Prediction market exchanges have been listing new event contracts by the thousand using a paperwork shortcut, and the CFTC just told them to knock it off. On July 24, the Commission’s Division of Market Oversight issued an advisory instructing designated contract markets to stop submitting what it calls “Broad Template Certifications” — single filings that bundle many potential contract variations, with differing settlement sources and methodologies, into one self-certification.
The advisory, formally CFTC Staff Letter No. 26-22, is short, but its target is the operational engine of the modern prediction market boom. Platforms like Kalshi list contracts on everything from Fed decisions to weekly economic data, and the self-certification process under Commission Regulation § 40.2 is how those markets go live quickly — an exchange certifies that a contract complies with the law, files it, and lists it, without waiting for Commission approval.
What staff actually observed
The staff letter describes the practice in unusually blunt terms. Exchanges have been certifying “broad, template event contracts” whose terms include, in the letter’s words, “non-exhaustive, vague lists of potential underlyings, including unidentified economic metrics, recurrent data releases, international agreements, and central bank decisions.” In other words: a single filing that reserves the right to spin up markets on things the exchange hasn’t fully specified yet.
Staff’s objection is procedural but pointed. Bundled filings prevent the Division from checking whether the exchange supplied all of the information, explanation, and analysis § 40.2 requires — and whether it “adequately evaluated the settlement methodology, data sources, and core-principles compliance” of every permutation it intends to list. The letter adds a second harm that market participants should care about directly: template filings also prevent traders from accessing and evaluating that information themselves. If you can’t tell how a contract settles or what data source decides the outcome, you can’t price it.
The narrow path that stays open
The advisory does not shut down class certifications entirely. The letter walks through the history: § 40.2(d) was added in 2011 so that exchanges could certify a class of closely related swaps in one submission — a process built for interest rate swaps, which at the time made up roughly 77.5% of outstanding over-the-counter notional value and shared identical pricing sources and methodologies. The Commission said back then that the class process could extend to certain event-based swaps too.
Staff’s position is that the class route remains available for genuinely similar event contracts — those sharing settlement sources and methodology — filed properly under § 40.2(d), or submitted for full Commission approval under § 40.3. What should not happen is stuffing dissimilar contracts through § 40.2(a) as one template. That distinction gives exchanges a compliance roadmap: group only what truly settles the same way, and file the rest individually.
Part of a widening squeeze on event contracts
The advisory lands in the middle of the most active stretch of prediction-market regulation the CFTC has ever run. On July 14, the Commission stayed a KalshiEX emergency rule change and invoked its emergency authority to force the exchange to honor executed trades after a Michigan state court ordered cancellations — with Chairman Michael S. Selig warning that “a state cannot force a DCM to violate its obligations.” The same release disclosed that the agency has sued nine states, including Kentucky and New York, to defend its exclusive jurisdiction over these markets. Earlier in July, the Commission also opened a comment period on new data reporting requirements for certain event contracts.
Crypto media read the advisory as a shot across the bow: Cointelegraph reported it as the agency’s second warning to prediction markets over “cookie-cutter” self-certifications in quick succession.
The through-line is worth registering. The CFTC is simultaneously defending prediction markets from state interference and tightening the screws on how those markets list products. That is not a contradiction — it is a federal regulator consolidating control over a product category that grew faster than its filing conventions. For exchanges, the near-term cost is friction: more individual filings, more documentation per contract, slower listings for novel market types. For traders, the trade-off runs the other way — contracts that reach the order book after this advisory should come with clearer settlement terms and identifiable data sources.
The practical question is enforcement. Staff advisories are guidance, not rulemaking, and the letter itself doesn’t threaten penalties. But it explicitly reminds exchanges that certifications lacking required analysis are deficient under § 40.2 — which gives the Division grounds to stay or challenge future template filings. Exchanges that keep bundling do so on notice.
