1. CFTC Staff Issues Advisory on Self-Certification of Event Contracts
On July 24, the Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (Staff) issued an advisory (Staff Advisory) reminding designated contract markets (DCMs) of the proper procedures in connection with the submission of self-certifications of event contract series. Staff noted in the Staff Advisory that it has observed DCMs improperly self-certifying broad, template event contracts that bundle multiple contract permutations with differing settlement sources or methodologies into a single § 40.2(a) certification, which impairs Staff’s ability to assess whether each permutation satisfies Regulation § 40.2’s disclosure requirements and core-principles compliance and also limits market participants’ access to that information. In place of broad, template-based certifications, Staff directs DCMs to certify event contract series either as a class under § 40.2(d) or for approval under § 40.3. A § 40.2(d) class certification is available only where each contract in the series references a prior, specific contract previously certified under § 40.2(a) or approved under § 40.3 and shares identical pricing sources, formulas, procedures, and methodologies for calculating reference prices and payment obligations, along with an identical underlying excluded commodity and currency.
The Staff Advisory illustrates this with sports and event examples, such as event contracts relating to the FIFA World Cup versus Major League Soccer matches. This requirement is designed to ensure Staff can separately evaluate manipulation risk for each settlement source as required under DCM Core Principle 3, given the incentive that cash-settled event contracts can create to manipulate underlying data. Staff further cautions that certifying multiple contracts together does not shield any individual contract from being pulled for separate review and that it may recommend a stay of listing or require withdrawal and individual resubmission under § 40.2(c) or § 40.2(d)(2) where a certification is deemed inadequate. See the CFTC’s press release here and a copy of the Staff Advisory here.
2. Minnesota Judge Grants Preliminary Injunction Preventing Ban on Prediction Markets
On July 27, the United States District Court for the District of Minnesota granted a request for a preliminary injunction in connection with Minnesota’s prediction market statute, which was set to take effect on August 1, 2026. The ruling came in consolidated suits brought by the CFTC, the United States, and DCM operators Kalshi and Polymarket US, which argued the state law is preempted by the Commodity Exchange Act’s (CEA) grant of “exclusive jurisdiction” to the CFTC over transactions involving “swaps” traded on DCMs. The court agreed that the plaintiffs were likely to succeed on express preemption for a substantial share of the event contracts at issue, since the CEA’s broad “swap” definition captures payments tied to events with a “potential” financial, economic, or commercial consequence, election or economic-indicator predictions, despite some contracts (e.g., reality-TV outcomes) falling outside the broad definition.
The court also found irreparable harm from potential felony exposure, unrecoverable financial losses (Kalshi cited over 90,000 verified Minnesota users with millions in open positions), sovereign immunity barring damages against the state, and reputational harm from having to unwind Minnesota users’ trades, with the balance of harms and public interest likewise favoring relief given the likely preemption. The court granted all three preliminary injunction motions, enjoining Minnesota from enforcing the statute against CFTC-registered DCMs pending a final merits ruling, and it joins a growing but split body of case law from other jurisdictions on whether federal commodities law preempts state gambling laws as applied to prediction markets. See a copy of the order here.
3. SEC Announces Roundtable To Discuss 24/7 Trading
On July 23, the Securities and Exchange Commission (SEC) announced that it will host a roundtable on September 17 to discuss 24-hour trading for U.S. equity markets, overnight trading, operations and resiliency in a 24-hour market, and opportunities and challenges for expansion. The roundtable will be open to the public and will be held at the SEC’s headquarters in Washington, D.C., and streamed live on sec.gov. The agenda and speakers will be posted on the SEC website shortly before the event. See the SEC’s press release here and comments received here.
4. FINRA Seeks Comments to Modernized Best Ex Guidance
On July 24, the Financial Industry Regulatory Authority, Inc. (FINRA) issued Regulatory Notice 26-15 (Notice), requesting comment by September 25 on modernizing its best execution guidance under Rule 5310 as part of the FINRA Forward initiative. The review is prompted by the SEC’s proposal to rescind the Rule 611 trade-through prohibition and Rule 610(e) locked/crossed quotation requirements under Regulation NMS. While FINRA believes Rule 5310’s principles-based framework remains sound, it is seeking input on how firms should adapt best execution practices if the SEC’s structural protections are eliminated.
The Notice poses detailed questions across nine areas, including venue connection standards absent a trade-through requirement; the continued role of the National Best Bid and Offer as a benchmark; access fees and transaction costs (including the SEC’s planned review of Rule 610(c) fee caps); order-by-order versus regular and rigorous review standards; institutional order handling (including request-for-quote platforms and single-dealer platforms); extended hours and overnight trading; held versus not-held order categorization; listed options market structure; and emerging technologies such as artificial intelligence (AI) and gen AI and tokenized securities. See the Regulatory Notice here.
5. State Attorneys General Stand Against Two Bank Deals
On July 15, 20 state attorneys general (AGs) submitted a letter to the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve urging them to deny national bank charters, bank holding company status, mergers, and deposit insurance to high-cost lenders and nontraditional fintech and cryptocurrency entities, including Enova and OppFi. The AGs argue that granting such charters would let these companies bypass the interest rate caps and consumer protections in place in 45 states and D.C., pointing to existing “rent-a-bank” arrangements in which Enova and OppFi partner with banks in states without rate caps to originate loans reaching 195 percent or more.
The letter also raises safety-and-soundness concerns, noting that Enova’s charge-off rates exceed 50 percent and that losses on rent-a-bank loans run more than 25 times higher than bank credit cards, which the AGs contend is inconsistent with FDIC underwriting standards and the prudential regulators’ 2020 Interagency Lending Principles for Small-Dollar Loans. They further warn that extending banking privileges to cryptocurrency firms and other emerging platforms could embed systemic risk in the financial system and erode the credibility of the “bank” designation, and they ask regulators to allow public comment and hearings before acting on any such applications. See the letter here.
