used for online stock trading.  Positions in these contracts either pay out a pre-set value or expire worthless, depending on the occurrence or non-occurrence of an underlying political outcome (an increase in a tax rate, enactment of a piece of legislation, etc.) before the expiration date.  A business or investor with an inherent, adverse exposure to such an outcome can therefore hedge that risk by buying contracts that will increase in value if/when that outcome occurs.

Please visit our Background page for details on market operations, contract structure, sample contract categories, and regulatory implications.

Is it legal?
Yes. The Exchange operates as an Exempt Board of Trade (EBOT) under the guidelines set forth in the Commodity Exchange Act (CEA) and the Commodity Futures Modernization Act. We have filed a notification letter with the Commodity Futures Trading Commission (CFTC) in 2009, electing to operate as an EBOT. The Exchange is not a Designated Contract Market (DCM) or any other CFTC-regulated entity. As such, the Exchange is not designated or licensed by the CFTC.

We intend to list our contracts on a CFTC-regulated DCM in the coming months. In addition to the transparency and regulatory oversight associated with trading on a regulated exchange, all trades will be cleared by a regulated Derivatives Clearing Organization (DCO), helping to minimize counterparty risk. Before real-money exchange trading begins, some or all of our products may be subject to Part 40.11 review by the CFTC.

Is it gambling?
No. Unlike gambling (casino gaming, sports books, online betting markets, etc.), a marketplace for political risk fulfills a legitimate economic purpose. Much like established futures markets for commodities, interest rates, foreign exchange, and weather, the Exchange offers a valuable risk management solution to market participants.

By hedging exposure to adverse political outcomes, participants are able to conduct their business with greater financial visibility and reduced variability due to factors beyond their control. The inclusion of market makers and institutional speculators (market participants without inherent financial exposure to the underlying events) increases liquidity, reduces order imbalances, and contributes to the smooth functioning of the market.

I have an idea for a contract that I'd like to see traded on the Exchange.  Where can I submit suggestions?

Visit our Demo market, sign up, then follow the Propose new product link to tell us about it.

Before you submit your suggestion, bear in mind a few things:

-  Occurrence of the contract's underlying event should carry material financial consqeuences (positive or negative) for a significant population of businesses and investors.

-  The bulk of the financial risk associated with the underlying event should be expressable as a purely binary outcome (i.e. something that either does or doesn't happen by a certain date), the status of which can be unambiguously measured and verified by one or more 3rd party authority.

-  The outcome of the underlying event should currently be in significant doubt.

What safeguards are in place to prevent manipulation and insider trading?
Trading will take place on a CFTC-regulated Designated Contract Market (DCM) with clearing services provided by a regulated Derivatives Clearing Organization (DCO), in compliance with both long-standing federal oversight procedures and recent regulatory reforms.

ACE has established guidelines for permissible trading which exclude certain parties who might have access to material, non-public information about public policy outcomes and/or might be in a position to influence such outcomes (e.g. elected officials and certain government employees).

How do I open an account?
Visit our Demo market to open an account and begin trading play-money-denominated contracts with other market participants. As we approach launch of real-money exchange trading, we will post details on where and how to fund new accounts or trade ACE products through your existing brokerage account.


How can I get more information?
Please contact us with your questions.