Alerts

CFTC 'Event Contracts' Concept Release May Lead to New, Uncorrelated Trading Opportunities

May 13, 2008

On May 1, 2008, the Commodity Futures Trading Commission (“CFTC”) issued a concept release (“Concept Release”) requesting comment on the appropriate regulatory treatment of financial agreements (“event contracts”) offered by markets known as event, prediction or information markets (“event markets”). The comment period ends July 7, 2008. The Concept Release was prompted by a substantial and increasing number of requests to the CFTC for guidance on the application of the Commodity Exchange Act (“CEA”) and the CFTC’s regulatory framework to event markets. If the CFTC ultimately takes a benign regulatory approach to such markets, a number of new trading opportunities whose returns are uncorrelated with other trading strategies may become available.