Wall Street banks tighten staff rules on prediction-market trading as Polymarket seeks US margin
Goldman, Morgan Stanley and Bank of America are moving on employee restrictions as World Cup volumes hit records.
Major Wall Street banks are tightening or preparing new employee restrictions on prediction-market trading as insider-information concerns rise around event contracts. The compliance clampdown is landing as Polymarket pursues a US-regulated path to margin trading and prediction-market volumes print World Cup-driven records.
Key Takeaways
- Goldman Sachs has reportedly barred employees from trading event contracts specific to the bank, spanning markets, macro, elections, and geopolitics.
- Morgan Stanley already has employee policies covering prediction-market trading, and Bank of America says new prohibitions for staff are being rolled out.
- Polymarket filed on July 3 for futures commission merchant status via affiliate Coming Home GBA LLC with the National Futures Association, a step toward broader US access and potential margin.
- World Cup-driven activity pushed prediction markets to records, including Polymarket’s $713 million daily taker volume on June 20 and Kalshi’s nearly $9.4 billion June volume.
Wall Street Compliance Tightens as Prediction Markets Go Mainstream
Large banks are treating prediction-market trading less like a retail novelty and more like a compliance surface area. Goldman Sachs has reportedly banned employees from trading event contracts that are specific to the bank, including contracts tied to financial markets, macroeconomic events, elections and geopolitics.
The timing matters. Prediction markets now list contracts that overlap directly with areas where bank employees can plausibly touch material nonpublic information (MNPI), from macro-sensitive releases to firm-specific outcomes. As liquidity deepens on platforms like Polymarket and Kalshi, the incentive to “trade the headline before the headline” rises, and compliance teams tend to respond before regulators force the issue.
Inside the Bank Restrictions: Goldman’s Reported Ban, Morgan’s Policies, BofA’s Incoming Prohibitions
Goldman’s reported restriction is narrow in wording but broad in practical scope: “event contracts specific to the bank” can still map to a wide set of tradable outcomes if the venue lists contracts referencing Goldman, its business lines, or market events where the firm is a key participant.
At Morgan Stanley, unnamed sources described existing policies governing prediction-market trading by employees. The details of those policies were not disclosed, leaving traders guessing whether the bank is targeting specific categories of contracts, specific venues, or simply requiring pre-clearance.
Bank of America signaled a more explicit tightening cycle. A spokesperson said the firm is “in the process of issuing new prohibitive measures” for employees on prediction-market trading. The missing piece is enforcement scope, including whether restrictions apply only to political and macro contracts or extend to sports and other high-volume categories.
Goldman declined to comment when asked what triggered its preventive policies.
Insider-Information Risk Moves From Theory to Enforcement Headlines
The compliance posture is being shaped by enforcement narratives, not just hypothetical risk. In May, the US Justice Department and the Commodity Futures Trading Commission said Google software engineer Michele Spagnuolo profited $1.2 million on Polymarket after accessing nonpublic information at work.
Political scrutiny is also building. On June 18, Rep. Bryan Steil introduced a proposal to prevent certain public officials from “wagering on public policy issues and political outcomes,” and the proposal “didn’t mention lawmakers in the White House.” Separately, a January flashpoint cited in the same policy debate involved a soldier who allegedly made more than $400,000 betting on the removal of Venezuelan President Nicolás Maduro.
For banks, these episodes compress the timeline from “potential conflict” to “headline risk,” which is often enough to justify blanket restrictions.
Signals to Watch for Wall Street banks restrict staff prediction
Polymarket’s regulatory path is now a live variable for US access and leverage. On July 3, Polymarket filed to become a futures commission merchant (FCM) through affiliate Coming Home GBA LLC with the National Futures Association (NFA). Any NFA status update on that application is a near-term marker for whether Polymarket can move toward a more traditional US distribution model.
Margin is the bigger unlock, but it is not just an NFA question. Polymarket also needs CFTC authorization to allow non-fully collateralized trading for users in the US, meaning approval, denial, or conditions from the CFTC will dictate whether “margin” becomes a product reality or stays a narrative.
On the bank side, the next signal is Bank of America’s final policy language and how aggressively it is enforced, plus whether other banks follow Goldman’s reported approach.
Steil’s June 18 proposal is another pressure point. Progress, amendments, or stalled momentum will shape how far political-wagering restrictions spread beyond government employees.
Liquidity Is Exploding, but the Compliance Perimeter Is Expanding Too
I read the current setup as two forces colliding: liquidity is scaling fast, and the compliance perimeter is expanding just as quickly. Polymarket’s record $713 million daily taker volume on June 20, per Dune data, and Kalshi’s nearly $9.4 billion June volume show real product-market fit around the 2026 FIFA World Cup. That kind of flow pulls in more sophisticated participants, and it also raises the cost of a single insider-driven incident.
The threshold that matters is whether Polymarket can translate its July 3 NFA filing into an approved FCM pathway and then clear the CFTC hurdle for non-fully collateralized trading. If that holds, the setup starts to look structural rather than narrative-driven, because margin access would shift who can participate and how much size they can run, even as banks tighten employee exposure where MNPI risk is hardest to police.
