CFTC issues staff advisory on “mention market” event contracts

Overview

On September 22, 2026, staff of the Commodity Futures Trading Commission (CFTC) issued an advisory regarding “mention market” contracts.¹ It appears that the advisory is intended to address increasingly vocal concerns about this category of event contract. However, while the advisory recognizes that mention market contracts raise heightened concerns about susceptibility to manipulation, the advisory does not take the position that such heightened concerns render mention market contracts, as a class, ineligible to satisfy statutory listing standards. Rather, the advisory identifies factors that, if thoroughly addressed by a prediction market, may be sufficient to support the prediction market’s listing of a mention market contract for trading. Given this approach, and regulatory constraints inherent to the contract listing process itself, expectations about the advisory’s longer-term effectiveness in stemming the flow of mention market contract listings should be tempered. 

Background

A mention market contract is a type of event contract that is based on whether a specific word or phrase will be spoken during a defined time period or event.² CFTC-registered prediction markets have, for example, listed event contracts on whether an electoral candidate will say certain words or phrases during a debate, whether a corporate executive will say certain words or phrases during an earnings call and whether a sports announcer will say certain words or phrases during a game broadcast.3 For purposes of its advisory, CFTC staff also recognizes mention market contracts to include event contracts on whether an individual will attend or appear at an event, or otherwise interact with another person (e.g., by shaking hands, being photographed together or engaging on social media).

Whether they involve speech or conduct, mention market contracts raise heightened concerns about susceptibility to manipulation because the individual whose statement or action determines settlement—or, potentially, those in close proximity to that individual—can readily influence the contract’s outcome. Mention market contracts may also create heightened incentives for such individuals to exploit advance knowledge of the contract’s outcome. As an example, over the summer, the CFTC brought and settled an insider trading action against a White House teleprompter operator who had access to the President’s speeches before they were delivered—providing the operator with the opportunity to review the content of the speeches ahead of time. The operator traded a number of mention market contracts on whether the President would say particular words, terms or phrases during scheduled public speaking engagements, receiving profits of about $100,000.⁴

The CFTC-registered prediction markets that list event contracts—including mention market contracts—for trading have statutory obligations to oversee trading on their markets and to establish rules, policies and procedures to prevent manipulation, price distortion and abusive trading practices.⁵ Among other safeguards, these prediction markets generally have rules in their rulebooks that prohibit trading in any particular event contract by “insiders” with respect to that contract, as well as by those with the ability to exert influence on the outcome of the contract’s underlying event. That being said, these prediction markets also have a statutory obligation—under “Core Principle 3” of the CEA provisions with which such markets must comply in order to obtain and maintain registration with the CFTC—to only list contracts that are not readily susceptible to manipulation.⁶ Given this statutory obligation, notwithstanding the trading controls, market surveillance mechanisms and enforcement programs that prediction markets may put in place to detect and penalize prohibited activity with respect to contracts that they have listed for trading, there is a real question about whether—on the front end—mention market contracts should be able to be listed at all. In this regard, it should be noted that: (i) the CFTC’s longstanding, Commission-level guidance outlining relevant considerations with respect to Core Principle 3 focuses on contract design;⁷ and (ii) separate statutory core principles address a contract market’s obligations with respect to trading controls, market surveillance mechanisms and enforcement programs.⁸

CFTC staff’s advisory 

CFTC staff’s advisory starts by highlighting the statutory obligation that all CFTC-registered prediction markets have, under Core Principle 3, only to list contracts that are not readily susceptible to manipulation. The advisory continues by stating that CFTC staff “may view Mention Market[] [contracts] as presumptively readily susceptible to manipulation,” because their outcome may be controlled by a single individual or small group of individuals with access to or influence over the words, attendance or interaction that determines settlement.⁹

Again, the advisory does not take the position that mention market contracts’ heightened susceptibility to manipulation renders them, as a class, ineligible to satisfy the Core Principle 3 listing standard. Rather, the advisory states that whether a mention market contract is readily susceptible to manipulation is a contract-specific determination, and that it “necessarily involves consideration of not only the design of the particular contract but also the effectiveness of any prophylactic measures implemented” to mitigate the manipulation and insider trading risks that the contract may present.¹⁰ The advisory states that, “in limited circumstances, a well-designed contract coupled with . . . trading rules, surveillance, and controls may be sufficient to rebut the presumption that Mention Market[] [contracts] are readily susceptible to manipulation, and support listing of such a contract consistent with Core Principle 3.”¹¹

The advisory then sets forth the factors that CFTC staff consider particularly relevant to a determination of whether the presumption of susceptibility to manipulation has been rebutted, namely: 

1. Whether the individual whose speech or action controls the mention market contract’s outcome is subject to independent obligations (e.g., legal, professional or contractual)¹² that meaningfully deter conduct designed to affect settlement—for example, by carrying professional, legal or reputational consequences disproportionate to the potential gain available in the contract.
2. Whether the contract may be manipulated not only by the individual whose speech or action determines settlement, but through that individual—for example, by social engineering, inducement or public pressure campaigns directed at the individual or a person able to influence the individual.
3. Whether the actions or outcomes underlying the contract are subject to transparent, independent verification and contemporaneous, significant public scrutiny. The advisory distinguishes between mention market contracts that settle based on actions by non-public and public persons—with the latter characterized as presenting less risk of manipulation because of the benefit of public scrutiny and independent verification. The advisory also suggests that, where words or conduct underlying a mention market contract are material to the event to which the words or conduct pertain, then the contract itself may be less susceptible to manipulation because such words or conduct will be subject to more “scrutiny and discipline” than words or conduct that lack substantive meaning in the context of the event (e.g., unrelated “buzzwords”).¹³ The advisory does not address the possibility that where words or conduct are in-context, manipulative activity may be harder to detect—and easier to conceal.
4. Whether the prediction market has implemented “prophylactic trading rules, surveillance, and controls reasonably designed to detect and deter manipulation, attempted manipulation, and the misappropriation of nonpublic information” in connection with the contract.¹⁴ The advisory states that prediction markets are strongly encouraged to identify “potential controllers and known insiders—drawing, for example, on public officeholder and financial-disclosure sources for contracts on public officials, or on exchange filings and other commercially available data for contracts on corporate officers”—and then design “compliance measures that are meaningfully calibrated to the particular risks those persons present.”¹⁵

The advisory concludes by stating that staff would expect any contract submission to the CFTC for a mention market contract to thoroughly address each of the foregoing factors. The advisory encourages prediction markets to engage with CFTC staff in the early phases of designing mention market contracts to determine if any heightened manipulation risks exist, and, if so, whether they can be mitigated with appropriate controls. 

Takeaways

The effect of the advisory for mention market contracts that already have been listed for trading is unclear; the advisory does not address this point.

The advisory also does not grapple with the fact that, generally speaking, CFTC-registered exchanges self-certify their contracts for trading—i.e., the exchanges take the lead in determining whether the contracts that they seek to list satisfy statutory requirements (like Core Principle 3) and relevant CFTC regulations and guidance.¹⁶ This opens the door to the possibility that more than a small number of mention market contracts may be determined by the listing prediction markets to fall within the “limited circumstances” where compliance with Core Principle 3 can be satisfied. The CFTC’s recourse, in circumstances where the agency has concerns about a contract that an exchange has self-certified, is quite limited¹⁷—and given the sheer volume of event contracts that are now being self-certified on a weekly basis, the agency may not even have the opportunity to identify those concerns before the contract is listed for trading.¹⁸

This is all to say that any expectations about the advisory’s longer-term effectiveness in stemming the listing of mention market contracts for trading should be tempered. The advisory may actually be seen by some prediction markets as establishing something akin to a safe harbor—an outlining of the boxes that they have to tick, and address in their submission to the CFTC, before moving ahead with listing a mention market contract for trading. 

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 CFTC Letter No. 26-27, Staff Advisory on Individual Mention, Attendance and Interaction Event Contracts (September 22, 2026) (Mention Market Advisory).}

_{2 See, e.g., In re Perez, CFTC Docket No. 26-06 at 2 (August 28, 2026). (“A mention market is a type of event contract where traders take a ‘Yes’ or ‘No’ position on whether a specific word, phrase, or term will be spoken, posted or otherwise mentioned during a defined event or time period.”)}

_{3 In August, media reported that CFTC-registered prediction market KalshiEX LLC had removed its listings of sports-related mention market contracts from its trading platform.} 

_{4 In re Perez at 3-4, 8.}

_{5 See, e.g., Commodity Exchange Act (CEA) section 5(d)(2), 7 U.S.C. 7(d)(2), which requires, among other things, that a CFTC-registered designated contract market (DCM) establish, monitor and enforce compliance with the rules of the DCM, including rules prohibiting abusive trade practices on the DCM; and DCM Core Principle 4, CEA section 5(d)(4), 7 U.S.C. 7(d)(4), which requires, among other things, that a DCM prevent manipulation, price distortion and disruptions of the physical delivery or cash-settlement process through market surveillance, compliance and enforcement practices and procedures. All prediction markets currently registered with the CFTC are registered as DCMs.}

_{6 CEA section 5(d)(3), 7 U.S.C. 7(d)(3).}

_{7 See 17 CFR Part 38, Appendix C.}

_{8 See note 4, supra.}

_{9 Mention Market Advisory at 3.} 

_10 Id.

_{11 Id. at 4.}

_{12 Id. (“DCMs should consider whether the individual whose speech or conduct controls the outcome of the contract is subject to independent legal, professional, contractual, fiduciary, confidentiality, or organizational obligations that meaningfully deter conduct designed to affect settlement.”)}

_13 Id.

_14 Id.

_{15 Id. at 4-5.}

_{16 See CEA section 5c(c), 7 U.S.C. 7a–2(c). See also 17 CFR Part 40. Generally speaking, there are two processes through which a DCM may list a new derivative contract—including a new event contract—for trading. The DCM may list the contract by providing the CFTC with a written certification—a “self-certification”—that the contract complies with the CEA, including the CFTC’s regulations thereunder. Alternatively, the DCM may elect voluntarily to seek prior CFTC approval of the contract. In the vast majority of cases, DCMs self-certify their contracts with the CFTC.} 

_{17 See 91 FR 35806, 35810 at fn. 53 (June 12, 2026) (“[T]he Commission has limited authority to prohibit a prediction market from listing self-certified event contracts. If Commission staff identify concerns with a self- certified event contract submission (e.g., concerns that a contract may be readily susceptible to manipulation), the Commission could, pursuant to §40.2(c), stay the listing of the event contracts during either the pendency of Commission proceedings for filing a false certification or during the pendency of a petition to alter or amend the event contract terms and conditions. See 17 CFR 40.2(c). The Commission could also initiate an enforcement action alleging that the prediction market failed to comply with part 40 requirements or applicable core principles (e.g., failure to comply with the prediction market’s obligation to list only contracts that are not readily susceptible to manipulation”).}

_{18 In effect, a DCM may list a self-certified contract for trading one business day after the DCM submits the self-certified contract to the CFTC. More specifically, a DCM may list a self-certified contract for trading where the DCM has otherwise complied with the substantive and procedural requirements of CEA section 5c(c) and Part 40 of the CFTC’s regulations, and the CFTC has received the self-certified contract submission by the open of business on the business day preceding the contract’s listing. See 17 CFR 40.2(a)(2).}