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Speculating With Financial Derivatives Is Socially Harmful: Slate

Posted: 04/ 6/2012 9:15 am Updated: 04/ 6/2012 9:15 am

Financial Derivatives

Slate:

On Monday, the U.S. Commodity Futures Trading Commission issued an order prohibiting the marketing of a new set of derivatives that would have enabled traders to bet on the winners of national elections. While these “political events contracts”—the latest development in the world of prediction markets—have their partisans, the CFTC’s order was based on fundamentally sound logic that should be applied more broadly. Financial instruments that serve primarily as a means of speculation rather than hedging should be banned, just as gambling is illegal in most contexts.

Read the whole story at Slate

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Filed by Alexander Eichler  |