U.S. regulators barred a Chicago exchange from allowing tradesin derivatives tied to the outcome of the 2012 U.S. elections,deciding that the transactions would constitute gambling andundermine the public interest.

The North American Derivatives Exchange sought to offercontracts tied to the outcome of the elections and whetherDemocrats or Republicans would control the U.S. House, Senate andWhite House. The U.S. Commodity Futures Trading Commission, whichregulates futures contracts tied to wheat, oil, natural gas andother commodities, said yesterday that it ordered the exchange notto list election contracts for clearing or trading.

“We felt strongly that these products met all legal andregulatory criteria for listing, and that the public would benefitfrom having these products traded on a well-regulated exchange,”Tim McDermott, general counsel at Nadex, said in an e-mailedstatement.

The company said the contracts would have allowed traders totake an economic position on the election's consequences for taxpolicy and other issues. The company said existing political eventscontracts, allowed by the CFTC to trade on the Iowa ElectronicMarket, an academic project of the University of Iowa, have offeredaccurate predictions of election outcomes.

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