Regulation 40.11 to implement CEA section 5c(c)(5)(C) as part of broader changes to the Commission’s part 40 regulations. 27 C. Past Commission Notices Regarding Prediction Markets In 2008, the Commission published the 2008 Concept Release, requesting input from the public on the appropriate regulatory treatment of prediction markets. 28 The 2008 Concept Release was prompted by the Commission’s receipt of requests for guidance related to the application of the CEA to prediction markets. 29 The Commission ultimately did not take further action at that time. In 2024, the Commission proposed rules to further specify the types of event contracts that fall within the scope of CEA section 5c(c)(5)(C) and are contrary to the public interest. 30 In 2026, the Commission withdrew the proposed rules to reconsider them “in light of various forms of state regulatory actions and litigation concerning the Commission’s exclusive jurisdiction over event contract derivatives listed on [DCMs] 27 Part 40 of the Commission’s regulations, more generally, implements the contract and rule submission requirements for registered entities set forth in CEA section 5c(c). For example, Regulation 40.2 sets forth the general process by which a DCM or SEF may list a new derivative contract for trading by providing the Commission with a written certification – a “self-certification” – that the contract complies with the CEA, including the CFTC’s regulations thereunder. 17 CFR 40.2; see also CEA section 5c(c)(1), 7 U.S.C. 7a- 2(c)(1). The Commission must receive the DCM’s or SEF’s self-certified submission at least one business day before the contract’s listing. 17 CFR 40.2(a)(2). Regulation 40.3 sets forth the general process by which a DCM or SEF may elect voluntarily to seek prior Commission approval of a derivative contract that the DCM or SEF seeks to list for trading. 17 CFR 40.3; see also CEA sections 5c(c)(4)-(5), 7 U.S.C. 7a- 2(c)(4)-(5). Amendments to an existing derivative contract also must be submitted to the Commission either by way of self-certification or for prior Commission approval. 17 CFR 40.5, 40.6. 28 See supra , note 2. 29 Between 1992 and 2008, CFTC-registered exchanges listed for trading event contracts involving interests such as regional insured property losses, the count of bankruptcies, temperature volatilities, corporate mergers, and corporate credit events. 2008 Concept Release, 73 FR at 25671. 30 Event Contracts; Proposed Rule, 89 FR 48968 (June 10, 2024).
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