From CNBC · Davis Giangiulio · · 1m 30s
Kalshi seeks margin trading approval
The prediction market platform asks regulators to let traders borrow money to buy event contracts, a move rivals are also pursuing.
In brief
The prediction market platform asks regulators to let traders borrow money to buy event contracts, a move rivals are also pursuing. Kalshi filed with the CFTC on Tuesday to offer margin trading on event contracts, seeking to attract institutional traders to prediction markets. Originally reported by CNBC.
Kalshi files for margin trading
Prediction market platform Kalshi filed on Tuesday with the Commodity Futures Trading Commission seeking approval to offer leverage on event contracts.
What margin trading does
Margin trading allows a trader to borrow money to purchase more of an asset than the cash they put down. Currently, all event contracts on regulated U.S. exchanges are entirely collateralized.
Why institutions want it
Offering margin has been seen by institutions eyeing prediction markets as critical for bigger players to participate, as they are used to the practice on traditional equities and derivatives.
Kalshi's limits on margin
Kalshi will avoid offering margin on its sports, culture and mention markets. Marginable contracts will only be accessible to self-clearing members meeting certain capital requirements.
Kalshi's strategy for leverage
The company said offering leverage will make longer-dated prediction markets more attractive to institutional traders. It is also seeking a system where capital requirements increase as contracts near expiry.
Rivals pursuing same path
Bloomberg News in July reported Polymarket, a prediction market rival, made moves to obtain regulatory licenses to eventually offer margin trading on its event contracts in the U.S.
At a glance
Kalshi filed with the CFTC on Tuesday to offer margin trading on event contracts, seeking to attract institutional traders to prediction markets.
