CFTC proposes rule to classify sports, political and weather event contracts as swaps
The CFTC wants public comment within 30 days on a proposal to define event contracts, including sports-based ones, as swaps under its jurisdiction.
Key takeaways
- 01The CFTC published a Notice of Proposed Rulemaking to expressly define event contracts, including sports, political, cultural and weather contracts, as swaps.
- 02Chairman Michael S. Selig said the products are commodity derivatives within the CFTC's exclusive jurisdiction under the Commodity Exchange Act.
- 03Comments must be submitted via Regulations.gov within 30 days of the NPRM's publication in the Federal Register.
The Commodity Futures Trading Commission has opened a Notice of Proposed Rulemaking Concerning the Inclusion of Certain Event Contracts in the Definition of Swap to public comment, proposing to expressly define event contracts — including those based on sports, politics, cultural and weather-related events — as swaps.
Americans use event contracts to hedge risks, speculate, and provide the public with information about the outcome of future events.
The proposal states that these contracts are financial instruments “commonly known to the trade as swaps” and seeks to resolve ambiguity over how they are classified. Chairman Michael S. Selig said the products are “commodity derivatives squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are within the agency’s exclusive jurisdiction.”
What happens next
The CFTC said comments on the NPRM must be submitted in writing through Regulations.gov and received within 30 days of the proposal’s publication in the Federal Register. The commission has not announced a decision date on the rulemaking.
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