Nasdaq is seeking approval from the Securities and Exchange Commission (SEC) to introduce prediction market-style options on the Nasdaq 100 index and Nasdaq 100 micro index.
The stock exchange operator is aiming to introduce yes/no contracts priced between $0.01 and $1, reflecting the market’s view of a given outcome being true, according to the regulatory filing.
The Nasdaq 100 tracks the prices of the largest 100 companies listed on Nasdaq’s exchange. The micro index, meanwhile, is based on 1% of the full value of the Nasdaq 100.
The indexes are popular among day traders, with options contracts that expire each day reportedly accounting for the majority of trading volume.
Binary yes/no options would introduce an additional, simplified way for traders to express their views on the indexes’ expected value.
The move would represent Nasdaq’s first foray into prediction market-style products, which it has deemed ‘Outcome Related Options’.
The application makes Nasdaq the latest stock exchange operator seeking to get in on the prediction markets sector, following in the wake of Cboe Global Markets and CME Group.
Intercontinental Exchange, the owner of the New York Stock Exchage, also made a strategic investment of up to $2bn in Polymarket last year.
Products to be overseen by SEC
If approved, Nasdaq would introduce the products under the oversight of the SEC, rather than the Commodity Futures Trading Commission (CFTC), which currently oversees the prediction market sector.
The CFTC regulates major prediction market operators such as Kalshi and Crypto.com, which have faced significant pushback from some state gaming regulators who argue their products represent unlicensed gambling.
CFTC Chairman Michael Selig came out in staunch support of prediction markets recently, saying the agency “will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products.”
It should be noted that Nasdaq’s plans to enter the space do not currently include the introduction of markets based on sports or cultural events, as other prediction market platforms offer.