Major US banks have notified employees they could face termination if they engage in trading contracts linked to finance and politics prediction markets, according to various unnamed sources cited by news agencies.
Reuters reported that banks including Goldman Sachs, Morgan Stanley, JPMorgan Chase, and Bank of America are implementing these restrictions. Goldman Sachs has reportedly cautioned staff through an internal memo that participating in such trades might lead to conflicts of interest with the bank, its clients, and other stakeholders in the financial sector.
The memo allegedly indicated that repeat offenders could face disciplinary consequences, including termination and potential forfeiture of profits from the banned trades. However, details on how these forfeitures would be handled were not clarified. Most institutions have refrained from commenting on these reports, but a spokesperson for Bank of America confirmed that the bank has revised its employee conduct guidelines to include clearer definitions of prohibited activities.
Similarly, Morgan Stanley has updated its conduct code to reflect new regulations on prediction market trading, though specifics were not disclosed. An insider from JPMorgan Chase stated that the bank prohibits employees from trading based on non-public information, extending this ban to prediction market platforms. Additionally, a source affiliated with Bank of America indicated that staff are instructed not to trade contracts tied to “company-specific, macroeconomic and financial services events.”
Despite the banks' restrictions, there appears to be an increasing interest in prediction markets within Wall Street. Cboe has launched binary outcome contracts on its own prediction market platform, with other firms like Charles Schwab reportedly preparing to introduce similar offerings. Industry analysts have observed a shift toward prediction markets among traditional financial players, though many are awaiting clearer regulatory guidance amid ongoing disputes between the Commodity Futures Trading Commission and various states over jurisdiction related to prediction markets. States allege that platforms like Kalshi violate local gambling laws, complicating the regulatory environment.
