Key Highlights
- Kalshi has asked the SEC to delay approval of Cboe’s proposed binary options tied to corporate earnings metrics.
- The company argues regulators should first resolve the division of authority between the SEC and CFTC.
- Cboe and CME have questioned the CFTC’s approach to approving prediction market products.
Prediction markets platform Kalshi has asked the U.S. Securities and Exchange Commission (SEC) to hold off on approving a new set of Cboe Global Markets contracts tied to corporate performance metrics.
According to a Bloomberg report published on Tuesday, Kalshi sent a letter to the SEC earlier this month asking the agency to delay approval of Cboe’s proposed binary options until regulators complete a broader review of where the SEC’s securities jurisdiction ends and the Commodity Futures Trading Commission’s (CFTC) derivatives authority begins.
Kalshi wants SEC to wait for regulatory review
Kalshi’s objection centers on Cboe’s proposed contracts, which would be linked to specific corporate performance indicators reported by public companies. The company argues that approving the products before the SEC and CFTC resolve their respective areas of authority could effectively settle unresolved jurisdictional questions before the public has had an opportunity to comment.
In the letter, signed by Kalshi Chief Compliance Officer Sudhir Jain, the company said approving Cboe’s filing at this stage would be premature given that the agencies are already soliciting public input on their regulatory boundaries.
The request comes as Kalshi’s own event contracts increasingly overlap with traditional financial markets. The platform already offers contracts linked to corporate events, including indicators such as what executives may say during earnings calls.
Cboe and CME question CFTC’s approach
The objection follows criticism from traditional derivatives exchanges over the CFTC’s handling of prediction markets.
At a CFTC event last week, Cboe CEO Craig Donohue questioned whether some prediction-market products should fall under securities regulation rather than commodities oversight, arguing that uncertainty over which regulator has authority creates risks for market participants. “Those are risks that don’t promote safety and soundness. They don’t protect customers,” he said.
Cboe and CME Group have both argued that some prediction-market contracts have reached the market with less regulatory scrutiny than comparable products overseen by the SEC.
Where the regulatory line is drawn
Many financial products connected to public companies, including equity options, fall under SEC oversight. Kalshi operates its event contracts through a derivatives framework overseen by the CFTC instead.
Cboe is taking a different route for its proposed corporate contracts, seeking SEC approval directly for binary options tied to specific company metrics.
The dispute centers on how such products should be classified and which regulator has authority over them.
Prediction markets and corporate contracts
Platforms including Kalshi and Polymarket have expanded from political forecasting into sports, economic data, and corporate events, bringing them closer to markets traditionally served by exchanges and derivatives firms.
Cboe’s proposed corporate-event contracts extend that overlap from the exchange side, though the company’s products are focused specifically on financial information tied to public companies rather than the sports and political categories that have drawn separate legal challenges in several states.
The filing is also part of a broader push by Cboe into crypto- and event-linked products. In August, the exchange separately filed with the SEC to list 3x leveraged Bitcoin and Ether ETFs, designed to track three times the daily performance of the assets through CME futures rather than direct holdings.
Kalshi’s own pending filings
Kalshi is separately seeking CFTC approval for perpetual equity futures that could compete with existing Cboe products, including its S&P 500-linked options.
The company has argued it does not need SEC approval for those contracts because they fall within the CFTC’s derivatives framework, a position that mirrors the argument at the center of its objection to Cboe’s filing: whether a product’s classification should hinge on its trading structure or on the underlying event it references.
The SEC and CFTC have not yet resolved their respective jurisdictions over event-based contracts. How that boundary is defined could affect Kalshi, Cboe, and other companies seeking to offer products tied to corporate, sports, and political outcomes in the U.S.
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