Citadel Seeks SEC Oversight for Prediction Markets Tied to Public Companies

Citadel Securities is calling for the SEC to regulate prediction markets tied to public companies. The company believes that contracts based on key performance indicators (KPIs) of these firms should be treated as security-based swaps, not CFTC-regulated products.

This stance comes after Citadel wrote a letter to regulators expressing concerns about the potential for insider trading risks in these markets. According to Stephen Berger, 'Congress established this framework for good reason: trading in equity-linked products directly implicates the integrity of the underlying securities markets, impacting our public companies and investors.'

Citadel also questioned the CFTC's self-certification system, which allows platforms to introduce new products without a full review. The company argues that this approach could create regulatory gaps between SEC- and CFTC-regulated venues.