United States regulators have released new guidance aimed at strengthening oversight of the fast-growing prediction markets sector as trading in event-based derivatives continues to expand.
The advisory was issued on 12 March by the Division of Market Oversight of the Commodity Futures Trading Commission, focusing on the listing and trading of event contracts on designated contract markets.
Prediction markets allow traders to buy and sell contracts tied to the outcome of future events, with payouts usually determined by whether a specific event occurs or fails to occur.
These instruments are commonly structured as binary derivatives where settlement depends entirely on the real-world outcome of an event such as an election result, economic release, or sports competition.
Regulators said the growing popularity of these markets has drawn increasing attention as millions of traders begin using them to speculate on future outcomes.
The Commodity Futures Trading Commission said the advisory aims to clarify how existing federal trading rules apply to the emerging sector.
Officials emphasised that exchanges listing event contracts must comply with the core principles outlined under the Commodity Exchange Act.