CFTC Withdraws No-Action Relief for Event Futures Market
Commentary by Steven Lofchie
The CFTC withdrew no-action relief granted to an event futures market that permitted U.S. persons to make small trades on the outcome of events such as elections. The withdrawal of the relief is effective immediately.
The no-action relief was granted in 2014 (see related news). The CFTC had permitted a New Zealand university to run an event future market subject to numerous conditions that, among other things, limited the size of the market.
In withdrawing the letter, the CFTC stated that the university had not complied with the terms of the no-action relief, but did not indicate which condition had been violated. The letter of withdrawal also requires that any open transactions permitted by the no-action relief should be closed out and/or liquidated no later than 11:59 p.m. EDT on February 15, 2023.
Commentary
The CFTC had previously refused to allow a futures exchange to permit trading in futures based on the outcome of a sporting event. (See generally CFTC Commissioner Explains Rejection of Futures on NFL Games.)
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Oct 30, 2014
The CFTC Division of Market Oversight issued no-action relief to Victoria University of Wellington, New Zealand to operate an educational not-for-profit market for event contracts.