Goldman Bars Staff From Prediction Markets as Wall Street Tightens

Goldman Draws a Line Around Finance and Politics

The reported Goldman policy addresses the part of prediction markets that most resembles a conventional personal-trading issue. A contract on an earnings release, a policy decision, an economic data point or a corporate event can be valuable to someone with access to information that has not reached the public market.

Reuters said repeated violations of Goldman’s policy could result in discipline, including termination, and that employees could be required to forfeit gains from prohibited trades. Goldman did not publicly detail the memo, so the available reporting does not establish how the bank will classify every market or how it will monitor accounts.

Morgan Stanley’s employee code includes prediction-market rules, though Reuters said the details were not disclosed. JPMorgan’s reported approach reaches trades based on nonpublic information, while Bank of America restricts certain company-specific, macroeconomic and financial-services contracts.

The banks are not regulating the exchanges. They are applying the familiar personal-trading logic that staff who advise clients, trade markets or handle sensitive information should not bet on outcomes they can influence or know about before the public does.

Kalshi and Polymarket Face an Insider-Information Test

The bank policies arrive while platforms are building their own controls. Kalshi said in June it would assign risk scores to markets, collect employment information for certain high-risk markets and add whistleblower tools. The company said the measures followed recommendations from its independent Surveillance Audit Committee.

Kalshi’s stated design is to screen people it identifies as presumptive insiders before they trade certain contracts. That does not make every information advantage improper. The line the CFTC describes is misappropriated information tied to a duty of trust or confidence, rather than legitimate independent research or expertise.

The CFTC’s advisory cited two KalshiEX matters where the exchange’s internal program acted on alleged improper trades, including one involving a candidate trading on the candidate’s own race. Its authority extends to fraud, manipulation and misuse of confidential information on a designated contract market.

Daily Crypto Briefs recently covered Polymarket’s U.S. margin-trading filing, which showed the platform seeking a larger role in regulated derivatives. A bank’s internal policy does not decide that application, but it signals the client and counterparty questions the platforms will face as they move closer to traditional finance.

AP reported that Polymarket’s international platform uses blockchain and crypto, while its U.S. platform uses a more centralized, CFTC-regulated structure. Different rails do not remove the integrity challenge when a small group may know a contract’s outcome first.

Wall Street Compliance Arrives Before Clearer Rules

The CFTC is still working through the broader rulebook. Its March advance notice of proposed rulemaking sought comment on the core principles and regulations that apply to prediction markets, including surveillance and manipulation risks.

That leaves a transition period in which platforms are growing faster than the framework is being clarified. Internal conduct rules contain risk before a common industry standard emerges.

Wall Street restrictions can look like a warning, but they also acknowledge that event contracts have become relevant enough to enter formal compliance codes. The platforms’ next task is to show that their surveillance, employer-screening and enforcement processes can keep pace.

The same pressure is visible in the CFTC’s evolving prediction-market oversight. More access can bring liquidity, but also a higher burden to prove a market is not being used by people with information ordinary traders cannot obtain.

Alternative.me’s Crypto Fear and Greed Index registered 26, or Fear, on July 12.

What is still unclear is whether other major banks will follow Goldman’s reported posture, how far the existing restrictions reach into private accounts and whether platforms will obtain enough employment and affiliation data to make their screens effective. The next practical test will be a high-profile corporate, policy or macroeconomic contract, when the incentive to trade first is greatest and the surveillance record is most visible.