1. Ninth Circuit Hears Consolidated Oral Argument in Kalshi, Crypto.com, and Robinhood Appeals Against Nevada
On April 16, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit heard consolidated oral arguments in appeals brought by KalshiEX LLC, North American Derivatives Exchange Inc. (Crypto.com), and Robinhood Derivatives LLC (collectively, the exchanges), each challenging the Nevada Gaming Control Board’s enforcement of state gambling law against the exchanges’ sports event contracts. The exchanges, which are designated contract markets (DCMs), and the Commodity Futures Trading Commission (CFTC), appearing as amicus, argued that the Commodity Exchange Act (CEA) vests in the CFTC exclusive federal jurisdiction over event contracts traded on DCMs and preempts state gaming regulation; Nevada countered that the CEA lacks the clear intent required to displace Nevada’s historic police power over gambling. The panel pressed counsel for the exchanges on issues including CFTC Rule 40.11(a), prohibiting DCMs from listing event contracts involving gaming, and the exchanges’ agreement to abide by CFTC regulations as the “gatekeeper” of the public interest. Notably, on the same day as the Ninth Circuit argument, CFTC Chairman Michael S. Selig testified before the U.S. House Committee on Agriculture that the CFTC is “working to provide explicit guidelines and further strengthen investor protections for prediction markets” and reiterated that event contract derivatives are “regulated under the exclusive jurisdiction of the CFTC.” The Ninth Circuit’s archived oral argument is available here. Selig’s testimony is available here.
2. Sen. Blumenthal and AG Tong Press for State Regulation of Prediction Markets
On April 17, U.S. Sen. Richard Blumenthal (D-Conn.) and Connecticut Attorney General William Tong appeared together to push back on the CFTC’s effort to displace state regulation of prediction markets, highlighting Blumenthal’s bill S. 4060, the Prediction Markets Security and Integrity Act of 2026, which would prohibit the use of material nonpublic information to trade on prediction markets; ban prediction-market contracts that “present a conflict of interest”; prohibit listings related to war, death, and military action; and impose age-verification and advertising restrictions. The S. 4060 bill page is available here. Blumenthal’s Week in Review (4/10–4/17) discussion is available here.
3. OCC, Federal Reserve, and FDIC Issue Revised Interagency Model Risk Management Guidance
On April 17, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (FDIC) issued revised interagency guidance on model risk management. The revised guidance highlights sound principles for model development and use, validation and monitoring, and governance and controls, and it addresses considerations for vendor and third-party products; the agencies emphasized that the guidance “does not set forth enforceable standards or prescriptive requirements, and non-compliance will not result in supervisory criticism.” Notably, the agencies stated that “[g]enerative AI and agentic AI models are novel and rapidly evolving. As such, they are not within the scope of this guidance. Furthermore, this guidance is expected to be most relevant to banking organizations with over $30 billion in total assets.” OCC Bulletin 2026-13 is available here. The OCC news release is available here. The FDIC press release is available here.
4. SEC Chairman Atkins and Commissioner Peirce Deliver Remarks at Options Market Structure Roundtable
On April 16, Securities and Exchange Commission (SEC) Chairman Paul S. Atkins and Commissioner Hester M. Peirce delivered separate remarks at the commission’s Options Market Structure Roundtable hosted by the Division of Trading and Markets. Peirce identified several “matters worthy of consideration,” including the proliferation of options exchanges (soon to be 20), reduction in the number of clearing firms, concentration of activity in a small number of market makers, proliferation of strikes, generous market-maker allocation formulas, calls for greater transparency in options execution data, and the opportunities and challenges presented by 24/7 trading and tokenization. She anticipated that “solutions that emerge will be industry-led, with the Commission playing a supporting role.” Atkins’ remarks are available here. Peirce’s remarks are available here.
5. SEC Approves FINRA Proposal To Eliminate Pattern Day Trader Rule and Adopt Intraday Margin Standards
On April 14, the SEC approved FINRA proposed rule change SR-FINRA-2025-017, which amends FINRA Rule 4210 (Margin Requirements) to eliminate the longstanding day trading margin provisions, including the “pattern day trader” designation, the $25,000 minimum equity requirement, and the computation and use of day-trading buying power, and replace them with modernized intraday margin standards. Part of FINRA’s broader FINRA Forward Rule Modernization initiative, the rule change replaces the prior framework with an intraday margin system under which broker-dealers will calculate margin obligations based on real-time intraday exposure rather than the static $25,000 minimum equity threshold that had been in place since 2001. The new rules will become effective June 4, 2026, with an 18-month transition period through October 20, 2027. The SEC’s approval order is available here. FINRA’s proposed rule change filing is available here. The Federal Register notice is available here.
