A Bigger Regulator at the Table: SEC Joins CFTC on Prediction Markets and Derivatives Reform
On June 18, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) issued two joint requests for public comment relating to the swap and security-based swap markets: the to clarify and harmonize the definitions of “swap” and “security-based swap,” and the to streamline data reporting requirements across those markets. These joint requests are notable both for their substance and for the SEC’s active participation alongside the CFTC in areas such as event contracts and prediction markets that the CFTC has historically overseen largely on its own.
These requests follow a related CFTC initiative two days earlier. On June 16, the CFTC issued a (RFI) pursuant to President Trump’s (“Integrating Financial Technology Innovation Into Regulatory Frameworks”) seeking to identify CFTC regulations and other items that may impede fintech firms from partnering with federally regulated institutions. The RFI invites input on a broad range of “regulatory items”—including rules, guidance, orders and no-action relief—that may create unnecessary barriers to entry, such as whether existing registration, designation and authorization processes are “fit for purpose” for fintech business models, which requirements impede partnerships with registrants, and whether current registration categories either miss emerging fintech activities or are overly broad.
Although the RFI and the joint requests arise from separate processes, they target an overlapping set of market participants—fintech, derivatives and digital asset firms whose products and business models increasingly straddle the CFTC and SEC regimes. Together, they present a meaningful opportunity for these firms to inform regulatory policy. Effective engagement with both commissions may help shape reforms that reduce operational friction, enhance regulatory clarity, and support innovation and new business opportunities.
The joint requests reflect a coordinated effort to modernize key elements of the Dodd‑Frank Title VII framework in response to evolving markets, technologies and product innovation.
Clarifying and Harmonizing Derivatives Product Definitions
The first request seeks input on how to further define and clarify the boundary between “swaps,” “security-based swaps” and “mixed swaps,” particularly for novel or emerging products that raise interpretive or jurisdictional questions. The agencies ask whether existing statutory definitions and exclusions remain fit for purpose, whether additional objective criteria or interpretive guidance is needed and how to address ambiguity around products such as event contracts and other innovative structures. The request also explores whether “alternative compliance” frameworks may be appropriate where products implicate both the SEC and CFTC regimes.
Greater definitional clarity could significantly affect how products are classified and regulated as emerging technologies increasingly blur the longstanding jurisdictional divide between the SEC and CFTC. Reducing legal uncertainty and compliance risk would particularly benefit market participants developing or trading innovative or digitally structured products. Because any changes could have significant downstream implications for regulatory obligations, platform requirements and market access, this is a consequential opportunity to shape how core Title VII concepts are interpreted going forward.
The SEC's Entry into Prediction Markets
Perhaps the most significant aspect of the first joint request is the SEC’s express involvement in the treatment of event contracts, the instruments underpinning prediction markets. To date, prediction markets have developed largely within the CFTC’s orbit, regulated (and litigated) as event contracts under the Commodity Exchange Act. By jointly asking how event contracts and similar products should be classified across the swap and security-based swap definitions, the SEC is now formally participating in a debate it had largely sat out.
This introduces a second, and substantially larger, federal regulator into a space the CFTC had effectively overseen alone. If certain event contracts are viewed as implicating the securities laws—or as “security-based swaps”—platforms and product sponsors could face SEC registration, disclosure, and oversight regimes in addition to, or instead of, the CFTC framework they have built around. The joint posture signals that a shift in the jurisdictional perimeter for prediction markets is genuinely in play, and that the outcome will be shaped by both agencies rather than the CFTC alone. For firms in this sector, the comment process is an important early opportunity to advocate for a coherent, predictable jurisdictional line before competing or overlapping regimes take hold.
Data Reporting Frameworks for Security-Based Swap and Swap Markets
The second request focuses on the structure and effectiveness of swap and security-based swap data reporting frameworks. The SEC and CFTC are seeking public comment on how current requirements should be harmonized, simplified or otherwise modernized to improve data quality, usability and regulatory oversight while reducing unnecessary operational complexity. Key areas of inquiry include alignment between SEC and CFTC reporting regimes, reductions in operational burdens, and the use of standardized identifiers and reference data. This request indicates a shift toward “right-sizing” reporting obligations to better balance transparency with efficiency. Any reforms could reduce duplicative or low-value reporting requirements for market participants while enhancing data integrity and interagency coordination.
In a on the joint request, CFTC Chairman Michael Selig stated, “I look forward to hearing from market participants about the ways we can cut red tape and reduce costs, while still collecting the data we need to conduct our market oversight responsibilities,” emphasizing the intent to reduce regulatory burden in order to promote market efficiency. Firms directly affected by these reporting requirements can provide comments to help steer new CFTC and SEC policy.
What to Do Next
Given the potentially significant implications of these requests, market participants should strongly consider engaging in the public comment process. Doing so is an opportunity to influence how the SEC and CFTC modernize core aspects of the derivatives framework, including product classification, the regulatory treatment of prediction markets and reporting obligations. Comments allow firms to highlight practical challenges, operational considerations, and areas where clarification or reform could reduce costs, improve certainty or better accommodate innovation. Active participation can shape the direction of future rulemaking and help ensure that any changes reflect real-world market practices and technological developments. Comments on the RFI are due July 7, 2026, and comments on the joint requests are due August 23, 2026.
For guidance on or assistance with drafting public comments, please contact the Manatt professional with whom you work or reach out to any of the authors listed here.
Joint Request for Comment on Further Definition of ‘‘Swap’’ and ‘‘Security-Based Swap’’ and on Alternative Compliance, 91 Fed. Reg. 37873 (June 24, 2026); see also Press Release, CFTC, CFTC, SEC Seek Public Comment to Further Clarify and Harmonize Derivatives Product Definitions (June 18, 2026), ; Press Release, SEC, SEC, CFTC Seek Public Comment to Further Clarify and Harmonize Derivatives Product Definitions (June 18, 2026), .
Joint Request for Comment on Swap and Security-Based Swap Data Reporting, 91 Fed. Reg. 37877 (June 24, 2026), see also Press Release, CFTC, CFTC, SEC Seek Public Input on Data Reporting Frameworks for Security-Based Swap and Swap Markets (June 18, 2026), ; Press Release, SEC, SEC, CFTC Seek Public Input on Data Reporting Frameworks for Security-Based Swap and Swap Markets (June 18, 2026), .
Request for Information: Identifying Regulations To Facilitate Innovation and Competition to Financial Products and Services for Fintech Firms, 91 Fed. Reg. 36774 (June 16, 2026); see also Press Release, CFTC, CFTC Issues a Request for Information to Facilitate Innovation and Competition for Fintech Firms (June 16, 2026), .
Press Release, SEC, SEC, CFTC Seek Public Comment to Further Clarify and Harmonize Derivatives Product Definitions (June 18, 2026), .
