WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with the filing of Better Markets’ comment letter to the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) regarding the agencies’ joint request for comment on how to regulate event contracts on the key performance indicators (KPIs) of public companies: 

“The request for comment appears to be driven by prediction market platforms’ desire for legal cover for their offerings of event contracts on corporate events such as the sales growth or customer metrics. The prediction markets undoubtedly would like the CFTC to regulate these event contracts, but that agency does not have an investor protection mandate. The SEC does. And the existing rules establish that event contracts on corporations’ KPIs should continue to be regulated by the SEC. The Commissions should not revise the relevant rules so that the prediction market platforms can obtain the more favorable regulatory treatment that they desire at the expense of investor protection. 

“SEC regulation of event contracts on companies’ KPIs would better protect these markets from insider trading, market manipulation, and misleading advertising. To the extent there is any question that event contracts on corporations’ KPIs fall under the SEC’s jurisdiction, the Commissions should clarify that they do. What the Commissions should not do is manipulate the rules so that event contracts on corporations’ KPIs fall under the jurisdiction of the CFTC—the prediction market industry’s preferred regulator.  

“The SEC and CFTC are already blurring the line between investing and gambling. They should not also blur the line between products that should be regulated by the SEC and those that should be regulated by the CFTC. To do so would further endanger retail investors.” 

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.