Interactive Brokers Group (IBKR) stock plummeted 5.08% in Tuesday's intraday trading session, underperforming the broader market. The sell-off seems to be driven by concerns over potential regulatory risks and pushback against the company's growing event contracts business.
Interactive Brokers is one of the pioneers in offering event contracts, a new financial product that allows traders to bet on the outcome of future events. The company's subsidiary, ForecastEx, processes event contract trades for Interactive Brokers and other brokerages. While event contracts currently make up a small portion of Interactive Brokers' business, the company expects this market to grow significantly in the future.
However, the rise of event contracts has drawn criticism from regulators like the Commodity Futures Trading Commission (CFTC) and investor advocacy groups. There are concerns that event contracts blur the line between investing and gambling, potentially allowing gambling in regulated financial markets. The article highlights that the CFTC has pushed back against certain event contracts in the past, such as those related to the Super Bowl or high-profile criminal cases.