Citadel Urges SEC Oversight of Equity-Linked Bets

Citadel Securities has urged the Securities and Exchange Commission and the Commodity Futures Trading Commission to reaffirm SEC oversight of financial products tied to U.S. public companies, arguing that trading venues should not be able to use the CFTC's faster self-certification process to circumvent securities regulation. The market maker made the request in a Sept. 9 comment letter responding to a joint request for public input the two agencies issued earlier this year on the definition of a swap and a security-based swap. At the center of the dispute are key performance indicator contracts, a growing subset of prediction market products that pay a fixed amount depending on whether a company reports metrics such as revenue, sales, earnings or passenger numbers above or below a preset threshold. Citadel argues these contracts are security-based swaps under federal law and should fall under SEC supervision, along with equity-linked perpetual derivatives that reference American stocks.