PANews reported on March 13 that, according to Bloomberg, the U.S. Commodity Futures Trading Commission (CFTC) has issued its first guidance on the risk of market manipulation, requiring exchanges to consult with regulators before launching markets that may be susceptible to manipulation and insider trading. The CFTC stated that exchanges can continue to use self-certification processes to introduce new markets, but must consider whether certain event contracts pose a higher risk of manipulation or price distortion and communicate with staff from the early design stages.
The agency also released a preliminary notice of proposed rules, soliciting public feedback on how to amend existing prediction market rules. The CFTC chairman stated that this move aims to develop new rules based on a reasonable interpretation of the Commodity Exchange Act, while assuring the public that the CFTC will exercise exclusive jurisdiction over prediction markets. The guidance specifically states that if event contracts are determined to violate the public interest, the CFTC may block contracts related to assassination, war, or terrorism. However, the document does not explicitly state that these markets will be completely banned. The new guidance indicates that sports contracts can continue, but exchanges should cooperate with sports leagues to monitor potential insider trading and work with leagues to handle pending investigations.
