CFTC staff presses exchanges on political speech bets and manipulation

CFTC staff asks regulated exchanges to provide contract-specific explanations of safeguards for political speech markets. The Division of Market Oversight says contracts tied to a named person's words, appearance or interaction carry heightened manipulation risk. Staff may view these contracts as presumptively readily susceptible to manipulation. A Sept. 22 advisory says the guidance is a staff view that creates no binding rule and does not prohibit speech markets. The advisory asks whether independent obligations deter the person determining the outcome from manipulating it. It asks whether someone could pressure or induce that person. It asks whether outsiders can verify the result under substantial public scrutiny. It asks whether the decisive word or act has real significance in its setting. It also asks whether trading restrictions, surveillance and other controls fit the specific risk. The advisory says public proof of what happened addresses only part of the test. It says a speaker's professional obligations cannot replace exchange controls. Kalshi continued listing speech markets the following day. A Sept. 23 check found about $125,776 in volume on a market about Donald Trump's remarks at Xi Jinping's state arrival. The check found about $5,333 in volume on a market about Treasury Secretary Scott Bessent's television interview. It found about $23,973 in volume on a market about BlackBerry's next earnings call. The figures change as trading continues. The Trump contract asked whether Trump would say "China" at least five times. Its rules use live video or a stream of the Sept. 24 ceremony to determine the result. The rules use official transcripts if Kalshi employees cannot reach a consensus from video. Only Trump's speech in an official capacity counts. The contract bars source-agency employees and people with material nonpublic information about the event from trading. Kalshi says it screens certain political figures and relevant government employees. Kalshi says it restricts trading by people with inside information or influence over outcomes. Kalshi says it monitors trading patterns. Kalshi says it can freeze flagged accounts and refer cases to regulators. Spokesperson Elisabeth Diana said on Sept. 23 that Kalshi had addressed the guidance through a prior discussion with the CFTC. Diana did not specify changes to the sampled markets. The CFTC's August settlement with Gabriel Perez concerns access to advance information. The agency's order found that Perez used access to presidential speeches before delivery to trade mention contracts between December 2025 and February 2026. He earned $107,539. The order does not say that Perez changed the words. A separate July settlement found that former Rep. George Santos traded a contract on his own State of the Union attendance. The CFTC found that Santos posted misleading statements about his plans during the trade. Prices moved in his favor. The settlements do not establish misconduct in the three sampled contracts. The advisory asks exchanges to address both people who can choose an outcome and people who may know it first.