CFTC staff told prediction market exchanges to stop certifying many contracts in one blanket filing, and say the practice carried on after a March warning

Buried in the footnotes of a six-page staff letter is the practice that prompted it. Exchanges, the Commodity Futures Trading Commission's Division of Market Oversight writes, have certified event contracts on whether unspecified economic events may occur, listing potential underlyings in terms the division calls non-exhaustive and vague: unidentified economic metrics, recurrent data releases, international agreements, central bank decisions.

The advisory issued on July 24 tells them to stop.

It has a name for what it is describing, the Broad Template Certification, meaning a single filing under Commission Regulation 40.2(a) that bundles together many possible versions of a contract with different settlement sources or different methodologies. Staff say that approach hampers the division's ability to determine whether an exchange has supplied all the information, explanation and analysis that Regulation 40.2 requires, and whether it has adequately evaluated the settlement methodology, data sources and core principles compliance of every permutation it intends to list. There is a second objection, and it is about the public rather than the regulator: the practice prevents market participants from accessing and evaluating that information too.

This is the second time staff have said it. A March 12 advisory, CFTC Letter No. 26-08, warned that overly broad or generalized contract specifications may affect an exchange's ability to explain and analyze compliance, and said a product submission would be expected to describe a settlement methodology accounting for the different permutations, identify the specific data sources settlement rests on, and assess how reliable, objective and manipulation resistant those sources are. Notwithstanding that letter, the new advisory says, many designated contract markets have continued to file broad templates under 40.2(a).

The route staff want instead is older than prediction markets and was built for something else entirely. Regulation 40.2(d), added in 2011, was meant to streamline certification for swaps, at a time when interest rate swaps made up roughly 77.5 percent of the outstanding notional value of over-the-counter swaps and shared identical pricing sources. Four conditions in 40.2(d)(1) govern it, and every contract in a class has to meet all of them: the contract rests on an excluded commodity specified in the rule, it uses an identical pricing source, formula, procedure and methodology for calculating reference prices and payment obligations, that method is identical to one in a product already certified under 40.2 or approved under 40.3, and it involves an identical currency. A class filing must reference a prior specific contract of the exchange's own, never a prior broad template and never another exchange's filing.

The worked example is a football tournament. An exchange may certify a series covering all matches in the 2026 FIFA World Cup by referencing an earlier individual certification of a single match contract, staff write, so long as every contract in the series relies on identical pricing sources, formulas, procedures and methodologies. It may not use that same World Cup contract to cover all matches in the 2026 MLS Leagues Cup, because the two competitions run under different rules and therefore settle differently. The advisory names the difference it has in mind: the World Cup permits draws in the first round of the tournament and the Leagues Cup does not.

Staff list other groupings that could qualify. A tournament whose outcomes are each decided by identical rules, such as a women's singles tennis event. Election outcomes arising from a single ballot. Nominees in one awards show chosen by the same process, with Best Picture and Best Director given as examples. Daily rainfall totals in a city, as reported by the same official weather station using the same measurement method.

The reasoning underneath is manipulation risk. Requiring every contract in a class to share a settlement source, the advisory says, is what forces exchanges to evaluate the manipulation risk of each source separately under Core Principle 3, and cash settled derivatives can create an incentive to manipulate or artificially influence the data a price is derived from. Staff say they expect an exchange to identify in the certification itself any settlement source a contract relies on, because that analysis cannot be performed unless the sources are named before listing.

There is a consequence attached, and the advisory states it in the plainest sentence in the document. Where the division finds a self-certification inadequate, it may recommend that the Commission stay the listing under Regulation 40.2(c), or require the exchange to withdraw the certification and resubmit contracts individually under 40.2 or 40.3. Exchanges, staff write, should not assume that certifying multiple contracts in a single filing insulates any one of them from individual review.

One thing the advisory does not do is close off consolidated filings. Where an exchange lists closely related contracts sharing a rulebook, a settlement source analysis or common terms, it may still submit those materials once and incorporate them by reference, provided each contract is certified individually under 40.2(a) or as a class under 40.2(d).

The letter is signed by Duncan Hennes, Acting Director of the Division of Market Oversight. Its closing paragraph is a limit on everything above it: the advisory creates no rights enforceable by any party, grants no relief from an enforcement recommendation, makes no new rules and amends none, and represents only the views of the division rather than those of the Commission.

A separate proceeding on this beat is still open. The Commission proposed a rule on data reporting requirements for certain event contracts, published in the Federal Register on July 1, 2026, and comments on it close on July 31.