The Commodity Futures Trading Commission has published an Advanced Notice of Proposed Rulemaking to solicit public feedback on possible amendments or new regulatory approaches for event contracts that trade on prediction markets.
Chairman Michael S. Selig described the move as part of the Commission's effort to encourage responsible innovation across derivatives markets. According to the notice, the process seeks to lay the groundwork for rulemaking that rests on a rational interpretation of the Commodity Exchange Act, and to reaffirm that the CFTC will assert exclusive jurisdiction over prediction markets.
The ANPR asks market participants and other interested parties to provide views on a set of focused topics. Among them are how the statutory core principles and existing Commission regulations should be applied to prediction markets, and which forms of event contracts - if any - could be viewed as contrary to the public interest and therefore subject to prohibition.
In addition to questions about permissible contract types, the notice requests commentary on cost-benefit factors related to prediction markets. The Commission intends to use the submissions to inform any potential future action, which may include the development of formal rules.
Stakeholders wishing to contribute must submit written comments within 45 days of the notice's publication in the Federal Register. The CFTC has made its Public Comments Portal available as the channel for electronic submissions.
Context and next steps
The information collected through this notice will be used by the Commission to help determine whether and how to proceed with regulatory changes pertaining to prediction-market event contracts. The ANPR represents an early, information-gathering phase; any subsequent agency action would be guided by the comments and materials received.
Members of the public and market participants should note the 45-day comment deadline tied to the notice's Federal Register publication and use the CFTC Public Comments Portal to file their responses.