Key Takeaways
- Nasdaq has submitted an SEC filing to launch binary options contracts linked to the Nasdaq-100 index, with prices ranging from $0.01 to $1
- These “Outcome Related Options” replicate the functionality of prediction platforms such as Polymarket and Kalshi
- February saw Kalshi and Polymarket achieve a combined trading volume of $18.4 billion — marking the sixth consecutive monthly record
- Traditional exchanges like Cboe and CME are similarly pursuing prediction-based trading instruments
- SEC Chairman Paul Atkins identified prediction markets as a “huge issue,” highlighting jurisdictional concerns between the SEC and CFTC
Nasdaq Pursues Binary Options Approval for Nasdaq-100 (NDX) While Cryptocurrency Exchanges Enter Prediction Markets
Nasdaq has formally submitted an application to the US Securities and Exchange Commission requesting authorization to launch binary options contracts linked to the Nasdaq-100 index.
Nasdaq MRX, an options trading venue operated by Nasdaq, filed the application this past Monday.
These proposed instruments, designated as “Outcome Related Options,” carry price points between $0.01 and $1. Upon correct prediction, contracts settle at $1; incorrect predictions result in complete expiration with no value.
The instruments would be connected to both the Nasdaq-100 Index and its Micro counterpart. The contracts would exclude non-financial events like sporting competitions or political races.
This structure closely resembles the mechanics employed by prediction market operators like Polymarket and Kalshi, both experiencing substantial expansion recently.
Prediction Platform Trading Volumes Reach Unprecedented Levels
Kalshi and Polymarket collectively processed $18.4 billion in trading volume during February, establishing a sixth straight monthly record. The previous milestone of slightly over $17 billion was achieved in January.
Nasdaq intends to introduce these contracts across two additional exchanges under its control — Nasdaq NOM and Nasdaq PHLX — which employ alternative pricing structures that can compensate market participants for providing liquidity.
Nasdaq MRX, the venue for the original submission, operates on a priority-based model without liquidity incentives.
Upon receiving approval, these instruments would be classified as securities options under SEC jurisdiction. This classification distinguishes them from most current event-based contracts, which generally fall under Commodity Futures Trading Commission authority.
SEC Chairman Paul Atkins recently characterized prediction markets as a “huge issue,” emphasizing potential jurisdictional complications between the SEC and CFTC.
Competing Exchanges Accelerate Development
Cboe Global Markets has announced it’s examining the reintroduction of “all-or-nothing” binary options connected to financial indices.
CME Group is broadening cryptocurrency derivatives availability and has established a partnership with FanDuel enabling wagers on non-financial markets.
Digital asset investment firm Bitwise submitted paperwork last month proposing “PredictionShares” ETFs focused on the 2028 US presidential election. GraniteShares and Roundhill filed comparable proposals in February.
Cryptocurrency trading platforms are also participating. Coinbase and Crypto.com are incorporating prediction market capabilities into their existing platforms.
The Intercontinental Exchange has either invested in prediction market ventures or indicated intentions to develop proprietary products.
Nasdaq’s application would introduce fixed-payout, event-based trading mechanisms directly into the listed equity index options marketplace for the first time.
The submission arrives amid heightened regulatory scrutiny. SEC Chairman Atkins delivered his remarks regarding the sector during the early part of this month.
