based prediction markets? Which areas, if any, would benefit from Commission guidance or rule amendments for blockchain-based prediction markets? 3. Are there aspects of the clearing of event contracts that the Commission should consider in applying the DCO Core Principles in CEA section 5b(c)(2)? 42 Are there specific points on which the Commission should provide guidance or adopt rule amendments? If so, why? a. The following DCO Core Principles may be relevant in this regard: (C) participant and product eligibility, (D) risk management, (H) rule enforcement, and (I) system safeguards. 43 What factors should the Commission consider in applying these Core Principles? b. Are there relevant differences in how the Core Principles and underlying regulations for DCMs and DCOs apply to prediction markets? If so, how should the differences factor into the Commission’s consideration of these issues? c. What implications for DCOs should the Commission consider if event contracts were traded on prediction markets on margin? Are there any issues arising with respect to, for example, the requirements in DCO Core Principle D that “(iv) … [t]he margin required from each member and participant of a [DCO] shall be sufficient to cover potential exposures in normal market conditions” and “(v) … [e]ach model and parameter used in setting margin requirements under clause (iv) shall be- (I) risk-based; and (II) reviewed on a regular basis”? 44 What factors should the Commission consider regarding the clearing silo, if any, that would be appropriate for event contracts? What
42 7 U.S.C. 7a-1(c)(2). 43 CEA sections 5b(c)(2)(C), (D), (H), (I), 7 U.S.C. 7a-1(c)(2)(C), (D), (H), (I). 44 CEA section 5b(c)(2)(D), 7 U.S.C. 7a-1(c)(2)(D).
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