Citadel Securities says bets on public company outcomes in prediction markets should fall under SEC oversight. The firm is raising red flags about insider trading risks and pushes back against launching these products through the CFTC's streamlined process, which could sidestep rules that normally apply to securities.

What Citadel Securities Wants

The market maker argues that contracts with payouts tied to a company's performance should be regulated by the SEC. In their view, only SEC supervision can guarantee these products meet the standards set for securities-like instruments.

Risks and the CFTC Angle

Citadel Securities sees a big insider trading risk in betting on corporate results. They're against letting these contracts go live under the CFTC's lighter regime, since that would let issuers dodge securities regulations and weaken critical protections for market participants.

What Kind of Contracts Are We Talking About?

The contracts in question are basically outcome-based bets, where payouts depend directly on whether a public company hits certain metrics. Citadel Securities says these products should be regulated as instruments that touch on corporate reporting and related market risks.