Citadel Securities has told regulators that prediction market contracts tied to publicly-traded companies should be overseen by the Securities and Exchange Commission rather than the Commodity Futures Trading Commission, which currently has responsibility. In a letter sent Wednesday, the firm argued that contracts based on key performance indicators are security-based swaps falling under SEC jurisdiction, and warned that CFTC oversight risks market fragmentation. Prediction markets allow bets on events like sports or inflation, and KPI contracts, a subset, let traders speculate on metrics such as Kroger's sales or United Airlines' passenger numbers. Citadel's Stephen Berger cited concerns about insider trading, noting the SEC and equities exchanges have extensive cross-market surveillance experience. The letter comes as both agencies seek to harmonize their regulatory regimes amid the rapid growth of prediction markets.
Kroger Company
United Airlines Holdings IncCitadel Securities urges SEC oversight, potentially affecting its business.
