Cantor Fitzgerald is entering the prediction market sector by becoming an introducing broker for approximately 3,000 institutional clients. The bank will provide hedge funds and family offices with access to block trading on Kalshi, an exchange regulated by the Commodity Futures Trading Commission.
The partnership aims to address issues of scale and liquidity in prediction markets. Block trades allow large orders to be executed privately outside the central order book, preventing market impact. Susquehanna International Group will act as the liquidity provider for these transactions.
Kalshi launched in 2020 after receiving CFTC approval for various event contracts. While institutional interest has grown due to political developments and the search for uncorrelated returns, participation was previously limited by small contract sizes and insufficient liquidity.
Bernstein analysts project that annual trading volumes in prediction markets could reach $1 trillion by the end of the decade. These markets allow participants to trade contracts tied to real-world outcomes, with prices ranging from zero to one dollar.
