1. CFTC Proposes Comprehensive Prediction-Market Public Interest Framework
On June 12, the Commodity Futures Trading Commission (CFTC) published a notice of proposed rulemaking (RIN 3038–AF65) to amend its rules concerning event contract derivatives traded on prediction markets. The proposal further specifies the types of event contracts that may be subject to a determination that they are contrary to the public interest under Commodity Exchange Act (CEA) Section 5c(c)(5)(C), such that they may not be listed for trading or accepted for clearing on or through a CFTC-registered entity.
The proposed amendments introduce several key elements. First, the CFTC proposes a definition of “gaming” and a rule regarding when event contracts “involve” an underlying activity. Second, the proposal sets out factors the CFTC would apply in its public interest determination, including (i) price discovery and information aggregation utility, (ii) potential threats to market integrity, and (iii)
