Nasdaq Unveils Binary Bets on Stock Market Outcomes in Regulatory First
Nasdaq Inc. is set to launch a new type of financial product that lets traders bet on whether specific stock market today outcomes will happen. Called Outcome Related Options, these contracts would allow yes-or-no wagers on major indices like the Nasdaq 100. The move follows a broader shift in how US regulators classify prediction markets—once seen as gambling but now potentially treated as securities.
The proposed contracts would work like binary options, paying out either a fixed amount or nothing at all. Prices would range from 1 cent to $1, reflecting the market's confidence in an event occurring—such as whether NVIDIA's stock closes above $200 by week's end. Unlike traditional derivatives, these would be classified as securities under the SEC's oversight rather than falling under the CFTC's derivatives rules.
Nasdaq consulted the SEC directly on the plan, bypassing the CFTC. This marks a significant departure from past practice, where prediction markets were often treated as gambling or regulated as derivatives. The shift gained momentum after the SEC declared in 2024 that some prediction markets could qualify as securities, pulling them into its jurisdiction.
The timing coincides with the CLARITY Act, passed by the House in July 2025 with bipartisan backing. The law clarifies that the CFTC holds exclusive authority over spot markets for digital commodities, while the SEC retains control over assets deemed investment contracts. This ends years of regulatory uncertainty, where agencies often clashed over oversight. SEC chair Paul Atkins and CFTC chair Michael Selig have both stressed the need for better coordination between the two bodies.
Nasdaq's filing is the first major test of how the SEC and CFTC will handle prediction markets under the new rules. Meanwhile, rival exchange Cboe is also preparing to roll out its own all-or-nothing contracts tied to financial benchmarks, expected in the second quarter of this year.
If approved, Nasdaq's contracts would trade as SEC-regulated securities, not CFTC-overseen derivatives. The move could set a precedent for how prediction markets are treated in the future. Traders would gain a new tool for speculating on stock performance, while regulators face the task of ensuring smooth oversight between agencies.
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