Citadel Securities urges SEC oversight of prediction markets

Citadel Securities is urging U.S. regulators to shift oversight of certain prediction market products from the Commodity Futures Trading Commission (CFTC) to the Securities and Exchange Commission (SEC). The firm argues that contracts tied to the key performance indicators (KPIs) of publicly traded companies should be classified as security-based swaps rather than commodities. Citadel contends that the CFTC’s self-certification process allows trading venues to bypass rigorous SEC scrutiny, potentially increasing risks of insider trading and undermining the integrity of equity markets.

In a related development, Kalshi is seeking regulatory approval to introduce single-stock perpetual futures for mega-cap companies such as Tesla, Apple, and Nvidia. These contracts, which have no expiration date, would be subject to joint oversight by both the SEC and the CFTC.

Meanwhile, the European Securities and Markets Authority (ESMA) has issued warnings regarding major prediction platforms like Polymarket and Kalshi. ESMA noted that these platforms generally lack the necessary authorization to sell event contracts within the European Union. Regulators expressed concerns over the ability of these sites to prevent users from bypassing geographic restrictions via VPNs and highlighted that such contracts may fall under strict financial instrument or gambling regulations depending on their nature.