Kalshi secures license to offer margin trading to institutional investors

Margin feature is a departure from traditional prediction markets, which typically require fully collateralized positions, and comes as the industry sees growing trading volumes and investment.

What to know:

• Prediction market platform Kalshi has been cleared to offer margin trading to professional clients, allowing them to open positions with less upfront capital.
• The move is designed to make Kalshi more appealing to institutional investors, and could be rolled out first for new products rather than core event contracts.
• Kalshi's margin feature is a departure from traditional prediction markets, which typically require fully collateralized positions, and comes as the industry sees growing trading volumes and investment, including a recent $1 billion funding round for Kalshi.

Prediction market platform Kalshi has been cleared to offer margin trading to professional clients, a move designed to make its platform more appealing to institutional investors.

The license, granted to Kalshi’s affiliate Kinetic Markets, allows it to operate as a futures commission merchant, according to a filing with the National Futures Association.

Before margin trading goes live, the company still needs a sign-off from the Commodity Futures Trading Commission (CFTC) for rule changes that would enable trading without full collateral up front.

Margin trading lets investors open positions with less upfront capital, a practice common in traditional markets but new to regulated prediction markets. Competitors, which include crypto-native prediction markets like Polymarket, do not offer margin trading and instead operate with fully collateralized positions.

Prediction markets let users bet on the outcomes of real-world events, ranging from elections to economic data releases. These have seen trading volumes explode over the last few months, while facing legal pushback from state regulators who argue that some event contracts constitute unlicensed gambling.

Still, prediction markets have continued to grow. Earlier in the month, Kalshi raised more than $1 billion in a funding round that valued the prediction market at $22 billion.

Meanwhile, the Intercontinental Exchange, owner of the New York Stock Exchange, doubled down on its investment in rival prediction market Polymarket, bringing its total commitment to nearly $2 billion.

Kalshi’s margin feature is set to debut for institutional clients only, and could be rolled out first for new products rather than for core event contracts.

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