Contributors: Kari S. Larsen, Chelsea Pizzola, and Austin Stanton
On September 22, 2026, the CFTC’s Division of Market Oversight (“DMO”) issued Staff Advisory Letter No. 26-27, addressed to designated contract markets (“DCMs”), concerning the listing and trading of event contracts that settle based upon the discrete conduct of a named individual, such as: whether that person will say or “mention” certain words, attend or appear at an event, or interact with another person. DMO refers to these products collectively as “Mention Markets.” The advisory follows recent CFTC enforcement actions in this space, including a settlement with a former White House teleprompter operator who exploited advance access to presidential speeches to trade mention contracts and a separate action against a former member of Congress who traded on his own decision to attend the State of the Union. Key takeaways from the advisory are below.
Mention Markets Presumptively Readily Susceptible to Manipulation
Unlike conventional event contracts, which settle on aggregate, externally verifiable outcomes (such as economic data releases, weather events, or election results), Mention Markets settle on the discrete conduct of a named person. DMO staff conclude that this distinction makes it far more difficult for Mention Market contracts to meet the standards of DCM Core Principle 3, which require DCMs to list only contracts that are not readily susceptible to manipulation. DMO grounds this presumption in four characteristics of Mention Markets:
- Controllable outcomes. The settlement condition is often within the control of a small number of actors, making it comparatively easy to cause, prevent, or influence for personal gain. E.g., a podcast host can simply utter a catchphrase on-air; a trader can induce the result by submitting a question or purchasing an on-air acknowledgment.
- Insider knowledge. Those closest to the settlement outcome frequently possess advance knowledge (access to scripts, prepared remarks, guest lists, or unpublished content), creating opportunities for trading on material nonpublic information.
- Susceptibility to external pressure. The same proximity that creates insider knowledge makes the controlling individual susceptible to influence by others through social engineering, inducements, or public pressure campaigns.
- Weak verification environment. Many Mention Markets settle on outcomes that lack independent verification or substantial public scrutiny, particularly where settlement turns on conduct in informal or private settings, or on the actions of a nonpublic person. Where those conditions are present, manipulation is harder to detect and easier to conceal.
The Presumption Is Rebuttable, but DMO Expects a Heightened Showing in Any Part 40 Filing
DMO acknowledges that susceptibility to manipulation is a contract-specific determination. In limited circumstances, a well-designed contract coupled with robust DCM trading rules, surveillance, and controls may rebut the presumption and support listing consistent with Core Principle 3. DMO identifies four factors as particularly relevant to that analysis:
- Independent obligations constraining the controlling individual. Whether the person whose conduct determines settlement is subject to independent legal, professional, contractual, fiduciary, confidentiality, or organizational obligations that meaningfully deter settlement-influencing conduct.
- Susceptibility to manipulation through external pressure. Whether the contract can be manipulated not only by the controlling individual but through that individual via social engineering, inducement, or public pressure campaigns directed at the individual or those able to influence him or her.
- Independent verification and substantial public scrutiny. Whether the settlement-determining actions are subject to transparent, independent verification and contemporaneous public scrutiny, including whether those actions carry substantive weight in context.
- Robustness of trading rules, surveillance, and controls. Whether the DCM has implemented measures reasonably designed to detect and deter manipulation, attempted manipulation, and the misappropriation of nonpublic information in Mention Markets. DMO offers specific examples: identification of potential controllers and known insiders; position limits sized so that manipulation would be economically irrational; heightened surveillance around event windows; restricted lists and third-party vendor screening; periodic monitoring of participant employment status; and “pop-up” notifications requiring traders to confirm the absence of a connection to the contract before trading.
DMO expects that any Part 40 filing for a Mention Market contract, whether by self-certification under 17 C.F.R. § 40.2 or voluntary submission for Commission approval under 17 C.F.R. § 40.3, will address each of the foregoing factors and specify the DCM’s prophylactic measures with sufficient detail to permit staff to assess whether those measures are reasonably designed to mitigate the risks that such contracts present.
Conclusion
The advisory is informational. It represents only the views of DMO staff, does not necessarily represent the views of the Commission, and does not create new binding rules or regulations. DCMs are encouraged to engage with DMO staff in the early phases of designing Mention Market contracts to determine whether heightened manipulation risks exist and, if so, whether they may be mitigated with appropriate controls.
Please let us know if you have any questions, if we can assist you in evaluating how this advisory may affect your event contract listings or prediction market activities, or if you would like assistance engaging with DMO staff in connection with a Part 40 filing.
