Goldman Sachs and Morgan Stanley have updated their employee codes of conduct to prohibit trading on prediction markets, according to reports. The new rules specifically ban employees from making bets on contracts tied to financial markets and political events.
These policies are intended to prevent real or perceived conflicts of interest that could arise between the banks, their clients, and the broader financial industry. Violations of these new restrictions could lead to disciplinary actions, including termination, and may require employees to forfeit any gains from prohibited trades. However, the restrictions do not extend to prediction market contracts related to sports and entertainment.
Prediction market platforms like Kalshi and Polymarket have seen rapid growth, prompting concerns about regulatory oversight, particularly in the lead-up to significant events such as midterm elections. The specific policies for Morgan Stanley are included within its broader code of conduct covering various trading and investing activities, though details were not specified.