Comment Text:
Dear Chairman and Commissioners,
My name is Américo Serra, and I'm a trader and investor based in New York. I've been working in financial markets for years, and I've used prediction markets a few times to inform my decisions and hedge risks. I'm writing in response to the Advance Notice of Proposed Rulemaking on Prediction Markets, published in the Federal Register (91 FR 12516). I strongly support the proportionate regulation of these markets, and I want to share why they matter to me and why overly restrictive rules would do more harm than good.
Prediction markets have given me insights I can't get from polls or pundits. I've seen firsthand how their forecasts on elections and public events often beat traditional sources. A few years back, I relied on a prediction market to gauge the likelihood of a major policy shift that could have impacted my investments. The market's pricing was spot-on, while the talking heads on TV were all over the place. This kind of accuracy isn't just useful for traders like me; it's valuable for anyone making decisions, from business owners to policymakers. Its about better information for everyone.
Beyond forecasting, these markets let me hedge real financial risks. As someone who manages investments, I'm exposed to uncertainties like regulatory changes or economic data releases. Being able to trade event contracts helps me offset potential losses tied to those outcomes. It's no different from hedging with futures or options in other markets. This isn't gambling; it's a practical tool for managing uncertainty.
I'm also aware of the academic research backing prediction markets. Studies show they aggregate information efficiently, and I believe the CFTC should consider this data when crafting rules. Transparency in how these markets operate only strengthens their value for price discovery. Plus, as a citizen, I value the freedom to participate in legal, regulated markets. Shutting down or over-restricting them doesn't solve problems; it just pushes activity to unregulated offshore platforms where there's no oversight at all. Thats a worse outcome for everyone.
Id like to address a couple of specific questions from the ANPR. On Question 7 under Public Interest, I believe prediction markets serve the public good through accurate forecasting and risk management, outweighing speculative concerns if properly regulated. And on Question 15 under Listed Activities, I urge the CFTC not to classify these contracts as "gaming." They have clear economic purposes, just like other derivatives.
I know there are concerns about manipulation or insider trading, and those aren't trivial. But the CFTC already has tools to tackle fraud and abuse in other markets. Use those same powers here instead of broad bans that punish law-abiding participants like me. I ask that you support well-regulated prediction markets with targeted rules that address specific risks without stifling innovation or access.
Thank you for considering my views.
Sincerely,
Américo Serra
