2. With respect to the following DCM Core Principles, what factors are relevant to prediction markets? a. Core Principle 2 states that a DCM “shall establish, monitor, and enforce compliance with the rules of the [DCM], including- (i) access requirements; … and (iii) rules prohibiting abusive trade practices.” 33 Regulation 38.151, adopted under this core principle, requires that a DCM provide “impartial access to its markets and services, including … [a]ccess criteria that are impartial, transparent, and applied in a non- discriminatory manner.” 34 What aspects of prediction markets affect how a DCM provides impartial access and prohibits abusive trade practices? Are there potential barriers to impartial access that the Commission should consider? Are there particular risks of abusive trading? b. Core Principle 2 also requires a DCM to “establish, monitor, and enforce compliance with … the terms and conditions of” contracts traded on the DCM. 35 In this regard, what factors should the Commission consider regarding a DCM’s rules related to resolution criteria for event contracts? For example, if there is a dispute regarding how an event contract is resolved or how the trigger event for an event contract is determined (such as a dispute regarding whether an event underlying a contract has occurred), what factors should the Commission consider in setting expectations for DCMs to have rules to resolve the dispute? Are dispute resolution procedures for other types of swaps, such as credit default swaps, helpful precedents? Also, what considerations under Core Principle 14, which requires a DCM to have “rules regarding, and provide facilities for alternative
33 CEA section 5(d)(2), 7 U.S.C. 7(d)(2). 34 17 CFR 38.151. 35 CEA section 5(d)(2)(A)(ii), 7 U.S.C. 7(d)(2)(A)(ii).
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