The Commodity Futures Trading Commission on Wednesday published a Notice of Proposed Rulemaking that would amend Regulation 40.11 and add Appendix F to part 40, creating a structured framework for evaluating event contracts involving enumerated activities listed by CFTC-registered entities.
The Commission said it has observed growth in the number and variety of event contracts, including contracts referencing sporting events. The proposal targets contracts that involve terrorism, assassination, war, gaming, or conduct unlawful under federal or state law, as set out in Section 5c(c)(5)(C) of the Commodity Exchange Act.
Under the proposed rules, the CFTC would apply public-interest factors on a contract-by-contract basis through a 90-day review process. The proposal also defines key statutory terms, including “involve” and “gaming.”
“This proposal gives the Commission a durable, transparent framework to identify the contracts Congress directed us to scrutinize while letting legitimate markets move forward,” said CFTC Chairman Michael S. Selig.
The NPRM follows an Advanced Notice of Proposed Rulemaking on prediction markets published in March. The Commission said the current proposal is narrowly tailored to address one aspect of that ANPRM and that further rulemaking may follow.
