Britain’s Financial Conduct Authority has held talks with trading platforms about potentially easing its 2019 ban on retail access to financial prediction markets, according to a Friday report from The Times.
No rule has changed. The FCA’s published position still supports keeping the restriction in place.
The 2019 restriction remains in force
The FCA classifies contracts tied to financial events and certain climate-related events as binary options. Under rules that took effect on April 2, 2019, firms acting in or from the UK have been barred from selling, marketing, or distributing those products to retail consumers.
At the time, the regulator estimated the ban would save retail consumers up to £17 million a year. Christopher Woolard, who was then the FCA’s executive director of strategy and competition, described binary options as “gambling products dressed up as financial instruments.”
Industry groups say UK users are already going offshore
Industry participants have reportedly pushed for a policy change, presenting officials with evidence that millions of Britons already use overseas platforms through virtual private networks. Their argument is that those users sit outside UK consumer protections.
FCA papers show the issue is moving slowly
The FCA’s own documents suggest the question is advancing at a slow pace. In its perimeter report published in March, the regulator said prediction market products tied to non-financial events fall outside its remit. The financial-event contracts it has reviewed, however, are treated as binary options and remain subject to the permanent retail ban.
That same entry says the FCA considers the prohibition appropriate “given the speculative, gambling-like nature” of the contracts. It also says the regulator will consider further work on access, or on clarifying the perimeter, after its December discussion paper.
DP25/3 refers to them as horizon contracts
In that discussion paper, numbered DP25/3, the FCA refers to the products as horizon contracts and asks whether speculative products should be regulated according to their risk and return profile rather than their product label.
A reversal would still leave part of the market outside FCA control
Even if the FCA were to reverse course, only part of the market would open. Contracts on sports and politics fall under the Gambling Commission, so a platform seeking to offer a full slate of UK prediction markets would need FCA permission for financial-event contracts and a gambling licence for the rest.