The Division of Market Oversight and the Market Participants Division of the Commodity Futures Trading Commission recently issued a letter to remind Commission-regulated entities involved in the listing, soliciting, or acceptance of event contracts of their responsibility not to mislead consumers, including the obligation to display clear and accurate pricing information for derivatives products.
Registered entities and persons must uphold regulatory standards and foster clear understanding of the products offered within CFTC-regulated markets, including through the oversight of intermediary market participants, affiliates, and partners.
Commission staff warned that displaying pricing information in the “American” odds format used by casino gambling bookmakers is likely to mislead market participants about the nature of the transaction and may deprive users of access to indicia of market depth and pricing impact.
Market participants should display information, including pricing information, that indicates to consumers when a product is an event contract on a CFTC-regulated exchange, rather than a higher-margin, non-market-priced bookmaking product.
The divisions reminded regulated entities and persons that displaying misleading pricing information in connection with any regulated product risks violating federal law prohibiting the use of manipulative devices.
