Better Markets told the SEC and CFTC in an August 24, 2026 comment letter that event contracts tied to public-company key performance indicators should fall under securities-law oversight. The filing lands in a jurisdictional fight involving Cboe’s proposed Binary KPI Options and Kalshi’s request that the SEC wait for the agencies’ broader review.
What did Better Markets ask the SEC and CFTC to do?
Better Markets urged the agencies to keep corporate KPI contracts under SEC oversight when the contracts reference issuer-specific metrics drawn from securities filings or other company disclosures. Benjamin L. Schiffrin, the group’s Director of Securities Policy, wrote that SEC regulation of event contracts on companies’ KPIs would better address insider trading, market manipulation, and misleading advertising risks.
The group’s central argument is that corporate KPI event contracts resemble securities-linked instruments because their value depends on information about a specific issuer. Better Markets said the SEC’s investor-protection mandate, disclosure regime, market-manipulation rules, and insider-trading framework are better suited to those products than CFTC oversight alone.
The letter responded to the SEC and CFTC’s joint request for comment, Release No. 33-11424, also published as Exchange Act Release No. 105735. The Federal Register notice appeared on June 24, 2026 at 91 FR 37873, and comments were due August 24, 2026.
What is Cboe trying to list?
Cboe Exchange filed SR-CBOE-2026-061 with the SEC on June 30, 2026, proposing Binary KPI Options: cash-settled, European-style binary options that would settle from company data disclosed in SEC filings, including Forms 10-K, 10-Q, and 8-K. The Federal Register published the SEC notice for that filing on July 15, 2026.
The Cboe proposal covers more than 100 possible key performance indicators across 23 companies. Examples in the filing include Nvidia data center revenue, Apple net sales by category for iPhone, and SpaceX revenue. Because Cboe is a national securities exchange, the filing places the products in an SEC-supervised framework rather than the CFTC-designated contract market framework used by platforms such as Kalshi.
That is why the filing matters beyond Cboe. If the SEC permits a listed options exchange to offer corporate KPI contracts as securities options, it would create a regulatory reference point for products that prediction-market exchanges may otherwise try to list as event contracts.
Why is Kalshi objecting to SEC action on Cboe’s filing?
Kalshi submitted an August 5, 2026 letter to the SEC urging the agency to delay action on SR-CBOE-2026-061. Kalshi Chief Compliance Officer Sudhir Jain argued that approving Cboe’s proposal before the SEC and CFTC complete their joint review would prejudge jurisdictional questions before public consideration.
Kalshi’s position is narrower than a blanket objection to corporate-event trading. The company is asking the SEC not to resolve a major legal boundary through Cboe’s exchange filing while the agencies are separately collecting comments on how swaps, security-based swaps, securities options, and event contracts should be classified.
Cboe has pushed in the opposite direction. Cboe Global Markets Chief Executive Craig Donohue told Bloomberg, in a report published August 25, that the current ambiguity leaves market participants exposed. On safety and soundness, Donohue said, “Those are risks that don’t promote safety and soundness.”
What is the legal line the agencies are trying to draw?
The dispute turns on whether a contract tied to a single company’s operating metric is closer to a commodity event contract, a securities option, or a security-based swap. Title VII of Dodd-Frank defines security-based swaps to include certain agreements based on a single security, loan, narrow-based security index, or an event relating to a single issuer that directly affects that issuer’s financial statements, financial condition, or financial obligations.
A contract asking whether Tesla will deliver more than a stated number of vehicles in a quarter illustrates the problem. The answer depends on a company-specific operating metric. The economic exposure may resemble a binary wager, but the informational advantage may sit with insiders, employees, suppliers, counterparties, or others with access to issuer-specific data before public disclosure.
The SEC and CFTC issued Release No. 33-11424 on June 18, 2026 to ask how the agencies should classify products that sit near those statutory boundaries. The request also asked how the agencies should handle products that may implicate both securities and commodities law.
Better Markets argues that issuer KPI contracts fall on the SEC side of that line. Kalshi argues that the agencies should not let Cboe’s application decide the issue before the broader process is complete. Cboe’s filing, meanwhile, gives the SEC a concrete product proposal to act on while the jurisdictional debate remains open.
How does insider trading fit into the dispute?
Better Markets points to insider-trading and information-asymmetry risks as the core reason corporate KPI contracts should not be treated like ordinary event contracts. The concern is not limited to public-company executives. KPI-linked markets could reward anyone with early access to material issuer data, including employees, contractors, vendors, customers, and advisers.
The group also cited the April 23, 2026 prosecution of Gannon Van Dyke, an active-duty U.S. Army Special Forces master sergeant. Federal prosecutors in the Southern District of New York charged Van Dyke in a case involving alleged use of classified information about a covert operation targeting Venezuelan President Nicolás Maduro to trade on Polymarket. The CFTC also brought a parallel civil action.
Prosecutors alleged that Van Dyke made more than $400,000 from roughly $33,000 in wagers placed between December 27, 2025 and January 2, 2026. Better Markets uses the case to argue that prediction markets can create enforcement problems when the outcome of a contract is knowable in advance by a small group of insiders.
The Congressional Research Service addressed the same statutory friction in LSB11406, “Prediction Markets and Insider Trading Law,” dated March 18, 2026, with later April 2026 versions. CRS noted that traditional securities-fraud frameworks do not map cleanly onto CFTC-regulated prediction-market contracts, particularly when the relevant information comes from government or corporate insiders rather than public market disclosures.
Where does Congress stand?
House Democrats have also pressed the SEC to address the issue. Representative Sean Casten led a July 22, 2026 letter to SEC Chairman Paul Atkins signed by eight Democrats: Casten, Bill Foster, Jim Himes, Vicente Gonzalez, Brad Sherman, Ritchie Torres, Gregory Meeks, and Janelle Bynum.
The lawmakers asked the SEC to clarify how event contracts tied to individual securities and corporate metrics should be regulated. Their letter cited examples including contracts on Google’s quarterly earnings, Coinbase’s total trading volume, Cava’s restaurant openings, and Tesla’s car deliveries.
Atkins had already acknowledged the issue in February 2026 testimony before the Senate Banking Committee, where he called prediction markets “a huge issue” and said the SEC and CFTC needed to be harmonized. The July letter gave the SEC a political push to say where securities law begins when prediction contracts reference issuer-specific facts.
What happens next?
The SEC still must decide what to do with Cboe’s SR-CBOE-2026-061 filing, and the SEC and CFTC must process the comment record from Release No. 33-11424 after the August 24 deadline. Cboe’s Binary KPI Options are not approved for trading, and no launch date has been set.
The CFTC separately withdrew its 2024 event-contract proposal on February 4, 2026 and has been working on a revised framework for public-interest determinations. The next concrete milestones are SEC action on Cboe’s filing and any joint SEC-CFTC guidance that defines when a corporate-event contract becomes a securities-law product.
