Nasdaq and CME CEOs Call for Prediction Market Oversight
US exchange leaders are calling for consistent regulation to protect investors as prediction markets grow. They seek oversight to prevent market manipulation.
Executives from major exchanges in the United States are calling for a more robust and consistent regulatory framework for prediction markets as the sector experiences a surge in popularity. These platforms, which allow users to trade contracts based on the outcomes of real-world events ranging from elections to economic indicators, have drawn significant interest from both retail investors and institutional heavyweights. While supporters argue that these markets provide valuable price discovery by aggregating collective forecasts, critics remain concerned about their resemblance to gambling and the potential for market manipulation.
Nasdaq, Inc. Chief Executive Adena Friedman highlighted the importance of oversight during a panel at the FIA Global Cleared Markets Conference, noting that clear rules are essential for investor protection.
"Markets thrive when we have consistent regulation, and it allows investors, first of all, to be protected."
Friedman stated that the exchange is currently working with the Securities and Exchange Commission to develop a framework for options markets that operates safely within existing rule bases. This sentiment was echoed by CME Group Inc. CEO Terry Duffy, who argued that the growth of prediction markets depends on regulations that can endure across different political administrations.
"I think that's the biggest problem we have, especially with crypto and especially with predictions."
Duffy emphasized that the lack of regulatory stability is a significant hurdle for the industry. As the market evolves, it has begun to include niche wagers, such as social media metrics or geopolitical developments involving countries like Iran.
For major financial institutions, prediction markets represent a significant opportunity to diversify revenue and attract a broader pool of retail traders. Intercontinental Exchange, Inc., the parent company of the New York Stock Exchange, demonstrated its commitment to the sector by announcing a $2 billion investment in the platform Polymarket last October. Similarly, CME launched its own prediction platform in five states in December 2025 in partnership with sports betting firm FanDuel, and Nasdaq has recently sought approval to introduce prediction-based options on a major stock index. These moves signal a broader trend of traditional exchanges attempting to integrate these novel derivatives into the regulated financial ecosystem.
