CFTC Staff Reminds DCMs of Self-Certification Obligations for Prediction Contracts

The CFTC's Division of Market Oversight issued a staff advisory reminding designated contract markets ("DCMs") of their self-certification obligations for market-maker and incentive programs on prediction markets.

In the advisory, the Division stated that recent event contract filings submitted under CFTC Rule 40.5 ("Voluntary submission of rules for Commission review and approval") and Rule 40.6 ("Self-certification of rules") have failed to provide adequate disclosures, potentially extending the streamlined 10-business-day review process available for self-certifications under Rule 40.6. To ensure compliance, the Division said DCMs must submit filings that detail all material economic, structural, and operational terms, including the program's purpose, duration, covered contracts, eligibility criteria, and performance standards.

The Division also highlighted substantive design risks under the Core Principles, warning that volume-based rewards with steep tiers or profit guarantees may encourage wash trading or artificial strategies. The staff noted that hidden discounts, sweepstakes-style rewards, or preferential access may violate impartial access requirements and market-maker programs benefiting DCM affiliates may raise conflicts of interest.

Procedurally, the advisory, which creates no new obligations, clarified that material modifications to certified incentive programs must be filed as new certifications rather than amendments. The Division recommended that DCMs review existing incentive programs for compliance and submit any necessary amendments by September 14, 2026.