The New MNPI Vectors
Over the past few weeks, my colleagues and I have spent time with chief compliance officers and senior compliance leaders at several large global financial institutions. Many of those meetings began exactly where I expected: prediction markets. The StarCompliance partnership with Kalshi had just been announced, the topic was in the news (Barrons and others), and people wanted to understand what it meant.
But that is not where the conversations stayed.
Prediction markets remained central to the discussion, but they quickly opened the door to something broader. Rapidly, the conversation expanded to tokenized securities, stablecoins, real-world assets, self-custody wallets, and what this meant for PAD and insider trading controls.
That pattern repeated often enough that I stopped thinking of it as coincidence. Prediction markets are not creating the entire risk surface. In fact, they exposed a risk that has already been growing.
For years, digital assets have been discussed largely through the lens of cryptocurrency. That framing made sense at first, and most capital markets firms decided “bitcoin was a currency” and therefore did not need to be monitored. It also narrowed the conversation and over time any compliance teams heard "crypto" that the word itself became background noise. All the while, the underlying control challenge kept expanding.
Markets, being what they are, did not wait for the vocabulary to catch up. Tokenized securities matured. Real-world assets moved on-chain. Prediction markets gained traction. New venues emerged where economically valuable information could be monetized without ever touching a traditional brokerage account.
Viewed individually, each development may seem manageable. Viewed together, they point to something much larger and my colleagues and I started thinking of these as new MNPI vectors: new pathways through which MNPI can be monetized.
Prediction markets are simply the latest vector to reach institutional scale. They will not be the last.
Beyond Products, Toward Pathways
As we all know, historically, insider trading controls focused heavily on where an employee traded. Firms monitored brokerage accounts, compared transactions against restricted lists, reviewed pre-clearance requests, and reconciled activity using familiar identifiers such as tickers, ISINs, and CUSIPs.
Increasingly, the more important question is how inside information can be monetized.
Consider a simple example. An employee learns that a public company is about to announce a significant acquisition. Ten years ago, compliance would have focused on whether that employee purchased shares or options before the announcement. More recently, shadow trading expanded the question.
Today, the same information may be monetized through the listed security, a tokenized version of that security, a prediction market tied to whether the deal closes, or another venue that did not exist when many control frameworks were designed.
The information has not changed. The obligation has not changed. Only the vector has changed. Markets innovate continuously. Control frameworks modernize periodically. That gap continues to be where exposure accumulates.
That is why prediction markets matter. Not because they are the only issue, and not because they alone define the future of capital markets. They matter because they are forcing sophisticated compliance leaders to ask a better question:
How many ways can material non-public information now be monetized?
In meeting after meeting, the conversation followed the same progression. It started with understanding the risk. It quickly then shifted to educating senior leadership, building the business case, and figuring out how existing controls should evolve.
In response, we have developed executive briefing materials that explain these new MNPI vectors, along with a customizable business case framework that firms can use to educate stakeholders and support internal investment discussions. Those materials were not built because we needed another marketing asset. They were built because compliance leaders needed practical tools - now.
Prediction markets are not the destination. They are the catalyst.
They are forcing the industry to look beyond a single product and confront a broader reality: the number of MNPI vectors continues to expand, and many control frameworks were designed for a very different market structure.
What has encouraged me most over the past few weeks is not that firms are debating prediction markets. It's that many have already moved beyond that discussion. They are asking what these developments reveal about their own programs, where the gaps may exist, and how quickly they can adapt.
The firms that emerge strongest won't be the ones that correctly predicted prediction markets. They'll be the ones that recognized what they are revealing.
The opportunity isn't to predict the next market innovation.
It's to recognize, early enough, that your control surface has already expanded - and to modernize before the next MNPI vector exposes a gap you didn't know existed.