The U.S. Commodity Futures Trading Commission has warned prediction market operators against self-certifying template event contracts in bulk, saying the practice leaves the regulator unable to judge whether contracts meet federal requirements, including safeguards against market manipulation.
In a Friday advisory, CFTC staff said some exchanges self-certify 'broad templates that combine different contract variants with differing settlement sources and methodologies under a single approval'. Bundling contracts with different settlement parameters under one certification stops the agency from testing how far each one resists manipulation. The commission wants contracts grouped only where settlement characteristics match. Bets on FIFA World Cup 2026 matches could be certified together, but contracts on other tournaments run by different organisers with different methods of determining outcomes have to go through a separate procedure.
Self-certified contracts have grown sharply over the last 18 months, with exponentially more variations of base contracts appearing on regulated exchanges. Finer-grained certification, in the CFTC's view, would let exchanges assess the risk attached to each settlement source and methodology.
For operators that means more paperwork: separate filings for every group of contracts with unique parameters instead of one batch approval. Whether that slows the launch of new products will show in practice.
