{"id":790578,"date":"2026-10-03T10:42:11","date_gmt":"2026-10-03T10:42:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/790578\/"},"modified":"2026-10-03T10:42:11","modified_gmt":"2026-10-03T10:42:11","slug":"uk-urged-to-act-as-polymarket-takes-bets-on-whether-hsbc-and-lloyds-will-fail-banking","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/790578\/","title":{"rendered":"UK urged to act as Polymarket takes bets on whether HSBC and Lloyds will fail | Banking"},"content":{"rendered":"

UK authorities are being urged to intervene after it emerged that the online prediction market Polymarket<\/a> has been taking thousands of dollars worth of bets over whether HSBC and Lloyds will fail.<\/p>\n

Polymarket \u2013 the US-owned company which holds bets on anything from football matches, to the existence of aliens, to when a bomb drops on a city<\/a> \u2013 has allowed users to take $77,507 (\u00a358,530) worth of positions on whether the world\u2019s biggest banks will go under by the end of this year.<\/p>\n

That includes lenders ranging from JP Morgan to BNP Paribas, as well as two of the largest on UK high streets: HSBC and Lloyds Banking Group<\/a>.<\/p>\n

While residents from UK, US, Canada and EU are banned from betting on Polymarket\u2019s offshore platform, it leaves punters from across roughly 150 countries in a position to monetarily benefit from events that would create huge financial instability and threaten the health of entire economies.<\/p>\n

In a sign that authorities are taking the issue seriously, the UK\u2019s Financial Conduct Authority (FCA) told the Guardian it had been speaking to international regulators about prediction markets, as part of efforts to protect \u201cmarket integrity\u201d.<\/p>\n

There are growing concerns over insider trading and market manipulation<\/a> on Polymarket by bad actors hoping to win big on online bets.<\/p>\n

That raises the stakes for the banking industry, which has already been told to prepare for the risk of social media-fuelled bank runs<\/a>, where customers withdraw cash at speed. Silicon Valley Bank and Credit Suisse collapsed in 2023 after big stock sell-offs and bank runs, both of which were accelerated by a frenzy of speculation on platforms such as X and WhatsApp.<\/p>\n

The Treasury committee member and Liberal Democrat MP Bobby Dean said UK authorities should intervene. \u201cPolymarket has a poor reputation for stopping insider trading or bad actors placing bets on their platform, so it\u2019s easy to see how it could be exploited to try to aggravate real shifts in market sentiment,\u201d he said.<\/p>\n

\u201cIf the bank-related activity grows on the platform and then a particular market was to escalate rapidly, it could even trigger bank runs,\u201d Dean added.<\/p>\n

\u201cI would urge our regulators to get in contact with their counterparts in the US to raise concerns. We should not turn a blind eye to the risks because they are relatively small today, we\u2019ve all seen how quickly things can move in this sector.\u201d<\/p>\n

Polymarket bosses said they did not see a problem with the bets themselves, arguing they were democratising markets that were previously restricted to elite traders and institutions.<\/p>\n

The company\u2019s chief legal officer, Neal Kumar, said: \u201cThe information in these markets is already public. Banks, hedge funds and credit professionals have had access to credit default swap markets for years. You shouldn\u2019t need to work at an institution like that to have access to information on a topic of this importance like bank failures.<\/p>\n

\u201cPolymarket simplifies the question, providing a much larger audience with information, and markets serve as a powerful source of information and combating disinformation.\u201d<\/p>\n

However, academics have warned<\/a> these platforms are creating a serious moral hazard, giving market participants \u201can incentive to engage in corrupt, illegal, or dangerous actions in order to rig the outcome of the contract\u201d.<\/p>\n

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Meanwhile, the European Securities and Markets Authority (ESMA) used its twice-yearly risk report last month <\/a>to warn that \u201ca growing number of incidents illustrates that prediction markets are rife with inside trading\u201d.<\/p>\n

\u201cMarket manipulation and insider trading risks reach new levels in the context of prediction markets, particularly on DLT-based [distributed ledger technology] platforms such as Polymarket, which operate with limited identity verification and where the platform itself may not know who is behind a given wager.\u201d<\/p>\n

Polymarket\u2019s offshore platform is built on a blockchain. Accounts are linked to crypto wallets that can be publicly traced but are difficult to link back to an individual.<\/p>\n

While Polymarket is headquartered in the US, its markets are international and its users are anonymous. Some users from restricted countries can find workarounds via virtual private networks (VPNs), despite this violating Polymarket\u2019s terms of use.<\/p>\n

ESMA\u2019s report pointed to cases such as the US-Israel strike on Iran in February, when several newly created wallets reportedly generated $1.2m profits shortly before the military operation became public. That followed the US capture of Venezuela\u2019s leader, Nicol\u00e1s Maduro, in January, where a US soldier was criminally charged<\/a> for allegedly using classified information to place profitable bets on Polymarket ahead of the operation.<\/p>\n

And, in April this year, police were notified over suspected tampering <\/a>of weather sensors at the Charles de Gaulle airport that were used to settle Polymarket weather contracts.<\/p>\n

The Bank of England said its supervisors engage regularly with companies on a wide range of market developments and emerging risks. Lloyds and HSBC<\/a> declined to comment.<\/p>\n

The Treasury did not respond to requests for comment.<\/p>\n","protected":false},"excerpt":{"rendered":"UK authorities are being urged to intervene after it emerged that the online prediction market Polymarket has been…\n","protected":false},"author":2,"featured_media":790579,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,56,54,55],"class_list":["post-790578","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/790578","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=790578"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/790578\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/790579"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=790578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=790578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=790578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}