The U.S. Commodity Futures Trading Commission (CFTC) has granted Sporttrade, a sports prediction market platform, registration as both a designated contract market (DCM) and a derivatives clearing organization (DCO).
Sporttrade’s designation as a DCM and DCO allows it to support activity through futures commission merchants (FCM), direct access participants, introducing brokers (IBs), and independent software vendors (ISV) on its exchange. Further, it allows the company to clear for other DCMs via its DCO.
In preparation for launch, Sporttrade is actively onboarding brokers with national distribution such as Fliff, that will route order flow from their customers to the exchange pending regulatory approval.
“Receiving our DCM and DCO registrations from the CFTC is a true full circle moment for our company,” Alexander Kane, CEO at Sporttrade, said. “We founded Sporttrade on the principle that sports markets deserve the same high-performance structure, tight pricing, and regulatory integrity as traditional financial markets. By operating as both the exchange and the clearing venue, we are empowering broker partners with superior market quality while giving sophisticated traders the liquidity, transparency, and service they demand. In addition to our exchange business, we’re pleased to have begun clearing discussions with several exchanges who have understood Sporttrade to be a market leader on exchange and clearing technology for the past five years.”
Specifically, the designations would feature:
- Broker-First Market Architecture: Engineered to seamlessly support flow providers with dedicated institutional support, dedicated order entry, market data, drop copy ports, and robust back-office tools.
- Direct Clearing Capability: As a registered DCO, Sporttrade directly clears and settles transactions for self-clearing members and intermediaries, and leverages a more efficient withholding on member balances while maintaining full collateralization.
- Superior Quality of Execution: Powered by proprietary market structure, Sporttrade is poised to reduce broker costs by decreasing spreads on the type of products broker customers desire.
Sporttrade DCM plans to roll out its exchange and clearing capabilities in phases, starting with select flow and liquidity providers. It is also working with a pipeline of additional brokers and institutional partners to quickly expand its market presence in the coming months.