.@CFTC Staff Issues No-Action Letters Regarding Event Contracts: https://t.co/oelx60JIap ...

Core Insights - Polymarket has begun rolling out its U.S. app, marking its return to the American market after nearly four years of being shut out by the Commodity Futures Trading Commission (CFTC) [2][5] - The rollout follows a no-action letter from the CFTC that allows Polymarket to operate event contracts without triggering standard swap data reporting and recordkeeping mandates [3] - The company is launching its app with sports markets, with plans to expand to other event-driven markets in the future [2] Regulatory Developments - In January 2022, Polymarket was fined $1.4 million by the CFTC for failing to register and was ordered to shut down its markets and refund users [2] - The CFTC's no-action letter issued in September 2023 enabled Polymarket to re-enter the U.S. market under a regulated exchange structure [3][5] - Polymarket's CEO expressed gratitude for the constructive engagement with the CFTC and emphasized the company's commitment to operating transparently within the U.S. regulatory framework [6] Financial Backing - In October 2023, Intercontinental Exchange (ICE) announced a strategic investment of $2 billion in Polymarket, valuing the company at approximately $8 billion pre-investment [4] - The investment grants ICE a financial stake and a central role in distributing Polymarket's event-driven data, along with collaboration on tokenization initiatives [4]

🚨 BIG: Kalshi now supports buying and selling tokenized versions of its event-contract wagers on Solana https://t.co/QNKC58yPh8 ...

We are excited to announce the promotion of Travis McGhee to Global Head of Predictions as we further expand our event contracts and prediction markets offerings.Read more: https://t.co/xx6u34gKM7 https://t.co/3Y5FSQsvUU ...

Regulatory Landscape & Compliance - CFTC regulates prediction markets, including event contracts on elections, sports, and more [1][11] - Prediction markets are designated contract markets and registered with the CFTC, implying obligations to prevent manipulation and abusive trading [11][17][18] - Failure to comply with CFTC obligations results in liability for the organization, not just individual participants [18] - Common compliance solutions include training and awareness programs, especially for those involved in events covered by prediction markets [9][10] Market Growth & Trends - Prediction markets have experienced rapid growth, expanding from elections (e.g, KALSI, Polly Market) to sports and other areas [2][3] - Prediction markets are becoming a permanent asset class, influencing how people follow events like elections [19][20] Risks & Challenges - Insider trading is a significant risk in prediction markets, similar to equity, crypto, and sports betting markets [8][9] - There are risks associated with individuals betting large sums (e.g, liquidating 401Ks) on prediction market outcomes [13][14] - Recent cases involving NBA players and major league pitchers highlight the risks of inappropriate gambling and performance manipulation [5][6] Risk Mitigation & Deterrence - Strong policies and procedures, along with enforcement cases, are crucial for deterring misconduct in prediction markets [15][16] - Enforcement actions raise awareness about the risks of participating in these markets [15] - Transparency in prediction markets allows for quick detection of anomalous activity [7][8]

Financial Data and Key Metrics Changes - CME Group generated revenue of $1,500,000,000, down 3% from the strong third quarter in 2024 [11] - Adjusted net income and adjusted diluted earnings per share were $978,000,000 and $2.68 per share, slightly above the previous year's third quarter [12] - Average daily volume was 25,300,000 contracts, the second highest in CME's history for a third quarter [5][6] Business Line Data and Key Metrics Changes - The crypto complex traded a record 340,000 contracts per day, up over 225% year-over-year [6] - Market data revenue reached over $200,000,000 for the first time, up 14% [11][12] - New products with record volume included credit futures, one ounce gold futures, and agricultural weekly options [7] Market Data and Key Metrics Changes - Open interest at quarter-end was 126,000,000 contracts, the highest for September in the last five years [6] - WTI futures market share increased to 76% from 74% in the previous quarter [70] - Natural gas complex grew 2%, led by nat gas options up 12% [71] Company Strategy and Development Direction - CME Group is focused on innovation and expanding product offerings, including 24/7 trading of cryptocurrency futures and options [8][9] - A partnership with FanDuel aims to develop and distribute event-based contracts, enhancing retail strategy [9][20] - The company is extending its cross-margin agreement with DTCC to increase margin savings for clients [8] Management Comments on Operating Environment and Future Outlook - Management noted strong customer demand for products, with growing open interest and records in large open interest holders [13] - The outlook for energy markets remains positive, with continued growth in crude and natural gas [73] - Management emphasized the importance of credibility in markets and the potential for growth in retail offerings without necessarily pursuing acquisitions [20] Other Important Information - Capital expenditures for the third quarter were approximately $19,000,000, with cash at the end of the quarter around $2,600,000,000 [12] - The company paid dividends of $455,000,000 in the third quarter and approximately $3,500,000,000 over the first nine months of the year [12] - The average cash balance in the third quarter was $135,000,000, with a 30% cash minimum affecting client allocation decisions [105][106] Q&A Session Summary Question: Can you talk about your long-term retail strategy? - Management highlighted the importance of the partnership with FanDuel, which provides access to 13,000,000 potential accounts, and emphasized the credibility of CME in the retail market [16][20] Question: Is CME considering offering sports event contracts? - Management stated that the decision to list sports events depends on regulatory approval and expressed readiness to offer such contracts if permitted [30][48] Question: What is the outlook for energy markets? - Management noted that while energy volumes were down in the quarter, there is still strong growth potential in crude and natural gas markets, particularly in Europe and Asia [66][73] Question: What are the proceeds from the Ultra sale and capital deployment plans? - Proceeds from the sale were about $1,500,000,000, with management planning to present recommendations for capital use to the board soon [80][82] Question: Can you elaborate on the 24/7 trading initiative? - Management indicated that 24/7 trading for crypto is set for 2026, with ongoing discussions about potential expansion to other asset classes based on client demand [96][100]

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The CFTC’s Division of Market Oversight and Division of Clearing and Risk have taken a no-action position regarding swap data reporting and recordkeeping requirements for event contracts, in response to a request from designated contract market QCX LLC and derivatives clearing organization QC Clearing LLC. Meanwhile, Polymarket founder Shayne Coplan stated that the CFTC has approved Polymarket to go live in the U.S. https://t.co/CvDBznaQXY ...

Regulatory Updates - CFTC (Commodity Futures Trading Commission) staff issues a no-action letter regarding event contracts [1]