CFTC market surveillance turns to oil trades and midterm bets

CFTC market surveillance is stretching from crude futures to election contracts. Commodity Futures Trading Commission chairman Michael Selig said on Friday, Oct. 23, that enforcement staff have been looking into oil trades placed during the Iran war and is monitoring prediction markets for manipulation ahead of the November midterms, Bloomberg Law reported from his Bloomberg Television interview.

What happened

"Our enforcement division has been looking at all these trades," Selig said. "We take this stuff very seriously." The focus includes March 23, when traders sold Brent and WTI futures equal to at least 6 million barrels in two minutes, minutes before President Donald Trump retreated from his threat to hit Iran's power plants, OilPrice.com reported. Volume in that window was more than 8.5 times the level of the same period in the previous week, according to Bloomberg data cited by OilPrice.

Selig did not name any traders or say whether investigators had found wrongdoing. "We are on top of this and, rest assured, people can have confidence in the markets as long as I'm in the seat," he said. He also said he was disappointed that Congress had not passed the Clarity Act on crypto regulation.

On elections, Selig said the agency is watching for manipulation but did not identify a new case, crypto.news reported. As of Oct. 18, open interest in midterm contracts totaled $250 million across Kalshi and Polymarket, Dune data show, with $210 million on Kalshi and $40 million on Polymarket.

Why it matters

Oil has been acutely sensitive to presidential statements since the war began in February, and Bloomberg has reported several volume spikes ahead of major announcements this spring. The question for regulators is whether anyone traded on nonpublic information. With oil prices swinging on every headline, as our oil price shock long read showed, the stakes for market integrity are high.

For prediction markets, CFTC market surveillance already has a track record. Gabriel Perez, a former White House teleprompter operator, was ordered to give back $107,539.02 and pay a $65,000 penalty for trading on advance knowledge of presidential speeches, and settled with former Rep. George Santos over trades on his own State of the Union attendance, crypto.news said. Both received three-year trading bans.

Insider rules are tightening elsewhere, too: the Pentagon has barred personnel from trading on nonpublic information, as we reported in our story on the Hegseth memo.

What's next

The midterm vote is in early November, which is when any attempt to move prices would matter most. Concentration is high: the top 100 Polymarket wallets held 56% of midterm position value, Dune found, though that does not by itself show manipulation.

CFTC staff in September also told exchanges to build contract-specific safeguards for markets tied to a person's words or actions. Selig's comments are summarized in Bloomberg Law's report; the next sign of CFTC market surveillance in action would be a filed enforcement case.