MCO extends personal-trading surveillance to prediction markets

MyComplianceOffice has extended its personal trading and digital asset controls to prediction markets, pairing the launch with AI-assisted surveillance of employee messages on collaboration platforms including Telegram and Slack. About half of the compliance vendor's more than 1,500 financial services clients are RIAs, according to John Kearney, its director of product management.

The update pulls an employee's messages, trades, conflicts of interest, disclosures and exposure to material nonpublic information into a single review process, so investigators can weigh a trade against the conversations around it. Kearney told InvestmentNews that MCO sorts predictions into categories and flags them by whether the underlying activity is securities- or company-based, as opposed to sports betting. He said the firm is also working on using AI to tie a prediction back to a specific business entity or to stock market activity such as a merger or acquisition.

Combined monthly volume on Kalshi and Polymarket more than doubled to $53 billion in July from $26 billion in May, according to Pew Research Center data. "I would say maybe a year ago we weren't hearing that much about prediction markets, and now with the CFTC taking action against a number of people, suddenly people's antennae are up," Kearney said. He said monitoring employee trading has been shown to cut insider trading activity sharply.

In July, Goldman Sachs barred staff from betting on contracts tied to specific companies, elections, market performance, economic data and geopolitics, leaving sports and entertainment contracts allowed. Point72 Asset Management and Balyasny Asset Management banned personal-account trading on the platforms outright, Bloomberg reported, while JPMorgan Chase asked employees to limit participation in markets involving the bank, according to Barron's. Schwab said in June it would enter prediction markets through Cboe Global Markets.

This publication reported in August that Apex's turnkey API gives RIAs and wealth firms access to Kalshi's event contracts, with Tastytrade as the first adopter.