CFTC tells prediction markets to stop filing broad template event contracts

In a July 24 staff advisory, the Commodity Futures Trading Commission’s Division of Market Oversight reminded designated contract markets how to self-certify event contract series, and warned against broad, template-style submissions that bundle many possible contract variations into a single filing. The agency said those filings make it harder to review whether the market has supplied the required information, explanation and analysis, including settlement methodology, data sources and compliance with core principles.

The guidance said broad template certifications should not be submitted under Commission Regulation § 40.2(a). It also said the practice can prevent market participants from accessing and evaluating the information needed to understand the product, not just regulators.

The staff advisory followed an earlier March advisory, which had already told DCMs that overly broad or generalized contract specifications could impair a complete explanation and analysis of compliance. That earlier notice also said product submissions should identify the settlement methodology, the data sources on which settlement will be based and an assessment of those sources’ reliability, objectivity and resistance to manipulation.

The July advisory did not ban class-based filings altogether. It said closely related event contracts may be certified as a class under § 40.2(d), or submitted for approval under § 40.3, when the contracts share the required features and each individual swap in the class meets the conditions in the rule.

Those conditions are narrow. Under the advisory’s description, each contract in a class must be based on an excluded commodity, use identical pricing sources and identical formulas, procedures and methodologies for calculating reference prices and payment obligations, and rely on identical currency or currencies. The advisory also said the class filing must reference a prior, specific contract already certified under § 40.2(a) or approved under § 40.3, not a prior broad template.

The agency gave sports examples to draw the line. It said a DCM could consider self-certifying a 2026 FIFA World Cup match series by referencing a prior Mexico-South Africa example if the pricing source and methodology were identical. It said the same approach should not be used to certify all 2026 MLS Leagues Cup matches from a World Cup example, because the two competitions have different rules that produce different pricing methodologies.

The advisory also tied the filing rules to market integrity. Because cash-settled derivatives can create incentives to manipulate the data used to derive prices, the staff said DCMs must carefully consider the risk of distortion, the commercial acceptability of the price series, its public availability and timeliness, and the reliability of the settlement source before listing.

DMO said a DCM should specifically identify the settlement sources in its certification, because the analysis cannot be properly done before listing unless those sources are known. If a self-certification is inadequate, the staff said, DMO may recommend that the Commission stay the listing or require the market to withdraw the filing and resubmit individual contracts for review.

The advisory also said DCMs should not assume that filing multiple contracts together shields any one contract from individual review. At the same time, it said the Commission’s consolidated submission functionality remains available for separate but related certifications that share common materials, such as a rulebook, settlement source analysis or common terms and conditions, provided each contract is still certified individually or as a lawful class and the filing contains all required documents.

The CFTC said the approach was consistent with the purpose of § 40.2(d), which was added in a 2011 amendment to streamline product certification by allowing one submission for multiple swaps. At the time of that amendment, interest rate swaps made up about 77.5% of the total outstanding notional value of over-the-counter swaps, and the Commission said the class-certification process could also apply to certain swaps based on the occurrence or non-occurrence of events or contingencies.

The warning landed against a backdrop of rapid growth in prediction markets. A June Federal Register proposal said event-contract derivatives were rising quickly in popularity, and that trading volume across CFTC-registered prediction markets exceeded $25 billion in 2025. The same proposal said the Commission’s broader futures market had a notional value of around $31 trillion in 2025, and that the first prediction market was designated as a DCM in 2004.