The U.S. Securities and Exchange Commission approves the proposal for a prediction market option linked to the Nasdaq and benchmark indices.

According to a regulatory order, the U.S. Securities and Exchange Commission approved on Thursday a proposal by the Nasdaq Options Market to list and trade a new category of stock market prediction tool tied to major indexes. The product launched by the operator of this New York-based exchange is a cash-settled contract that will pay a fixed amount based on whether the index closing price is above or below a set level at expiration. The SEC stated that binary options - contracts that provide returns based on a "yes" or "no" bet outcome - will have a fixed, all-or-nothing exercise settlement amount of $100 if in-the-money at expiration. The options product tied to the Nasdaq 100 index and Nasdaq 100 Micro Index will be first introduced by the Nasdaq-operated U.S. electronic options exchange Nasdaq MRX.