ProphetX has filed applications with the Commodity Futures Trading Commission (CFTC) to become both a Designated Contract Market (DCM) and a Derivatives Clearing Organisation (DCO) in the prediction markets space.
If approved, ProphetX said in an announcement that it would become the first regulated exchange and clearinghouse in the US designed specifically for sports-based event contracts.
The firm said its dual registration would enable it to operate a vertically integrated marketplace, allowing participants to trade, clear, and settle contracts tied to sporting outcomes under direct CFTC oversight.
The company added that the filings are intended to establish a compliant and transparent framework for sports trading, aligning it more closely with the structure of traditional financial derivatives.
ProphetX described the move as a major step in legitimising sports outcomes as an investable asset class and in providing a robust regulatory foundation for event-based markets.
A central feature of ProphetX’s submission is its proprietary Request for Quote (RFQ) Parlay Mechanism, which facilitates direct negotiation and pricing of multi-event combinations between counterparties.
The technology replicates institutional trading practices common in equities and futures markets. It introduces features such as dynamic price discovery and competitive liquidity to the sports derivatives space.
ProphetX CEO and Co-Founder Dean Sisun said the company’s objective has always been to develop a transparent and fully compliant marketplace where sports outcomes can be traded with the same rigour as any other financial instrument.
ProphetX embraces the popularity of parlays
Co-Founder and CMO Jake Benzaquen noted that the RFQ Parlay Mechanism represents an “entirely new paradigm” for sports-based markets.
He explained that it offers “dynamic price discovery and efficient multi-leg exposure” that would be “entirely new to the sports derivatives domain.”
ProphetX said it expects its regulatory review to extend through 2026 as it continues to engage with the CFTC and other stakeholders to ensure adherence to all integrity and consumer protection standards.
The company aims to integrate its clearing and exchange functions to streamline operations and reduce counterparty risk, an approach consistent with regulated derivatives platforms.
Founded in 2021 and headquartered in New York, ProphetX is a technology-driven financial infrastructure company focused on developing regulated trading systems for event-based and predictive markets.
Its leadership team includes former financial engineers and trading platform developers with experience across derivatives, data analytics, and market structure innovation.
By pursuing DCM and DCO status simultaneously, ProphetX seeks to establish itself as the first fully regulated operator in a space that has long existed in a legal and structural conundrum.
Prediction markets platforms such as Kalshi and Polymarket have been embroiled in legal battles in several jurisdictions as they blur the line between financial speculation and sports wagering.