The Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) have published Joint Canadian Securities Administrators and Canadian Investment Regulatory Organization Staff Notice 91-307, Guidance related to Event Contracts: Compliance with Regulatory Requirements (the Joint Notice), which provides guidance on certain prediction market contracts.
A prediction market is an online platform where people buy and sell contracts against the outcome of future events, turning collective guesses into real-time probability estimates. A number of different online prediction or betting markets exist, including those that specialize in politics, current events, and pop culture. Others specialize in sports outcomes and forecasting macroeconomic and market trends.
The Joint Notice clarifies views of the CSA and the CIRO that prediction market contracts should not be regulated within securities and derivatives legislation and it is not appropriate to facilitate or approve an application by their dealer members to trade sports or entertainment-related event contracts.
The regulators report that assessment is ongoing regarding the regulatory status of other types of event contracts not addressed by the Joint Notice. Currently two CIRO dealer members have been authorized to facilitate the trading of a limited set of event contracts. These CIRO dealer members must comply with certain terms and conditions set out by CIRO, in consultation with the CSA, and such activity may be subject to further restrictions or other changes in the future. Anyone trading, or facilitating trading, in event contracts that are securities or derivatives must follow applicable requirements under securities and derivatives legislation.
Joint Canadian Securities Administrators and Canadian Investment Regulatory Organization Staff Notice 91-307, Guidance related to Event Contracts: Compliance with Regulatory Requirements is available for download from the websites of the participating jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
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