IEM PROSPECTUS: RCONV00
2000 Republican National Convention Presidential Nomination
Winner-Takes-All Market

At 5:00PM, C.S.T. Monday, June 14, 1999 the Iowa Electronic Market (IEM) will open trading in a market based on the Presidential nomination process of the 2000 Republican National Convention. This document describes that market and should be viewed asa supplement to the Trader's Manual. Except as specified in this prospectus, trading rules for this market are the same as those specified in the Trader's Manual for the Iowa Electronic Market.

Contract liquidation values in this nomination market will be determined by by the outcome of the 2000 Republican National Convention. There are 5 contracts in this market representing 5 possible unique outcomes. The liquidation value of the contract which represents the actual outcome of the 2000 Republican Convention will be $1.00. All other contracts will have a value of $ 0.00.


CONTRACTS

The financial contracts initially traded in this market are:

Code Contract Description
BUSH     $1.00 if George W. Bush wins the nomination; $0.00 otherwise
DOLE     $1.00 if Elizabeth Dole wins the nomination; $0.00 otherwise
FORBES     $1.00 if Steve Forbes wins the nomination; $0.00 otherwise
QUAYLE     $1.00 if Dan Quayle wins the nomination; $0.00 otherwise
RCROF     $1.00 if another candidate wins the nomination; $0.00 otherwise

RCROF stands for "Republican Convention Rest of Field" and represents all candidates not separately listed in this market.

As the 2000 Presidential campaign progresses, new candidate-specific contracts may be introduced as spinoffs of the RCROF contract as described below. However, once a contract is listed it will remain active until after the convention when all contracts in the market are liquidated.


DETERMINATION OF LIQUIDATION VALUES

This is a Winner-Takes-All market. The contract that denotes the actual outcome of the 2000 Republican Convention will have a liquidation value of $1.00, all others will have values of $0.00

The contract BUSH will be liquidated for $1.00 after the 2000 Republican Convention if Governor Bush is elected by the convention delegates as the official Republican nominee for the presidency. If he is not named as the Republican candidate, the liquidation value of the BUSH contract will be $0.00. Similarly the contracts DOLE, FORBES and QUAYLE will be liquidated for $1.00 or $0.00 depending upon whether or not the associated candidate becomes the Republican Presidential nominee. The contract RCROF will have a liquidation value of $1 if some candidate not listed in this market is the Republican Convention nominee; its liquidation value will be $0.00 if one of the listed candidates is the nominee.

The New York Times will be the official source for nomination results

Liquidation formulas can be viewed while you are logged into the IEM trading system by clicking on the market name, RCONV00, at the upper righthand corner of the market window.

The judgment of the IEM Governors and Directors will be final in resolving questions of typographical or clerical errors.


CONTRACT SPIN-OFFS

The Directors of the IEM reserve the right to introduce new contracts to the market as spin-offs of existing contracts. When a contract spin-off occurs, an original contract will be replaced by two or more new contracts which subdivide the payoff space of the original contract. No holder of the pre-spinoff contracts will be adversely affected. Traders will receive the same number of each of the new contracts as they held in the original, and the sum of the liquidation values of the new contracts will equal the liquidation value of the original.

Only the contract, RCROF, is subject to spinoffs.

Decisions to spin-off a contract will be announced at least two days in advance of the spin-off. The new contract names, the specifications regarding liquidation values and the timing of the spin-off will be included in the announcement. This announcement will appear as an Announcement on your WebEx login screen.


MARKET CLOSING

This market will close at 12:00PM, C.S.T. the day after the final Presidential nomination ballot at the convention. At that time, or as soon thereafter as results are available, liquidation values will be declared and funds credited to the cash accounts of market participants.


CONTRACT BUNDLES

Bundles consisting of one share of each of the contracts in this market can be purchased from or sold to the IEM system at any time. The price of each bundle is $1.00. Because exactly one of the outcomes denoted by the contracts in this market will result from the election, the total payoff from holding a bundle consisting of one of each contract until the market closes is $1.00.

To buy or sell bundles from the IEM exchange, use the "Market Orders" option from the Trading Console.


MARKET ACCESS

All current and newly enrolled IEM traders with US dollar denominated accounts will automatically be given access rights to th2 2000 REPUBLICAN NATIONAL CONVENTION Market. Access to this market is achieved by logging into the IEM and choosing RCONV00 from the Navigation Bar.

Funds in a trader's cash account are fungible across all markets so new investment deposits are not required. Additional investments up to the maximum of $500 can be made at any time. Requests to withdraw funds may be submitted at any time by sending email to the IEM Office (iem@uiowa.edu).