Citadel says SEC, not CFTC, should oversee stock-linked derivatives

Citadel Securities submitted a formal comment letter on Sept. 9 arguing that oversight of stock-linked derivatives and event contracts should remain with the SEC. Citadel said a recent surge in KPI prediction contracts and stock-linked perpetual derivatives under CFTC regulation risks allowing those products to evade the SEC’s regulatory framework. The firm said exchanges may be exploiting the CFTC’s self-certification system, which allows products to be listed the next day, to avoid the SEC’s stricter oversight process, which requires public review and formal approval. Citadel added that stock-linked products should remain under the SEC’s market surveillance system, as they directly affect securities markets, including through insider-trading risks, and urged both agencies to clearly establish jurisdiction.