Election gags and efficient markets

New Zealand's election stock market has to suspend trading from midnight Saturday 'till polls close that evening. Why? The election gag law:

Between 12am and 7pm on Election Day, trading on all NZ political contracts will be suspended. This is to comply with s197 of the Electoral Act, which very roughly says that it is illegal for people to speak to each other on Election Day, and following advice from the Electoral Commission. Between those times:

• Trading on all contracts under Election 2011 and Politics NZ will be suspended. It being perfectly legal to influence voters with not-quite current data, visitors to the site will be able to view the contracts but not trade them. Trading on contracts in other categories will continue.
• The commenting on the forum will also be disabled in this period.
• A banner will alert visitors to the fact that they are looking at data that is not current.

... Contracts not listed in NZ Politics and Elections 2011 will generally remain open, although we reserve the right to suspend trading on contracts in other categories which we discover pose a threat to democracy.

Any pre-suspension price manipulation will be backed out and traders responsible may find their iPredict accounts suspended until after Official Results Declared on 10 December.

Read that last paragraph again. Recall that manipulators typically increase market efficiency by providing liquidity and subsidizing other traders. But that doesn't work where the Electoral Commission bans trading at 12:00 Friday night. And so Matt's going to have to be up late figuring out which trades are attempts at jerking the prices around and then unwinding them rather than letting the distributed set of traders do it for him. The Electoral Commissioner's rule makes it more rather than less likely that somebody tries to use iPredict prices to affect folks' voting intentions.

I'm totally swamped. But here's a mission for somebody. Get the price series on some of the electoral contracts at iPredict. Run some correlations with NZX stocks that will continue trading on Saturday and whose price movements are likely correlated with election outcomes - try Contact, Chorus, Fletcher Building for starters. Ag stocks will also take a hit of Labour/Green are in as they'd then come under the ETS more quickly. If there's any reasonable correlation between those contracts and changes in the likelihood of a National victory, publish the method and results on Friday, with instructions on how anybody could pull up the Saturday prices and plug them into the algorithm. Then, on Saturday, just post the NZX prices of those contracts without mentioning the election. Ta-dah! You've just created a noisy proxy for the iPredict prices that's easily updated on election day without risking a spanking from the electoral commissioner.*

I wonder whether CentreBet will update prices during the day.

*Don't take legal advice from me; I'm likely wrong.