CFTC Releases Staff Advisory on Mention Markets
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The CFTC’s Division of Market Oversight issued a staff advisory on Sept. 22 about event contracts tied to whether a person will say certain words, appear at an event, or otherwise interact with someone. The advisory says contracts of that kind may be treated as especially vulnerable to manipulation, and exchanges that want to list them should be prepared to make a stronger case to regulators. It comes after a separate CFTC fine involving a former White House teleprompter operator and speech-linked contracts.
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What it means
Exchanges that list event contracts of this kind are the main group affected, because the staff advisory sets out a higher bar for listing them. Traders who use markets tied to a person’s words or appearances also face a market where staff have flagged a manipulation risk in the contract design itself. (per unchainedcrypto.com)
In practice, the advisory changes what an exchange must show before listing these contracts, while the basic idea of trading event contracts remains in place. The line now drawn by staff is not about all prediction markets, but about contracts that settle on a named person’s speech or conduct. (per cftc.gov)
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