Notebook

Notes and ideas to work on

={blue}The tail wagging the dog=. Back in days of yore, you couldn't easily gain index exposure. Then SPX futures launched, and very quickly became a massive product. It got so massive that SPX moves the stocks, not the other way round.

={blue}Roundhill Investments= proposed a series of ={blue}prediction market ETF=s designed to track the probabilities of specific future events, such as the outcomes of U.S. elections and economic data like recessions. However, their launch has been delayed following the Securities and Exchange Commission's (SEC) decision to halt the offerings. 

Core Details of the Proposed ETFs

Binary Payout Structure: The funds are structured to use swap agreements referencing binary-event contracts. If the predicted event happens, the contract pays out; if it fails, the fund loses substantially all of its value. 

Political Focus: Roundhill filed for six political funds (e.g., Democrat and Republican President, Senate, and House ETFs). These are primarily tied to the results of the 2026 midterm elections and the 2028 U.S. Presidential election. 

Roll Strategy: Unlike competitors (such as Bitwise, which terminates its funds after the outcome is settled), Roundhill’s structure is designed to roll the fund exposure into the next election cycle. 

Regulatory Status

SEC Delay: Roundhill, alongside firms like Bitwise and GraniteShares, anticipated their funds would become effective under the SEC's 75-day rule. However, the SEC delayed the launch of 24 prediction market ETFs, issuing a second delay as regulators evaluate the implications of bringing binary election contracts into retail brokerage and retirement accounts. 

Market Context: The product concept gained momentum after the CFTC withdrew a previous proposal that sought to ban political event contracts, clearing the way federally. Still, legal challenges persist in several states, and the SEC remains cautious about the structural risks of election-based products.