“A bill to amend the Commodity Exchange Act to modify provisions relating to event contracts, and for other purposes.”
No CRS summary available for this bill.
This section revises the Commodity Exchange Act’s treatment of event contracts by striking prior categorical prohibitions and establishing a new subsection (d) with case-by-case Commission review. It defines “event contract,” “occurrence,” and “contingency,” authorizes the Commission to determine that an event contract is contrary to the public interest if based on unlawful activity, terrorism, assassination, war, violence, gaming, or similar activity, and prohibits listing, clearing, or trading of any such contract. The Commission must issue rules specifying public-interest criteria (including whether the contract materially encourages violence), provide at least a 60-day public comment period, prescribe standardized certification formats and retail-customer disclosure requirements for new event contracts, and authorize financial penalties for violations, taking into account the gravity of the violation and prior similar violations. The section also bars derivatives clearing organizations from using specified deceptive or unbalanced promotional materials when offering event contracts to non-eligible contract participants and requires related recordkeeping and disciplinary rules.
This section amends the Commodity Exchange Act to prohibit any Member of Congress, the President, the Vice President, or any officer or employee described in sections 5312 through 5316 of title 5, United States Code, from entering into an event contract. This section also directs the Commodity Futures Trading Commission to promulgate rules to implement the prohibition, determine whether its insider trading rules should be revised to require designated contract markets, swap execution facilities, and futures commission merchants to establish enhanced measures to detect and deter insider trading involving event contracts, and implement any resulting revisions. Finally, this section requires the Commission to conduct financial literacy and customer education activities through its Office of Customer Education and Outreach specific to retail investor activity related to event contracts.
This section establishes the Innovation Advisory Committee to facilitate discussion and communication among exchanges, firms, end-users, and regulators on innovation in derivatives and commodity markets and to advise the Commodity Futures Trading Commission on those matters. The Commission appoints members representing a broad spectrum of interests, including market makers, derivative end-users, futures commission merchants, and market operators, to 3-year terms (removable for cause). The Committee must conduct public meetings at least twice per year, submit reports and recommendations to the Commission, receive authorized travel reimbursements, and is exempt from chapter 10 of title 5, United States Code (i.e., the Federal Advisory Committee Act), though the Commission may terminate the Committee.
This section requires the Commodity Futures Trading Commission to conduct a study on event contracts that examines market size and structure, growth in listings on designated contract markets and swap execution facilities, liquidity and market characteristics across categories including weather, political events, sports, and government data, unique trader conduct warranting monitoring, and Commodity Exchange Act provisions prohibiting fraud and manipulation that apply to overseas activities. The Commission must submit a report on the study to Congress and publish it on a publicly available website not later than 1 year after enactment. This section also requires the Securities and Exchange Commission and the Commodity Futures Trading Commission to conduct a joint study on event contracts potentially under Securities and Exchange Commission jurisdiction, harmonization efforts between the agencies, and the nature and role of decentralized blockchain applications offering such contracts, with a report due not later than 15 months after enactment.
This section authorizes appropriations of $30,000,000 for each of fiscal years 2027 through 2031, to remain available until expended, to the Commodity Futures Trading Commission for implementing this Act and developing policies, rules, and guidance on event contracts. Amounts may be used for oversight, supervision, and enforcement of event contract markets; required rulemakings, reviews, and determinations under the Commodity Exchange Act; studies and reports required under section 5; establishment and operation of the Office of the Retail Advocate; and development of the Commission’s technological, surveillance, and data analysis capabilities.