Staff of the Division of Market Oversight (DMO) of the Commodity Futures Trading Commission (CFTC) are issuing this advisory to remind designated contract markets (DCMs) of the proper procedures for submitting self ce...

Summary: Staff of the Division of Market Oversight (DMO) of the Commodity Futures Trading Commission (CFTC) are issuing this advisory to remind designated contract markets (DCMs) of the proper procedures for submitting self certifications of an event contract series. The advisory addresses the practice of submitting broad, template style certifications that combine many potential event contract permutations into a single, vague certification. This practice limits DMO’s ability to determine whether a DCM has supplied all of the information, explanation, and analysis required by Commission Regulation §?40.2 and has adequately evaluated the settlement methodology, data sources, and core-principles compliance of any contract it intends to list on the DCM. The guidance reiterates that broad, template-style certifications should not be submitted under Commission Regulation §?40.2(a) and explains when closely related event contracts may appropriately be certified as a class or submitted for approval under Commission Regulations §§?40.2(d) or 40.3.

CFTC Letter No. 26-22 Advisories July 24, 2026

1

UNITED STATES

COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

CFTC Staff Advisory

Division of Market Oversight

To:

Designated Contract Markets

Subject:

Self-Certification of an Event Contract Series

As prediction markets continue to evolve, staff of the Division of Market Oversight

(“DMO”) of the Commodity Futures Trading Commission (“CFTC” or “Commission”) have

observed a practice by which designated contract markets (“DCMs”)1 self-certify broad, template

event contracts that bundle together potential contract permutations with differing settlement

sources and/or methodologies under a single certification (“Broad Template Certification”).2

This practice hampers DMO’s ability to determine whether a DCM has supplied all information,

explanation, and analysis required under Commission Regulation § 40.2 and has adequately

evaluated the set

mplate

event contracts that bundle together potential contract permutations with differing settlement

sources and/or methodologies under a single certification (“Broad Template Certification”).2

This practice hampers DMO’s ability to determine whether a DCM has supplied all information,

explanation, and analysis required under Commission Regulation § 40.2 and has adequately

evaluated the settlement methodology, data sources, and core-principles compliance of all

permutations of the contract the DCM intends to list. Further, it prevents market participants from

accessing and evaluating such information.

Commission staff is issuing this advisory to remind DCMs that Broad Template

Certifications should not be submitted via § 40.2(a) and to provide guidance when a certified series

or class of closely related event contracts may be appropriately filed under § 40.2(d) or § 40.3.

I.

Background

In 2011, the Commission amended § 40.2 to add § 40.2(d), which was intended to

“streamline the product certification process for a significant percentage of swap contracts by

permitting DCMs and SEFs to certify, within a single submission, one or more swaps without

submitting each swap and its supporting information to the Commission.”3 At the time, interest

1 This advisory is addressed to DCMs, as no swap execution facilities (“SEFs”) currently list event contracts.

However, the analysis described herein is also applicable to event contracts that may be listed by SEFs, as the

provisions in § 40.2 and § 40.3 apply to DCMs and SEFs.

2 For example, DCMs have certified event contracts regarding whether unspecified economic events may occur. The

terms associated with these contracts have included non-exhaustive, vague lists of potential underlyings, including

unidentified economic metrics, recurrent data releases, international agreements, and central bank decisions.

3 Provisions Common to Registered Entities, 76 FR 44776, 44780 (July 27, 2011).

certified event contracts regarding whether unspecified economic events may occur. The

terms associated with these contracts have included non-exhaustive, vague lists of potential underlyings, including

unidentified economic metrics, recurrent data releases, international agreements, and central bank decisions.

3 Provisions Common to Registered Entities, 76 FR 44776, 44780 (July 27, 2011).

CFTC Letter No. 26-22 Advisories July 24, 2026

2

rate swaps comprised approximately 77.5% of the total outstanding notional value of over-the-

counter swaps,4 and these swaps were generally structured in a manner that could benefit from

class treatment because they relied on identical pricing sources and methodologies, allowing

multiple contracts to be certified together without impairing the Commission’s ability to review

them. While the amendment was primarily intended to address certification burdens associated

with interest rate swaps, the Commission specifically stated that the class certification process

under § 40.2(d) could also be used for certain “swaps based upon the occurrence or non-occurrence

of certain events or contingencies.”5

In particular, § 40.2(d) provides that DCMs may self-certify a class of swaps that are based

upon certain types of “excluded commodities,” including an excluded commodity defined in

Section 1a(19)(iv) of the Commodity Exchange Act (“CEA”) as “an occurrence, extent of an

occurrence, or contingency (other than a change in the price, rate, value, or level of a commodity

not described in [Section 1a(19)(i)]).”6 The vast majority of event contracts are agreements,

contracts, transactions, or swaps that are based upon the occurrence, extent of an occurrence, or

contingency, and are therefore eligible for class self-certification under § 40.2(d), provided that

each individual swap within the class meets certain conditions

ce, rate, value, or level of a commodity

not described in [Section 1a(19)(i)]).”6 The vast majority of event contracts are agreements,

contracts, transactions, or swaps that are based upon the occurrence, extent of an occurrence, or

contingency, and are therefore eligible for class self-certification under § 40.2(d), provided that

each individual swap within the class meets certain conditions.

Specifically, a DCM may submit a class self-certification only if each individual swap

within the certified class satisfies the four conditions outlined in § 40.2(d)(1)(i)–(iv)7 that provide

that:

i.

Each swap within the certified class must be based on an excluded commodity specified

in § 40.2(d)(1);

ii.

Each swap within the certified class must be based upon an excluded commodity with

an identical pricing source, formula, procedure, and methodology for calculating

reference prices and payment obligations;

iii.

The pricing source, formula, procedure, and methodology for calculating reference

prices and payment obligations in each particular swap within the certified class of

swaps is identical to a pricing source, formula, procedure, and methodology for

calculating reference prices and payment obligations in a product previously submitted

to the Commission and certified pursuant to § 40.2 or approved pursuant to § 40.3; and

iv.

Each particular swap within the certified class of swaps is based upon an excluded

commodity involving an identical currency or identical currencies.

4 Id. at note 14.

5 Id. at 44780.

6 17 CFR 40.2(d); see also CEA section 5c(c)(1), 7 U.S.C. 7a-2(c)(1).

7 17 CFR 40.2(d)(1)(i)–(iv).

ly submitted

to the Commission and certified pursuant to § 40.2 or approved pursuant to § 40.3; and

iv.

Each particular swap within the certified class of swaps is based upon an excluded

commodity involving an identical currency or identical currencies.

4 Id. at note 14.

5 Id. at 44780.

6 17 CFR 40.2(d); see also CEA section 5c(c)(1), 7 U.S.C. 7a-2(c)(1).

7 17 CFR 40.2(d)(1)(i)–(iv).

CFTC Letter No. 26-22 Advisories July 24, 2026

3

Further, § 40.2(d)(2) explicitly authorizes the Commission to require a DCM to withdraw

a certification under § 40.2(d)(1) and “submit each individual swap or certain individual swaps

within the submission” for review under § 40.2 or § 40.3.8 This provision makes clear that even

when a DCM utilizes § 40.2(d)(1) to certify multiple swaps in a single filing, the Commission may

determine at any time that individual certification is necessary.

To date, many DCMs have self-certified event contracts using Broad Template

Certifications pursuant to § 40.2(a), rather than individually certifying each potential permutation.

In March 2026, DMO staff raised concerns with this approach and issued an advisory (“CFTC

Staff Letter No. 26-08”) emphasizing that “[o]verly broad or generalized contract specifications

may [] impact a DCM’s ability to provide a complete explanation and analysis of compliance in

the DCM’s product submission to the Commission.”9 DMO further advised registrants that “DMO

staff would expect a product submission to include, among other things, a description of the

settlement methodology that accounts for differing potential permutations of the contract,

including identification of the specific data source(s) on which settlement will be based, and an

assessment of the reliability, objectivity, and manipulation resistance of such sources.”10

Notwithstanding CFTC Staff Letter No

ect a product submission to include, among other things, a description of the

settlement methodology that accounts for differing potential permutations of the contract,

including identification of the specific data source(s) on which settlement will be based, and an

assessment of the reliability, objectivity, and manipulation resistance of such sources.”10

Notwithstanding CFTC Staff Letter No. 26-08, many DCMs continue to self-certify event

contracts pursuant to Broad Template Certifications under § 40.2(a) without supplying the terms

and conditions of each proposed permutation and a concise explanation and analysis with respect

to the product’s terms and conditions, the underlying commodity, and the product’s compliance

with the CEA and Commission regulations as required by § 40.2(a).

II.

Requirements for Certification of an Event Contract Series

Consistent with the requirements of § 40.2, DMO advises DCMs that an event contact

series certification should be filed pursuant to § 40.2(d) or § 40.3.11 To qualify for a § 40.2(d)

class certification of swaps, an event contract series must reference a prior, specific contract

certified pursuant to § 40.2(a) or approved pursuant to § 40.3 (i.e., not a prior Broad Contract

Template) that shares identical pricing sources, formulas, procedures, and methodologies for

calculating reference prices and payment obligations.12 For example, a DCM may consider self-

certifying an event contract series pursuant to § 40.2(d) for all matches in the 2026 FIFA World

Cup by referencing a prior § 40.2(a) certification for “Will Mexico beat South Africa in the 2026

8 17 CFR 40.2(d); see also CEA section 5c(c)(1), 7 U.S.C. 7a-2(c)(1).

9

Prediction

Markets Advisory,

CFTC

Staff

Letter

No.

26-08

(Mar.

12,

2026),

available

at:

https://www.cftc.gov/csl/26-08/download, at 5.

10 Id

ct series pursuant to § 40.2(d) for all matches in the 2026 FIFA World

Cup by referencing a prior § 40.2(a) certification for “Will Mexico beat South Africa in the 2026

8 17 CFR 40.2(d); see also CEA section 5c(c)(1), 7 U.S.C. 7a-2(c)(1).

9

Prediction

Markets Advisory,

CFTC

Staff

Letter

No.

26-08

(Mar.

12,

2026),

available

at:

https://www.cftc.gov/csl/26-08/download, at 5.

10 Id.

11 DMO staff expects that an event contract series certification filed pursuant to § 40.3 would define the class for the

event contract series pursuant to those parameters identified in § 40.2(d).

12 See 17 CFR 40.2(d)(1)(iii). A DCM may only reference its own prior filings, and not those of other DCMs. A

DCM’s § 40.2(d) submission should reference the Official Product Name and the Official Receipt Date of the

referenced contract that was previously certified or approved.

CFTC Letter No. 26-22 Advisories July 24, 2026

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FIFA World Cup?,” if they all rely on identical pricing sources, formulas, procedures, and

methodologies for calculating reference prices and payment obligations. By contrast, a DCM

should not self-certify an event contract series pursuant to § 40.2(d) for all matches in the 2026

MLS Leagues Cup by referencing the § 40.2(a) certification of “Will Mexico beat South Africa in

the 2026 FIFA World Cup?,” as MLS and FIFA have different rules and therefore lead to different

contract pricing sources, formulas, procedures, and methodologies for calculating reference prices

and payment obligations

ertify an event contract series pursuant to § 40.2(d) for all matches in the 2026

MLS Leagues Cup by referencing the § 40.2(a) certification of “Will Mexico beat South Africa in

the 2026 FIFA World Cup?,” as MLS and FIFA have different rules and therefore lead to different

contract pricing sources, formulas, procedures, and methodologies for calculating reference prices

and payment obligations. For example, the 2026 FIFA World Cup permits draws during the first

round of the tournament, whereas the 2026 MLS Leagues Cup does not.13

In addition to these examples, a DCM could potentially utilize § 40.2(d) to certify an event

contract series involving:

• the outcome of games in a tournament or series whose outcomes are each determined

by identical rules (e.g., a women’s singles tennis tournament);

• election outcomes arising from a single ballot;

• nominees in a single awards show chosen by the same process (e.g., Oscars Best

Picture, Oscars Best Director);

• daily rainfall totals in a city as reported by the same official weather station and

measurement methodology.14

By requiring that each contract in a class share the same pricing sources and methodologies

for calculating payment obligations, § 40.2(d) helps ensure that DCMs separately evaluate the

manipulation risks posed by each settlement source and methodology, as required by Core

Principle 3.15 Given that cash-settled derivatives, including event contracts, may create an

incentive to manipulate or artificially influence the data from which the product’s price is derived,

DCMs are expected to give careful consideration to the potential for manipulation or distortion of

the cash settlement price, as well as the reliability of that price as an indicator for cash market

values.16 DCMs are also expected to thoroughly consider the commercial acceptability, public

availability, and timeliness of the price series that is used to calculate cash settlement prices.17

Because this analysis cannot be adequately performed unless the settleme

nipulation or distortion of

the cash settlement price, as well as the reliability of that price as an indicator for cash market

values.16 DCMs are also expected to thoroughly consider the commercial acceptability, public

availability, and timeliness of the price series that is used to calculate cash settlement prices.17

Because this analysis cannot be adequately performed unless the settlement sources are identified

13 Leagues Cup 2026: Competition dates, format & teams, available at: https://www.mlssoccer.com/news/leagues-

cup-2026-competition-dates-format-teams;

Regulations

for

the

FIFA

World

Cup

26,

available

at:

https://digitalhub.fifa.com/m/636f5c9c6f29771f/original/FWC2026_regulations_EN.pdf.

14 DMO is providing this non-exhaustive list of the types of contracts that may qualify for certification under § 40.2(d)

if they share an identical pricing source, formula, procedure, and methodology for calculating reference prices and

payment obligations. In all cases, the § 40.2(d) certification must reference a prior, specific contract that is certified

pursuant to § 40.2(a) or approved pursuant to § 40.3.

15 See DCM Core Principle 3, CEA section 5c(d)(3), 7 U.S.C. 7(d)(3); 17 CFR 38.200, 38.201; see also SEF Core

Principle 3, CEA section 5h(f)(3), 7 U.S.C. 7b-3(f)(3); 17 CFR 37.300, 37.301.

16 17 CFR Part 38, Appendix C.

17 Id.

CFTC Letter No. 26-22 Advisories July 24, 2026

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prior to listing, DMO staff expects a DCM to specifically identify in its certification any settlement

sources upon which a contract or class of contracts relies. This approach ensures that each contract

is subject to a complete evaluation of its compliance with core principles

37.300, 37.301.

16 17 CFR Part 38, Appendix C.

17 Id.

CFTC Letter No. 26-22 Advisories July 24, 2026

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prior to listing, DMO staff expects a DCM to specifically identify in its certification any settlement

sources upon which a contract or class of contracts relies. This approach ensures that each contract

is subject to a complete evaluation of its compliance with core principles.

Where DMO determines that the self-certification of a contract or series of contracts is

inadequate, DMO may recommend that the Commission stay the listing of the contract under

§ 40.2(c) or require the DCM to withdraw the certification and resubmit each individual contract,

or certain individual contracts, for review under § 40.2 or § 40.3, as provided in § 40.2(d)(2).

DCMs should not assume that certifying multiple contracts in a single filing insulates any one

contract from individual review.

In the event that the design of an event contract or series of event contracts raises unique

or novel questions about whether certification under § 40.2(d) is appropriate, DCMs are

encouraged to engage with DMO staff to discuss the appropriate submission approach prior to

filing the contracts with the Commission.

III.

Consolidated Submission Functionality

For the avoidance of doubt, nothing in this guidance prevents a DCM from utilizing the

Commission’s consolidated submission functionality to submit a single set of product certification

documents that are applicable to separate but related contract self-certifications.18 Where a DCM

lists a group of closely related contracts that share common supporting documents or exhibits, such

as a common rulebook, settlement source analysis, or common terms and conditions, the DCM

may submit the associated contract certifications in a consolidated filing, incorporating the shared

materials by reference. Because the shared exhibits need only be submitted once, this process

reduces duplicative filings and facilitates Commission review

re common supporting documents or exhibits, such

as a common rulebook, settlement source analysis, or common terms and conditions, the DCM

may submit the associated contract certifications in a consolidated filing, incorporating the shared

materials by reference. Because the shared exhibits need only be submitted once, this process

reduces duplicative filings and facilitates Commission review. DCMs are encouraged to use

consolidated submissions where appropriate, provided each contract is certified individually under

§ 40.2(a) or as a class under § 40.2(d), as discussed above, and the submission includes all of the

documents and information required by § 40.2.

******************************************************************************

This advisory is not intended to, does not, and may not be relied upon to create any rights,

substantive or procedural, enforceable by law by any party in any matter. This advisory does not

provide any no-action position with respect to a recommendation by any division that the

Commission initiate an enforcement action for failure to comply with the CEA or Commission

regulations. Further, this advisory is not intended to, does not, and may not be relied upon to create

any new binding rules or regulations, or to amend existing rules or regulations. This advisory

represents only the views of DMO and does not necessarily represent the views of the Commission

or of any other division or office of the Commission.

18 See Release No. 9244-26.

CFTC Letter No. 26-22 Advisories July 24, 2026

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Questions concerning this advisory may be directed to DMOletters@cftc.gov.

Sincerely,

_______________________

Duncan Hennes

Acting Director

Division of Market Oversight