The Managed Funds Association (MFA) has urged the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to strengthen investor protections and oversight for event contracts, perpetual contracts in a comment letter.
The trade body said appropriate oversight would help these markets expand by strengthening investor confidence and encouraging broader participation.
Bryan Corbett, MFA president and chief executive officer, said:
“Confidence in how new markets are overseen is essential to broader participation by institutional investors. Getting this framework right will ensure US capital markets remain the envy of the world and the destination of choice for investors and innovators.”
MFA’s core recommendations include keeping securities-related products under SEC oversight, given the regulator’s experience regarding insider trading and manipulation, and replacing self-certification with a requirement that the SEC and CFTC jointly approve new event products before they can list.
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Additionally, the association urged correcting a more than decade-old classification that treats certain cross-currency, or ‘compo’ equity swaps differently from other similar swaps.
In recent times, Cantor Fitzgerald launched institutional block trading in prediction markets last month, while TS Imagine added event-probability data to its platform around the same time, moves that follow Cboe’s and Trading Technologies’ earlier entries into the category.