Institutional capital is flowing into prediction markets as derivatives firms rush to capture the emerging asset class, according to Acuiti’s latest research. Nine percent of institutional derivatives participants are already trading event contracts, with another 35 percent preparing to enter. Proprietary trading firms are leading adoption, with 13 percent actively trading and 31 percent evaluating participation.
Regulatory uncertainty remains the dominant obstacle, cited by 57 percent of respondents, while 56 percent identified CFTC clarity as critical for mainstream adoption. Infrastructure is advancing rapidly despite regulatory gaps, with Trading Technologies integrating Kalshi connectivity and Interactive Brokers launching a multi-venue prediction markets platform for professional traders.
The push comes amid elevated industry confidence, which hit 79 in Q2, the highest level in five quarters. Record volumes in energy, rates, and equity derivatives are driving optimism, particularly among sell-side execution desks and prop firms, which scored confidence levels of 85 and 87 respectively.
FXnCO Insight
Firms with execution-based revenue models are positioned to profit from prediction market growth while directional traders face heightened volatility risk until regulatory frameworks solidify.
Source: Finance Magnates