Citadel Securities Urges SEC and CFTC to Affirm SEC Oversight of Event Contracts Tied to Public Companies

A regulatory turf question that has been simmering for months came to a head this week, when the largest market maker in U.S. equities put its position in writing.

Earlier this year: a joint request goes out

The SEC and the CFTC issued a joint request for public comment earlier in 2026, seeking input on how swap definitions and related jurisdictional lines should apply to a fast-growing category of financial products: event contracts, including so-called prediction markets, that let traders take positions on whether a specific outcome will occur. Some of these contracts are tied to metrics from specific public companies — earnings figures, guidance targets, or other key performance indicators — putting them in a gray zone between traditional securities regulation and the commodities-derivatives framework the CFTC oversees.

September 9: Citadel Securities responds

In a letter dated September 9, Citadel Securities urged both agencies to affirm that the SEC, not the CFTC, should serve as the primary regulator of event contracts tied to the performance of U.S. public companies. The letter was signed by Stephen Berger, the firm’s Global Head of Government and Regulatory Policy, who argued that contracts referencing a company’s key performance indicators function economically like security options and should fall under the SEC’s existing framework for that reason. Berger’s letter warned that using the CFTC to sidestep that oversight risks fragmenting the markets for securities-adjacent products across two regulatory regimes with meaningfully different approval processes.

The process gap at the center of the dispute

That process difference is the crux of Citadel’s argument. Under CFTC rules, a registered exchange can self-certify a new contract and begin listing it for trading as soon as the next business day, without a public comment period. The SEC’s process runs on a different timeline: venues generally have to demonstrate compliance with applicable rules, open the proposal to public comment, and secure affirmative SEC approval before trading can start. Citadel’s letter pointed to CFTC-registered designated contract markets that have already self-certified KPI-linked event contracts under that faster process, framing it as evidence that the gap is being actively used rather than a theoretical risk.

Why Citadel says the stakes are higher for company-linked contracts

Berger’s letter singled out a risk specific to contracts tied to individual companies rather than broad economic indicators like inflation or elections: the potential for material nonpublic information to affect pricing before an official disclosure. A contract wagering on whether a company will hit a specific earnings or performance threshold sits close enough to that company’s own disclosure obligations that Citadel argues it warrants the same insider-trading-focused oversight regime that governs securities and options — scrutiny the letter says the CFTC’s faster-moving self-certification process isn’t built to provide.

What happens next

Neither agency has issued a public response to the letter, and the joint comment period that prompted it remains open. The outcome will matter beyond this one letter: prediction markets tied to corporate and economic outcomes have expanded rapidly over the past two years, drawing in both traditional trading firms and crypto-native platforms, and a clear jurisdictional line from regulators would determine which compliance framework — and which approval timeline — governs the next wave of these products as they launch.

Readers looking to understand how U.S. financial regulators divide oversight of derivatives and securities-linked products can find background explainers in coin680’s Bitcoin Academy.

This article is for informational purposes only and is not financial advice or legal advice. Regulatory outcomes affecting event contracts and prediction markets remain uncertain; always consult primary sources and qualified professionals before making decisions based on pending rulemaking.