Nasdaq Embraces Prediction Markets with New Trading Options Approval

The U.S. Securities and Exchange Commission has approved Nasdaq's proposal to introduce new stock market prediction instruments. These cash-settled contracts, tied to major indices like the Nasdaq-100, offer fixed payouts based on yes-or-no outcomes. The approval opens doors for new revenue streams and market insights in prediction markets.

The U.S. Securities and Exchange Commission on Thursday gave the nod to Nasdaq's innovative proposal to list and trade a new category of stock market prediction instruments. This move sees Nasdaq's options trading venue embracing prediction markets, a growing field allowing bets on real-world event outcomes.

The approved instruments, cash-settled and paying a fixed sum at contract expiration, are tied to the Nasdaq-100 and its Micro index. They offer a straightforward, yes-or-no decision tree that determines whether an index surpasses a designated level at expiry.

Nasdaq MRX, Nasdaq's electronic options exchange arm, is set to roll out these options, targeting both retail and institutional investors seeking new financial products. Cboe Global Markets, another prominent player, is likewise eyeing entry, pending regulatory go-aheads for similar financial instruments.