Editor’s note: This story has been updated with new information from Interactive Brokers on the timing of the ForecastEx prediction market launch and to correct a quote by Thomas Peterffy.
Interactive Brokers‘ IBKR Thomas Peterffy has revealed that the Commodity Futures Trading Commission (CFTC) will not permit the listing of election-related contracts on their soon-to-launch prediction market, “ForecastEx.”
What Happened: On Wednesday, Peterffy, the founder of Interactive Brokers, revealed during CNBC’s “Last Call” that the CFTC will not allow to list election-related contracts on their upcoming prediction market.
“They think that it may influence the election. That people with a lot of money could influence the election by driving the contract to an unreasonable level.”
Peterffy’s comment appears after Interactive Brokers ‘s wholly owned subsidiary ForecastEx LLC received the CFTC’s nod to operate a contract market and derivative clearing organization.
As per a press release, ForecastEx, a prediction market, is scheduled to commence operations on July 8 and will offer contracts that enable investors to speculate on the likelihood of specific economic and climate indicators.
The ForecastEx prediction market, which was initially scheduled to commence operations July 8, will now launch later in the summer due to administrative issues, according to Interactive Brokers. The market will offer contracts that enable investors to speculate on the likelihood of specific economic and climate indicators.
Contracts on ForecastEx aim to provide a consensus view on controversial issues and hedge economic exposure.
Why It Matters: In May, the CFTC voted to formally reject event contracts based on political activity. This decision was aimed at protecting U.S. customers from platforms that enable such trading, following a prolonged legal battle with firms offering these services.
Prediction platforms such as PredictIt, Polymarket, Zeitgeist, and Kalshi, which are popular in crypto circles, provide users the chance to buy contracts on actual event outcomes, including elections and policy developments. The proposed rule would prohibit contracts on political contests, awards contests, and game outcomes for U.S.-regulated companies. The proposal still needs to pass through a 60-day public comment period and a process to approve a final rule.
Just days after the CFTC’s vote, Polymarket secured $70 million in funding in a round led by billionaire investor Peter Thiel’s Founders Fund and included other notable backers such as Ethereum co-founder Vitalik Buterin.
Recently, Goldman Sachs revised its year-end target for the S&P 500 Index to 5,600 from the previous 5,200. Analysts pointed out that the U.S. election poses a significant risk to the S&P 500 level, with increased index volatility during the election period. However, following the election, volatility typically decreases and the S&P 500 index tends to recover, often reaching an even higher level.
Price Action: SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 Index, gained 15.42% so far this year. At the time of writing, it was trading 0.14% lower at $544.73 after it closed at $545.5 on Wednesday, according to Benzinga Pro.
Image via MidJourney
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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