Hedge funds are about to jump into prediction markets in a big way

• Cantor Fitzgerald will organize block trades (large, privately negotiated transactions) on Kalshi's event contracts for institutional clients, with ability to request new market designs subject to CFTC approval
• Susquehanna International Group will provide pricing and liquidity as market maker, with executives viewing institutional risk transfer as the next phase of material growth for prediction markets
• Kalshi has shifted focus toward professional investors despite retail traders initially driving growth through sports-related contracts, completing its first block trade in April

Summary: Hedge Funds Enter Prediction Markets Through Cantor Fitzgerald-Kalshi Partnership

Cantor Fitzgerald announced Wednesday it will become one of the first investment firms offering institutional trading on prediction market platform Kalshi, marking a significant expansion of professional participation in this emerging asset class.

Key Partnership Details:

• Cantor Fitzgerald will act as broker, organizing block trades on Kalshi's event contracts for institutional clients
• Susquehanna International Group will serve as market maker, providing pricing and liquidity
• Block trades—large, privately negotiated transactions executed outside public markets—will enable institutional-scale trading without price volatility

Market Development:

Pascal Bandelier, Cantor's co-CEO and global head of equities, noted that while prediction markets are growing rapidly, institutional participation has lagged due to inability to transact at scale on regulated exchanges. The partnership aims to address this liquidity gap.

Cantor can request Kalshi design new markets for client trading, subject to CFTC approval and liquidity requirements. Climate, weather, and economic indicator markets are expected areas of client interest.

Strategic Context:

This announcement represents Kalshi's latest push toward institutional adoption, despite retail traders—primarily focused on sports-related contracts—driving the platform's growth to date. Kalshi completed its first block trade on an event contract exchange in April and has made multiple moves this year to attract professional investors.

Implications:

The partnership signals prediction markets are maturing into a legitimate institutional asset class, potentially opening new hedging and risk transfer opportunities for Wall Street firms beyond traditional financial instruments.

*Disclosure: CNBC has a commercial relationship with Kalshi, including customer acquisition and minority investment.*