Nasdaq Mulling Pari-Mutuel Tech for Potential Products

The model, widely used in gambling, could have applications for customized options and other exotic financial products.

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Whereas trading is largely conducted on what is essentially a bilateral basis—one party takes one side of the transaction, while their counterparty takes the other—this model is not always ideal for instruments that have underlying assets with thin liquidity.

As such, Nasdaq is examining the possibility of incorporating pari-mutuel models and technology for certain markets. Pari-mutuel models place bets into a pool, and pay-outs are distributed among winning votes.

Given this model, there

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