The U.S. Securities and Exchange Commission (SEC) has told a court that jurisdiction over prediction markets lies with the Commodity Futures Trading Commission (CFTC). It filed an amicus brief after a financial-industry group sued the CFTC over its authorization of perpetual futures. According to foreign media reports on Thursday, the Capital Markets Alliance Association (CMAA), a group dominated by financial institutions, sued on the grounds that the CFTC had let market participants sidestep securities rules by authorizing perpetual futures based on individual stocks. Perpetual futures are derivatives with no expiration date, so investors can hold their positions indefinitely. The association argued that the CFTC overstepped its authority in approving products tied to individual stocks, and that the SEC failed to provide the oversight required. In its brief, the SEC rejected both claims: that the CFTC exceeded its authority and that the SEC abdicated its supervisory duty. It also said it found unpersuasive the argument that a regulatory gap had opened between the two agencies' spheres of oversight. The CFTC has also weighed in recently on geographic restrictions on trading on prediction-market platforms. It said exchanges registered as designated contract markets (DCMs) must not limit customers' access to trading on the basis of where they live. Kalshi is restricting trading in some states under court orders, so the question of whether federal or state authorities hold regulatory power over prediction markets remains a separate issue.

The U.S. Securities and Exchange Commission (SEC) has told a court that jurisdiction over …

U.S. SEC: CFTC Has Jurisdiction Over Prediction Markets, Files Brief With Court