SEC and CFTC Consider Status of Event Contracts and Other Innovative Products: Agencies Seek to Clarify Their Roles

On June 18, 2026, the SEC and the Commodity Futures Trading Commission (CFTC) issued a joint request for comment on “potential opportunities to further update, clarify, and harmonize certain derivatives product definitions and interpretive issues.” This request seeks public input on 15 questions that focus on two primary topics: “definitional clarity” pertaining to “swaps” and “security-based swaps” and alternative compliance. Alternative compliance addresses whether compliance with one agency’s regulatory framework can satisfy substantially similar requirements of the other in situations in which both the SEC and the CFTC have statutory interests under Title VII of the Dodd-Frank Act. This joint effort is the latest example of collaborative coordination by the two agencies to promote regulatory clarity and close regulatory gaps in the emerging prediction markets space and other innovative products.

With the rise of “innovative products and structures of products,” market participants have called for clarity regarding “regulatory lines for agency oversight.” As the request for comment notes, market participants have raised “questions about whether certain event contracts are swaps, [security-based swaps], or mixed swaps, or types of instruments that fall within statutory exclusions from the ‘swap’ definition.” The Dodd-Frank Act gives the role of regulating swaps primarily to the CFTC and the role of regulating security-based swaps primarily to the SEC. The Department of Justice is also playing a role in connection with certain event contracts. See “DOJ and CFTC Run New Routes to Pursue Insider Trading Case on Polymarket.”

Swaps are financial contracts in which two counterparties agree to exchange (“swap”) payments with each other based on such things as interest rates, currencies, or commodity prices. Security-based swaps are swaps based on a single security or loan, a narrow-based security index, or certain issuer-related events. Finally, a “mixed swap” contains elements of both a swap and a security-based swap and is subject to joint regulation in which both the SEC and the CFTC play a role.

As markets expand and evolve, difficult definitional questions have arisen regarding regulation of an increasingly complex swaps market. As a result, the agencies are seeking market participants’ input regarding whether new rules need to be issued or existing rules need to be revised to address these changes. For example, the agencies’ June 18 request seeks comments concerning what type of event contracts or other innovative products raise interpretive issues and what, if any, criteria are necessary for distinguishing between the various types of swaps; whether additional clarity is needed regarding the characteristics of a swap and a mixed swap; and even whether certain products such as cash-settled “perpetual” contracts that reference an equity security should be treated as a security future rather than a security-based swap. Finally, the request seeks comments on potential areas of possible joint or coordinated approaches to alternative compliance, including tailored procedural and reporting rules.

Comments in response to the agencies’ request were due by August 24, 2026.