CFTC Puts Prediction Markets on Notice as ‘Mention’ Contracts Face Manipulation Warning

The U.S. Commodity Futures Trading Commission warns that financial products based on “mention” contracts, which depend on what a named person says, attends, or does, are high risk and easily rigged.

On September 22, the CFTC’s Division of Market Oversight issued an Advisory on event contracts based on words or phrases, appearance at events, and interaction between individuals.

The Advisory is staff guidance, not a new Commission rule, and does not create new legal obligations.

Designated contract markets also must abide by the Commodity Exchange Act, which requires, itself, Core Principle 3, which states that a contract should not readily be susceptible to manipulation.