CFTC weighs tighter rules for prediction markets
Chairman Selig signals forthcoming rule changes as industry leaders debate manipulation risks and the case for federal oversight of event contracts.
The CFTC’s new Innovation Advisory Committee opened its first meeting with a focus on prediction markets, where regulators and industry executives debated whether current rules adequately protect against manipulation and insider trading.
More than 30 members took part, including executives from CME Group, Nasdaq and Robinhood, as well as Polymarket founder Shayne Coplan and Kalshi co-founder Luana Lopes Lara.
A key point of contention was self-certification, which allows platforms to propose and list event contracts without obtaining advance approval from the CFTC. CME’s Terry Duffy said the process has enabled thousands of contracts to reach markets without sufficient regulatory scrutiny and could expose platforms to manipulation.
Lara defended self-certification, arguing that prediction markets need to move quickly when contracts relate to fast-moving events.
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Members also focused on “mention markets,” which allow traders to speculate on whether particular words or statements will be made by public figures. Robinhood CEO Vlad Tenev said the CFTC should examine those markets closely rather than calling for an outright ban.
Selig laid out a three-step regulatory agenda that includes clarifying which event contracts can be prohibited, updating reporting requirements and strengthening rules around contract listings and consumer protections.