Can any index be converted to a respective trading instrument using F&O contracts?

Question

Pardon me if this sounds silly, I am not a finance student but it seems to me that any index can be used as a trading instrument with proper regulations. For example much like forex, with currency pairs, how about population pairs between countries? Or even better combining education and population into one index indicative of skilled human resources? Is this idea flawed? If it isn't, where to pitch ideas for new trading instruments? Also which organisation(s) handle the implementation of new trading instruments or is it just the normal exchanges? 
P.S.: Even if this idea is completely flawed, on a side note, it'll make good fiction, where time is a fixed-income liquid asset. :P

D Stanley · Accepted Answer

Yes, theoretically, one could "trade" futures and options on just about any statistic. In fact, weather derivatives were once a hot (pun intended) trading instrument when Enron was involved. They are still traded somewhat but not as heavily as they once were.
However, the reason that these exist was that there was some sort of direct financial consequence. Farmers could buy weather derivatives as "insurance" against drought or other unusual weather patterns. Ski resorts could use them to compensate them for lower snowfall totals. Energy companies could use them to hedge against the effect of weather on fuel for heating and cooling needs.
So if there is some plausible financial consequence for, say, population difference, then it's reasonable to imagine some sore of financial instrument based on it. The main thing you'd need is agreement on how to measure such a difference.

Can any index be converted to a respective trading instrument using F&O contracts?

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