Citadel Securities has called upon the Securities and Exchange Commission and the Commodity Futures Trading Commission to explicitly reaffirm SEC authority over instruments connected to American publicly traded companies and their equities.
Within a September 9 letter submitted in reply to a joint call for public comments by the regulators, the market-making firm argued that platforms should not leverage CFTC self-certification mechanisms to bypass SEC regulatory reach concerning equity-based instruments.
Citadel noted that under CFTC guidelines, platforms are able to self-certify novel instruments and launch trading as early as the following business day absent any public feedback period.
This mechanism contrasts with the SEC procedure, which generally mandates that platforms prove compliance, open the floor to public feedback, and secure formal SEC clearance before launching any trading activity.
“A trading venue should not be able to effectively choose its regulator for an equity-linked product based on its own unilateral characterization of such product,” Stephen John Berger, Citadel’s global head of government and regulatory policy, wrote in the letter.
Berger highlighted key performance indicator contracts linked to public corporations as an illustration, noting that particular CFTC-regulated designated contract markets have self-certified these offerings to trade under CFTC authority.
“The fact that these instruments pose novel risks relating to insider trading, including not only whether specific metrics will be met, but also whether and how they will be reported by the issuer, reinforces the case for SEC oversight,” Berger wrote.
He argued that binary options tied to KPIs ought to be classified as securities under federal statutes. Furthermore, he noted that these agreements might additionally function as security-based swaps when associated with an occurrence involving a lone issuer that impacts its financial status, reports, or liabilities.
Additionally, Citadel urged the SEC to promise prompt evaluations for fresh product applications and clear up classification debates surrounding equity-associated event contracts and perpetual derivatives.
“New products should succeed on their individual merits,” Berger wrote, “rather than by taking advantage of distinctions between the SEC and CFTC regulatory frameworks.”
Originally published at https://www.theblock.co/news/regulation/2026-09-10-citadel-urges-sec-assert-oversight-event-contracts-tied-public-firms-414140.
