MEMX, a technology-driven exchange operator that launched its national securities exchange in 2020 to compete with established players like NYSE and Nasdaq, has filed a proposed rule change with the U.S. Securities and Exchange Commission (SEC) that would allow MEMX Options to list Equities-Based Exchange Prediction Contracts (EPCs).

EPCs are event contracts tied to publicly traded companies, designed to give investors targeted exposure to objective, quantifiable measures of a company's financial performance, including earnings, revenue, sales, and other key issuer-specific metrics. The filing represents a notable expansion of the prediction market space, which has grown significantly in recent years through platforms such as Kalshi, a CFTC-regulated exchange. MEMX's proposal would bring company-specific event contracts under SEC oversight via a registered national securities exchange rather than through the CFTC's derivatives framework.

Investors would be able to trade complementary YES and NO contracts priced between $0.01 and $0.99. The proposed contracts would be listed on MEMX Options, a registered national securities exchange, and would be supported by central clearing, know-your-customer (KYC) requirements, and MEMX's existing regulatory and market-surveillance programs.

"MEMX designed EPCs to allow investors to express a view on a single financial result," said MEMX CEO Jonathan Kellner. "These event contracts make that exposure more direct and intuitive. An investor could buy an EPC on a widely followed KPI reported in a listed company's 10K, such as top line product sales, and the contract price would provide a transparent indication of the market's view of that outcome."

Milan Galik, Chief Executive Officer at Interactive Brokers, expressed support for the initiative: "Prediction markets give investors a simple and direct way to take positions on important real-world and market events, and we are pleased to support MEMX's proposal to offer event contracts on performance indicators for public companies. We look forward to offering these products when they are available and giving our clients another way to manage risk around company announcements or express a view on individual stocks."

According to MEMX, EPCs enable investors with opposing views to converge in a single liquidity pool and trade directly against one another without unnecessary intermediation.

Subject to SEC approval and operational readiness, MEMX is targeting an early 2027 launch for EPCs. The exchange expects the contracts to be available to investors through Interactive Brokers and other distribution partners.

Source: GlobalFinTechSeries