The Commodity Futures Trading Commission (CFTC) is seeking public comment on another proposed rule for prediction markets, this time focused mostly on streamlining how regulated event contract exchanges report trading data.
But tucked inside the broader data-reporting proposal is a trader identification requirement that could be more noticeable to customers. Designated contract markets (DCMs), the CFTC-regulated exchanges behind platforms like Kalshi and Polymarket US, would have to collect occupation and employer information from customers trading standard fully collateralized event contracts, not just traders in selected high-risk markets.
The employer requirement is notable because insider trading concerns have been a recurring flashpoint for prediction markets, particularly in markets tied to government decisions, company events and entertainment outcomes known to a limited group of people.
Beyond the employer requirement, the proposal would create a permanent framework for event contract reporting, replacing the current system of staff no-action letters that has allowed exchanges to report those contracts under temporary staff relief. The CFTC said the framework is needed because event contracts generally fall under the Commodity Exchange Act’s swap definition, but are standardized, exchange-traded products that more closely resemble futures and options for reporting purposes.
What the trader identification rule would do
Under the proposal, DCMs listing covered event contracts would have to obtain identifying information from customers, including:
- Legal name
- Physical address
- Email address
- Phone number
- Occupation
- Employer
That would go beyond the basic identity information many traders are used to providing when they open an account. The employer and occupation requirements are especially notable because they could help exchanges and regulators identify traders with potential access to nonpublic information tied to a market’s outcome.
The CFTC said the information is “particularly important to monitoring and surveilling the Covered Event Contracts markets” and “necessary to detect insider trading and prevent wash trading.” The agency also said trader-identifying information would help with cross-market surveillance when multiple DCMs list “economically similar contracts.”
In practice, the rule could mean event contract exchanges need to collect employment information from traders as part of onboarding or compliance reviews if the proposal is finalized. The proposal does not spell out how exchanges would handle existing accounts, but because the requirement applies to customers trading covered event contracts, platforms may need a process to collect missing information from current users.
Why the CFTC wants more trader data
The CFTC said current rules do not guarantee that exchanges will have the trader-identifying information regulators need.
Under existing rules, DCMs must provide data that identifies or helps identify each trader for a transaction or order only “if the [DCM] maintains such data.” The proposal would change that for covered event contracts by requiring exchanges to obtain the information directly.
The CFTC said that approach was not required in the past because DCM trading historically flowed through intermediaries that were also subject to large trader reporting rules. But the agency said “today’s event contract markets present different circumstances,” with more retail and non-intermediated trading.
That distinction is central to the proposal. The CFTC is not only trying to simplify reporting for exchanges. It is also trying to make sure regulators have trader-level data before they need to investigate a suspicious trade.
Replacing temporary relief with permanent reporting rules
The employment data requirement is only one piece of a larger proposal aimed at replacing the temporary relief event contract exchanges have relied on for years.
“Under my leadership, the CFTC will no longer regulate market participants through a patchwork of no-action letters, which serve as band-aids for unworkable regulations,” Chairman Michael Selig said in the announcement. “This proposal is an important step in future-proofing the regulatory framework for event contracts.”
Selig said the agency’s responsibility is to provide “clear, workable regulations.”
The proposal would also standardize how covered event contract trades are reported and require exchanges to publish basic time-and-sales data, including execution time, contract ticker, quantity and price.
A broader push on market surveillance
The proposal lands just weeks after Kalshi announced its own employment checks for certain higher-risk markets, part of a broader set of safeguards aimed at blocking potential insiders before they trade. Kalshi said at the time that those checks would apply only to selected markets where nonpublic information may be especially valuable.
The CFTC proposal would take a broader approach by making occupation and employer information part of the baseline identification requirements for covered event contract traders.
The data-reporting proposal also follows the CFTC’s earlier June rulemaking proposal addressing which event contracts can be listed, including how the agency would evaluate sports-related contracts, micro-bets, injury markets and other categories under the Commodity Exchange Act.
Comments on the proposal are due 30 days after it is published in the Federal Register. Following the comment period, the CFTC will review the feedback before deciding whether to adopt a final rule.
