By RÂ Tamara de Silva | April 2026 | Originally published as Expert Analysis in Law360
Futures markets have always protected the anonymity of their participants. That was a defensible feature when the markets served commercial hedgers and professional speculators in a specialized regulatory space. It is a much harder position to defend when the same anonymity extends to trades that, in any other market, would be the opening paragraph of an insider trading case.
On March 23, 2026, roughly 6,200 oil futures contracts changed hands in a 60-second window carrying a notional value of approximately $580 million, nearly nine times the historical average for that window.[1] Fifteen minutes later, President Trump posted on Truth Social that the United States had been holding productive conversations with Iran. Crude prices fell sharply, and the Dow surged more than 1,000 points.[2] The traders who positioned ahead of that post remain anonymous. Under current CME Group disclosure rules, they are not required to be identified to anyone outside the exchange.
In equities, that fact pattern would trigger an immediate SEC investigation under a well-developed body of insider trading law. In futures markets, the same fact pattern produces a different result. Regulators must first overcome the structural anonymity built into the market before they can determine whether a violation occurred at all. The identity of the trader is not a fact to be uncovered in the course of an investigation. It is an obstacle that must be dismantled before the investigation can begin.
That obstacle is not a loophole. It is the architecture.
Prediction markets have grown from a regulatory curiosity into a significant segment of the derivatives landscape. Kalshi and Polymarket together handled more than $40 billion in trading volume in 2025, with Kalshi recording approximately $10.4 billion in monthly volume as of February 2026 and Polymarket recording nearly $8 billion in the same period.[3] These platforms list contracts on the outcomes of elections, military operations, and government policy decisions. They inherited the structural opacity of futures markets without the decades of institutional development that preceded them. The anonymity drawing scrutiny in oil futures is the same anonymity that allowed a single trader to make nearly $1 million on Polymarket by correctly predicting unannounced military operations against Iran, winning 93 percent of five-figure wagers.[4] Israeli authorities ultimately indicted two individuals, including a military reservist, for allegedly trading on classified information.[5] The platform’s own surveillance did not catch it.
The March 23 oil futures episode and the Polymarket enforcement cases are not separate problems. They are the same problem expressed in two different markets, and the regulatory architecture connecting them remains intact.
A Conflict the SRO Model Cannot Resolve
CME Group is a publicly traded corporation. Its revenue depends on trading volume. Its market-maker incentive programs, some of which date to 2005 and remained in place for years without modification, provide fee rebates and economic benefits to the participants who generate that volume.[6] Certain original market-making firms received trading perks ten times greater than those available to later entrants.[7] CME has sought confidential treatment for the specific terms of some of those rebates, filing FOIA confidential treatment requests to shield the details from public disclosure.[8]
The CFTC examined these programs in 2014 after Virtu Financial disclosed that regulators had requested information about its participation in exchange incentive programs. The commission sought to understand who receives discounts, how large the savings are, and whether early-adopter programs ever actually terminate. The exchange defended the programs as tools for building market liquidity. That defense has merit as far as it goes.
The problem is not that market-maker programs exist. The problem is that the same entity profiting from volume, rewarding the participants who generate it, and maintaining confidential financial relationships with its most active traders is also the entity responsible for surveilling those traders for misconduct. No amount of internal procedural separation resolves that conflict.
I spent years representing clients attempting to prove manipulative trading by high-frequency firms in futures markets. The anonymity problem was not a litigation obstacle that could be worked around with a better discovery strategy. It was the architecture itself. Trade data sufficient to reconstruct a 60-second anomaly exists at the exchange level. Accessing it requires either regulatory compulsion or litigation-compelled discovery, by which time the practical ability to reconstruct what happened is often compromised.
The SEC built the Market Information Data Analytics System in 2013 specifically to give regulators granular, near-real-time visibility into equity markets. It did so in part because prior market structure scandals had made the cost of opacity undeniable. The CFTC has no equivalent.
The CFTC Has Moved, But Not Far Enough
Former SEC Chairman Jay Clayton, now the U.S. Attorney for the Southern District of New York, acknowledged on CNBC that regulators would examine the March activity. He noted that surveillance in the futures and commodities markets is more complex and less comprehensive than in cash equities, and he called on Congress to act. He is right that the law is not clear enough. But the problem is not primarily a statutory gap. It is structural.
The CFTC’s response to the broader pattern of anomalous prediction market trading has been significant but incomplete. On March 12, the CFTC’s Division of Market Oversight issued Staff Advisory Letter No. 26-08 to all designated contract markets, reiterating existing compliance obligations under Core Principles 3, 4, and 12, which cover manipulation resistance, surveillance and enforcement, and customer protection.[9]
On the same date, the CFTC published an advance notice of proposed rulemaking in the Federal Register, formally opening a public comment period on how to regulate prediction markets. Comments are due April 30, 2026.[10] That ANPRM followed a February advisory from the CFTC’s Enforcement Division addressing two prior enforcement matters involving the misuse of nonpublic information on prediction markets.[11]
The advisory and the ANPRM together signal that the CFTC intends to exercise exclusive jurisdiction over prediction markets and is moving toward a formal regulatory framework. What they do not do is mandate real-time position reporting, establish surveillance functions independent of the platforms themselves, or create automatic referral obligations when trading anomalies exceed defined thresholds before government announcements.
The CFTC is asking the right questions. The architecture that produced the March episode will remain intact until the answers become binding rules.
Self-Governance Is Not a Surveillance Regime
Polymarket and Kalshi both announced new insider trading policies in the days following March 23, under pressure from Congress and the CFTC guidance. The policies prohibit trades based on stolen confidential information, illegal tips, and positions of authority or influence over an event outcome. Those are the right categories. The enforcement mechanism is not adequate.
Polymarket relies in part on community-assisted compliance, meaning users can report suspicious activity through a public interface. For a pseudonymous blockchain-based platform handling nearly $8 billion in monthly volume, that is not a surveillance regime. It is a suggestion box.
Kalshi operates as a CFTC-regulated DCM with more formal obligations, but even its enforcement had been largely reactive until the current controversy forced a change in posture. The deeper problem is common to both. Prediction markets inherited the structural opacity of futures markets without the decades of institutional development that came before them. When Kalshi and Polymarket update their own rulebooks in response to scandal, they are replicating the SRO model in compressed form. Platform self-governance is not a substitute for independent surveillance, and calling it regulation does not make it so.
What the CFTC Can Do Without Waiting for Congress
The CFTC has existing authority under the Commodity Exchange Act to require enhanced large trader reporting. Section 4(i) of the CEA authorizes the commission to require reports of trades, positions, and accounts in such form and at such times as it may require. The number of event contracts certified for listing on DCMs reached approximately 1,600 in 2025, up from an average of roughly five per year between 2006 and 2020.[12]
Calibrating large trader reporting thresholds to reflect the speed and scale of modern algorithmic trading, particularly in contracts with demonstrated sensitivity to government announcements, does not require new legislation. It requires rulemaking.
Mandatory referral protocols requiring exchanges to escalate to the CFTC when trading anomalies exceed defined statistical parameters in a specified window before a government announcement could similarly be implemented through exchange rule changes certified under Section 5(c) of the CEA. The SRO model does not have to be dismantled to be made more accountable. Automatic escalation requirements reduce the discretion that exchanges currently exercise in deciding what to investigate and what to report.
What Requires Congress
Public disclosure of SRO disciplinary actions in futures markets requires statutory authority, modeled on the FINRA BrokerCheck framework. FINRA’s disclosure obligations for broker-dealers were built through the Securities Exchange Act. There is no equivalent in the CEA. A futures market participant disciplined by CME for trading misconduct faces no public disclosure obligation comparable to what a registered representative faces under FINRA rules. That asymmetry has no principled regulatory basis.
For prediction markets specifically, the CFTC needs dedicated surveillance capacity with independent access to trade data, operating alongside rather than through the platforms themselves. Approving a DCM and delegating enforcement to the platform is not substantive oversight. It is the SRO model applied to markets that list contracts on the outcomes of elections, military operations, and government decisions. The stakes of getting that wrong are not limited to market integrity. They extend to the integrity of the government information that prediction market participants are, in some cases, apparently trading on.
The Reform Has to Be Structural
The March episode will be investigated. The participants may eventually be identified. But the regulatory architecture that made them anonymous in the first place, and that is now being replicated across a new class of markets, will remain intact unless the reforms address the structure rather than the incident.
The CFTC’s April 30 comment deadline is an opening. Exchanges, market participants, compliance officers, and counsel representing entities with futures or prediction market exposure should engage with that process now, before the framework is set.
Congress and the CFTC have the tools. The question is whether the current episode produces a response proportionate to the problem.
This article was originally published as Expert Analysis in Law360 on April 10, 2026. The full article is available at https://www.law360.com/articles/2461671 (subscription required). De Silva Law Offices has published more than a dozen articles analyzing the regulatory framework governing event contracts and prediction markets.
R. Tamara de Silva is the founder and managing attorney of De Silva Law Offices LLC, a boutique financial regulatory law firm in Chicago. The firm advises designated contract markets, introducing brokers, fund operators, and fintech companies on CFTC and NFA compliance, derivatives regulation, and event contract matters. For inquiries, contact tamara@desilvalawoffices.com or 312-500-8424.
SOURCES
[1] Financial Times, "Traders Made Bets Worth Half a Billion Dollars in Oil Market Before Trump Iran Post," March 24, 2026 (citing Bloomberg data). The FT calculated the notional value at approximately $580 million based on roughly 6,200 Brent and WTI futures contracts traded between 6:49 a.m. and 6:50 a.m. New York time on March 23, 2026. Average trading volume for the same 60-second window over the prior five trading days was approximately 700 contracts, making the March 23 volume nearly nine times the recent baseline.
[2] Id. President Trump's Truth Social post appeared at approximately 7:04 a.m. New York time. The Dow Jones Industrial Average surged more than 1,000 points following the post.
[3] Marketplace, "U.S. Regulators Eye Rules for Prediction Markets," March 24, 2026 (for $40 billion annual volume); The Block Data Dashboard, as reported by The Block, March 25, 2026 (for Kalshi monthly volume of approximately $10.44 billion as of February 2026 and Polymarket monthly volume of approximately $7.94 billion).
[4] CNN, "Trader Made Nearly $1 Million on Polymarket with Remarkably Accurate Iran Bets," March 24, 2026 (citing analysis by Bubblemaps). The trader won approximately 93 percent of five-figure wagers on unannounced U.S. and Israeli military operations against Iran.
[5] Id. Israeli authorities indicted two individuals, including a military reservist, for allegedly using classified military information to profit on Polymarket during the Iran conflict.
[6] "Perks Live Forever at CME Amid Review of Market Maker Advantages," Traders Magazine, June 19, 2014. Incentives granted by CME Group for help drumming up volume in Eurodollar futures as far back as 2005 remained in place at the time of reporting, according to regulatory filings.
[7] Id. The Eurodollar trading perks available to original market-making firms were reported to be ten times greater than those available to new entrants.
[8] "Can Market-Makers’ Rebates Explain CME’s Credit Futures High Turnover Ratio?," The DESK, March 2026. CME declined to specify the terms of its market maker incentives and filed a FOIA Confidential Treatment Request to protect them from public disclosure.
[9] CFTC Letter No. 26-08, Prediction Markets Advisory (Mar. 12, 2026), available at https://www.cftc.gov/csl/26-08/download. The advisory reiterates DCM obligations under Core Principles 3 (manipulation resistance), 4 (surveillance and enforcement), and 12 (customer protection), and states that CFTC Rule 180.1 prohibits manipulative or deceptive conduct including misappropriation-based insider trading pursuant to CEA Section 6(c)(1).
[10] Prediction Markets, Advance Notice of Proposed Rulemaking; Request for Comment, 91 Fed. Reg. 12,516 (Mar. 16, 2026). Comments are due April 30, 2026. RIN 3038-AF65.
[11] CFTC Enforcement Division Advisory on Insider Trading in Prediction Markets, February 25, 2026, as referenced in CFTC Letter No. 26-08.
[12] 91 Fed. Reg. 12,516, supra note 10, at n.9. From 2006 to 2020, DCMs listed an average of approximately five event contracts per year. In 2025, DCMs certified approximately 1,600 event contracts for listing.