Nasdaq has officially filed for approval from the Securities and Exchange Commission (SEC) to introduce a new class of prediction market-style products. Known as “Outcome Related Options,” these binary contracts are designed to track the Nasdaq 100 index and the Nasdaq 100 micro index.
The move represents Nasdaq’s first major foray into the rapidly expanding prediction market sector, following a trend set by other major stock exchange operators like Cboe Global Markets and CME Group.
Simplified “Yes/No” Market Mechanics
According to the regulatory filing, the proposed products will consist of simple yes/no contracts. These options will be priced between $0.01 and $1, with the final value reflecting the market’s collective view of the probability of a specific outcome being true.
The target audience for these products is the active day-trading community. Currently, the Nasdaq 100 and its micro version, which is based on 1% of the full index value, are highly popular among traders, with short-term options that expire daily accounting for the vast majority of current trading volume.
These new binary options would provide a simplified, streamlined method for traders to express views on expected index values without the complexity of traditional options.
A Shift in Regulatory Oversight
A critical detail of Nasdaq’s strategy is the choice of regulator. If approved, these products will be overseen by the SEC, rather than the Commodity Futures Trading Commission (CFTC).
While the CFTC currently regulates major prediction market operators like Kalshi and Crypto.com, the industry has faced significant pushback from state gaming regulators who characterize these products as unlicensed gambling.
However, CFTC Chairman Michael Selig has recently offered staunch support for the sector, warning state governments against undermining the agency’s “exclusive jurisdiction over these markets”.
Nasdaq’s entry is notable for its specific focus:
- Asset Class: The contracts will be based strictly on financial indexes.
- Exclusions: Unlike other prediction platforms, Nasdaq does not currently plan to offer markets based on sports or cultural events.
- Strategic Context: This follows a broader industry movement, including Intercontinental Exchange’s (ICE) recent $2 billion strategic investment in Polymarket.
