ForecastEx Self-Certifies New Sports Contracts

The filing is a critical regulatory step, submitted under Section 5c(c) of the Commodity Exchange Act. It allows ForecastEx to offer a new type of derivative focused on event outcomes. These outcomes include the final point tally a participant scores or the first person to score. Graham Deese, ForecastEx Chief Regulatory Officer, handled the submission.

Contract Structure and Integrity Rules

ForecastEx is registered with the CFTC as both a Designated Contract Market (DCM) and a Derivative Clearing Organization (DCO). The exchange structures its products as simple “yes” or “no” propositions. Every Forecast Contract settles with a value between $\$0.00$ and $\$1.00$. If the event outcome is “Yes,” the long position collects $\$1.00$. If “No,” the long position collects $\$0.00$. The total settlement value for the “Yes” and “No” positions always totals $\$1.00$.

The exchange built clear rules into the new statistical contracts to preserve market integrity. Specifically, trading restrictions prevent insider trading and conflicts of interest. These restrictions prohibit trading by:

• Any athlete, coach, referee, or official participating in the event.
• Individuals with ownership stakes in the participating teams or governing league.
• Persons possessing material, non-public information about the event.
• The immediate family members of the individuals listed above.

ForecastEx set a minimal tick size at $\$0.01$. The exchange established a position accountability limit of 250,000 contracts per Forecast Market.

Low-Cost Model and Market Goals

This new contract type positions ForecastEx to enter the market for proposition bets, often called “prop bets.” The new offering will likely compete directly with traditional betting firms. ForecastEx already offers contracts related to political, economic, and climate outcomes.

ForecastEx operates a low-cost, high-compliance model. The exchange charges only one cent $(\$0.01)$ per contract, which it includes in the price. The exchange eliminates additional brokerage or clearing fees.

Furthermore, the platform rewards traders with interest on their collateral, an innovative structure. This feature provides a potential revenue stream even if their predictions are incorrect. By aggregating trader predictions, ForecastEx aims to leverage the “wisdom of the crowd” to generate valuable data for business and policy decisions.