ESMA flags insider trading and retail risks in prediction markets
The European Securities and Markets Authority (ESMA) has issued a warning regarding risks in prediction markets, including insider trading and retail investor exploitation. The regulator notes that these risks are amplified by the use of decentralized finance and pseudonymous accounts.
Why it matters
As prediction markets grow in popularity, regulators are struggling to balance innovation with market integrity and consumer protection.
Home | Updates | ESMA flags insider trading and retail risks in prediction markets
The EU regulator warns that prediction markets can create market integrity risks as sophisticated and retail participants compete on event outcomes.
image via Magnific The European Securities and Markets Authority (ESMA) has warned of insider trading, market manipulation, and retail investor protection risks associated with prediction markets. In its latest TRV Risk Monitor , the EU regulator said these risks can be particularly difficult to detect on DLT-based platforms, where pseudonymous participation and multiple accounts can complicate the identification of abusive activity.
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