MEMX Wants to List Event Contracts as a Securities Exchange, Not a DCM

MEMX filed a proposed rule change with the SEC on August 12, 2026 (SR-MEMX-2026-25) to add a new Chapter 30 to its rulebook, establishing listing and trading rules for what it calls Equities Based Exchange Prediction Contracts, or EPCs, on MEMX Options. MEMX announced the filing publicly the same day, naming Interactive Brokers as an early distribution partner.

MEMX CEO Jonathan Kellner said EPCs 'make that exposure more direct and intuitive' for investors who want to express a view on a single financial outcome rather than trade the underlying stock. Interactive Brokers CEO Milan Galik said the firm looks 'forward to offering these products when they are available,' framing them as a way for clients to manage risk around company announcements.

An EPC is a YES/NO contract tied to an objective, quantifiable metric of a specific public company's financial performance, such as whether quarterly earnings, revenue, or another disclosed metric comes in above or below a set threshold. Complementary YES and NO contracts trade between $0.01 and $0.99, the same pricing convention Kalshi and other CFTC-regulated event-contract venues use.

The economic structure is functionally similar to a Kalshi or Polymarket event contract. The regulatory wrapper is not: MEMX Options is a registered national securities exchange under SEC oversight, not a CFTC-designated contract market, and the filing proposes that EPCs settle through MEMX's existing central clearing, know-your-customer, and market-surveillance infrastructure rather than a derivatives clearing organization.

CFTC-regulated event contracts typically reach the market either through a Commission order designating a new contract market, or through Regulation 40.6 self-certification, where an already-designated exchange can list a new contract on its own attestation, subject to CFTC objection later. MEMX's EPC filing runs through neither process: as a national securities exchange, MEMX filed under Section 19(b) of the Securities Exchange Act, which starts with Federal Register publication and public comment before the SEC decides whether to approve, disapprove, or open proceedings, generally within 45 days of publication, extendable to 90 days if the Commission designates a longer review period.

That timeline is genuinely public-facing in a way self-certification is not: the SEC republishes the underlying filing for comment, and any market participant can submit views before the Commission acts. It also means MEMX's launch depends on affirmative SEC approval rather than an exchange's own attestation, a materially different regulatory posture than the one most current prediction-market operators rely on.

By limiting EPCs to objective, company-specific financial metrics rather than sports, politics, or entertainment outcomes, MEMX's filing sidesteps the gambling-law and swap-definition disputes currently playing out against Kalshi, Polymarket, and other CFTC-registered operators in state courts. A contract settling on whether a company beat its own disclosed earnings estimate does not raise the same state gambling-law questions a sports-outcome contract does, because the underlying event is a corporate disclosure, not a game result.

MEMX is not the first venue to take a securities-law route around the CFTC framework. Cboe Global Markets and Charles Schwab took a similar approach in June 2026, listing S&P 500 binary options as Cboe Predicts contracts under existing SEC and OCC option-clearing rules rather than seeking a new derivatives designation.

MEMX's filing gives prospective operators a fourth broad route into the event-contract business, alongside a de novo CFTC DCM application, acquiring an existing DCM, and the SEC/OCC option-exchange route Cboe and Schwab have already used. Each route carries a different regulator, a different review process, and a different exposure profile to the state-level gambling-law fights concentrated almost entirely on sports and political contracts so far.

Subject to SEC approval and operational readiness, MEMX is targeting an early 2027 launch for EPCs, distributed initially through Interactive Brokers. Whether the SEC treats the filing as routine or opens a longer review, given how new this product category is to securities regulation, will be an early signal of how comfortable securities regulators are with event-contract-style products moving onto their side of the regulatory line.