CFTC Letter 25-20: Amendment of Letter 14-130 for Victoria University and PMRC

day-to-day operation of the Market and other services. Finally, the Division understands that Victoria University will cease operating any US-based prediction market upon this transfer to PRMC. Upon the transfer of operations, PMRC shall be deemed the beneficiary of this letter and CFTC Letter 14-130. Upon the transfer of operations to PMRC, the no-action positions in this letter and CFTC Letter 14-130 are subject to the following conditions:

1. PMRC shall comply with all terms and conditions of this letter and CFTC Letter 14-130.
2. PMRC shall comply with all requests from CFTC staff in demonstrating compliance with the
   terms and conditions of this letter and CFTC Letter 14-130.
3. The no-action positions in this letter and CFTC Letter 14-130 are issued to PMRC and will
   not transfer to a different entity by virtue of any future sale or other transfer of operations by PMRC.
4. Number of traders permitted in each contract
   Counsel for the Market has told us that the academic community believes that the 5,000-trader limit in any one contract, pursuant to CFTC Letter 14-130, can create distortions in the data generated by the Market, as new traders are not allowed to enter some popular contracts, which then become illiquid and are not able to trade at market prices. Consequently, the Division is amending CFTC Letter 14-130 to eliminate the limit of 5,000 traders in any one contract. The Division is satisfied that the investment caps, as described in this letter, will keep the Market small-scale, while permitting a liquid market that generates high quality data for academic study.
5. Allowable investment
   In order to promote liquidity and in recognition of inflation since 2014, the investment limit for a single participant in any particular contract will be the limit for individual contributions to campaigns per election, per candidate, under the Federal Election Campaign Act (FECA), as that limit is adjusted going forward. 1
6. Clarified scope of contracts offered
   As stated in CFTC Letter 14-130, the Division makes clear that the Market is restricted to political events, such as contracts related to the outcomes of elections and other significant political questions not involving war, terrorism, or assassination. 2 The Division understands that political events and significant political questions may include, but are not limited to:

• Nominations, confirmations, other selections, and departures of government officials;

• Court decisions and actions not related to criminal proceedings;

• Official actions by legislatures and legislators (e.g., introduction, action on, and passage of
  bills and resolutions);
  1
  See 52 U.S.C. § 30116(a)(1)(A). The current FECA limit is $3,500. This limit is adjusted for inflation by the Federal Election Commission every two years. 2 The no-action position in CFTC Letter 14-130 related to “economic indicator contracts” remains unchanged by this letter.

• Issuance and adoption of regulations, executive orders, and other actions of executive branch
  officials and government agencies;

• Adoption of, withdrawal from, or alteration of international agreements not involving war;
  and

• Official actions and declarations of international agencies.

5. Conclusion
   CFTC Letter 14-130, as amended by this letter, provides the scope of no-action positions provided to Victoria University, and its successor entity PMRC, related to the operation of the Market. Sincerely, ____________________ Rahul Varma Acting Director Division of Market Oversight