Trading on the Iowa Electronic
Markets
Introduction
Introduction
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
The IEM is an on-line futures market
Payoffs are based on real-world events
such as:
– political outcomes
– companies' earnings per share (EPS)
– stock price returns

Operated by University of Iowa Henry B.
Tippie College of Business faculty as an
educational and research project
Agenda
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Signing up for an IEM account
Connecting to the IEM
Navigating in the IEM
Trading with the IEM
Getting Account Information
Getting Market Information
Signing Up for an IEM Account
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
Start at
http://iemweb.biz.uiowa.edu/signup
Follow instructions provided in class
– Warning: use only forms that you were
instructed to use.
– Using the wrong forms may result in
additional fees
Connecting to the IEM

Connect using a web browser
– Internet browsers are Microsoft Internet
Explorer, Netscape, AOL, etc.

Web address:
– http://iemweb.biz.uiowa.edu/
Logging Into the IEM
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Address:
– http://iemweb.biz.uiowa.edu
– Select the “login and trade” link.

Logging into the Practice Markets
– Trader ID: aaa, bbb, ccc, …
– Password: aaa, bbb, ccc, …
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Logging into your own account:
– Use Trader ID and password received from the IEM
– For security, CHANGE YOUR PASSWORD the first time
you login!
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Logging out
– REMEMBER to log out for security reasons!
Using the IEM
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Trading screen divided into three sections
– Market Window

shows current market status
– Trading Console
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where you enter your orders
– Navigation Bar

to move around between markets or generate
reports
The IEM Screen
The WebEx Market Window
The Market Window
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
Top panel of your screen
Shows
– current market information
– your holdings in cash and assets
– your outstanding orders
The WebEx Navigation Bar
The WebEx Navigation Bar
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Bottom panel of your screen
5 buttons:
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–
–
–
–
"Go To Market" Button
"Market Info" Button
"My Account" Button
"Help" Button
"Logout" Button
Trading in the IEM
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Trading Rights
– All traders can trade in political markets
– Only academic traders can trade other markets
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Markets and the Objects Traded
– IEM contains many markets
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Each market is related to some future event
– Assets are the objects traded in the market

The future event determines how assets in the
market will payoff
Trading in the IEM
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Three ways to buy and sell assets
– Market Orders
– Limit Orders
– Bundle transactions
Market Order: Definition

Request to buy or sell an asset at the
current ask and bid price

Consists of:
– Instruction to buy or sell
– Asset ticker symbol
– Quantity you wish to trade
Placing a Market Order

Use the market order menu

Choose the asset you wish to buy or sell
from the Action/Asset select list
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Specify the quantity

Click on the Market Order button
Market Orders in WebExchange
Limit Order: Definition


A request to buy or sell an asset at a
specified price for a specified period of
time
Consists of:
–
–
–
–
–
an instruction to buy or sell
an asset ticker symbol
the quantity you wish to trade
a price at which you are willing to trade
an expiration date and time after which the
order will not be traded
Placing a Limit Order
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Use the limit order menu
Choose the asset you wish to buy or sell
from the Action/Asset List
Specify
– price
– quantity
– expiration date and time

Click on the Limit Order button
Limit Orders in WebExchange
Buying and Selling Bundles

A bundle
– is a set of assets which can be purchased from
or sold to the exchange at a fixed price
– This fixed price is the guaranteed aggregate
liquidation value of the assets
– Processed as market orders in IEM
Withdrawing Orders
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
You can withdraw any of your bid and ask orders
as long as they have not traded or expired.
To withdraw an order
– Access the market in which the order was placed.
– Click on the bid or ask hypertext to the right of the
appropriate asset
– Find the order you wish to withdraw and click on the
word delete to the right of the order
– Once an order is deleted it cannot be retrieved
Order Queues
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Limit Orders are maintained in queues
Orders are listed in these queues in priority order.
– Bid orders with higher prices have higher priority than
orders with lower prices.
– Ask orders with lower prices have higher priority than
orders with higher prices.
– Within a particular price, older orders (orders that
were placed sooner) have higher priority than newer
orders.
Other Aspects of Trading
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Short Sales and Margins
– You cannot sell short or buy on margin
– Feasibility Checks
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Self Trades
– You cannot trade with yourself

Spinoffs and Splits
– The IEM governors can declare asset spinoffs and
splits
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Asset Liquidations by the Exchange
– The liquidation formula describes how and when
assets will payoff
– Once assets are liquidated, they can no longer be
traded
Other Aspects of Trading

Short Sales and Margins
– You cannot sell short or buy on margin
– Feasibility Checks

Self Trades
– You cannot trade with yourself

Spinoffs and Splits
– The IEM governors can declare asset spinoffs and
splits

Asset Liquidations by the Exchange
– The liquidation formula describes how and when
assets will payoff
– Once assets are liquidated, they can no longer be
traded
Other Aspects of Trading

Short Sales and Margins
– You cannot sell short or buy on margin
– Feasibility Checks

Self Trades
– You cannot trade with yourself

Spinoffs and Splits
– The IEM governors can declare asset spinoffs and
splits

Asset Liquidations by the Exchange
– The liquidation formula describes how and when
assets will payoff
– Once assets are liquidated, they can no longer be
traded
Reports About Your Account
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Trades Report
Outstanding Asks Report
Outstanding Bids Report
Orders and Order Resolution Report
Portfolio Report
Liquidation Report
Reports About Your Account
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Trades Report
Outstanding Asks Report
Outstanding Bids Report
Orders and Order Resolution Report
Portfolio Report
Liquidation Report
Reports About Your Account
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Trades Report
Outstanding Asks Report
Outstanding Bids Report
Orders and Order Resolution Report
Portfolio Report
Liquidation Report
Reports About Your Account

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Trades Report
Outstanding Asks Report
Outstanding Bids Report
Orders and Order Resolution Report
Portfolio Report
Liquidation Report
Reports About the Market
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Price History
– Daily contract volumes, dollar volumes, high
prices, low prices, average prices and closing
prices

Current Quotes
– Best bids, best asks and last trade prices

Prospectus
– READ IT BEFORE TRADING!
Reports About the Market

Price History
– Daily contract volumes, dollar volumes, high
prices, low prices, average prices and closing
prices

Current Quotes
– Best bids, best asks and last trade prices

Prospectus
– READ IT BEFORE TRADING!