Cantor to Act as Broker for Institutional Prediction Market Traders

It was perhaps inevitable, but investment firm Cantor Fitzgerald has announced a move into prediction markets to cater to its institutional investors.

Cantor announced this week that it will provide its clients the chance to make block trades on Kalshi, one of the giants of the prediction markets world.

The ability to “transact at scale” on regulated exchanges like Kalshi is key to the move, a Cantor spokesman said.

Cantor Will Organize Block Trades to Combat Price Volatility

Major prediction markets like Kalshi have satisfied the demands of retail traders, especially on financial markets like the price of oil.

However, the inability to scale up trades has held back larger investors – until now.

Investors, said global head of equities at Cantor Pascal Bandelier, had “lacked the ability to transact at scale on a regulated exchange.” This move will go some way to addressing that.

Cantor will act as a broker for Kalshi, with Susquehanna International Group brought on to determine prices.

Additionally, Cantor can put out requests to Kalshi to design bespoke markets, one of the benefits of online prediction platforms.

Four Reasons Cantor is Making the Kalshi Move

• The ability to hedge risk: Isolating and transferring real-world regulatory, macroeconomic, or geopolitical exposure
• Arbitrage and market making: Susquehanna can exploit pricing spreads between different prediction platforms.
• Crowd indicators: Cantor can analyze crowd-sourced implied probabilities to train their trading models.
• Block trading: The ability to execute large-size risk transfers for clients that standard retail order books cannot absorb.

$40BN Valuation Shows Predictions Future

The deal with Cantor Fitzgerald could serve around 3,000 institutional clients, including hedge funds.

It comes at a time when Kalshi is seeking – and getting – huge investments into its data models and operations.

The recent $40 billion valuation of Kalshi shows that the future of prediction markets only shows an upward trend.

The prediction market behemoth is in discussions with Wellington Management and Sequoia Capital over a proposed $750 million injection. Main rival Polymarket is also on the lookout for funding at a valuation of $20 billion.

Kalshi Still Navigating Choppy Legal Waters

Despite being federally regulated by the CFTC, Kalshi continues to fight states on charges of illegal betting.

Kalshi operates under a Designated Contract Markets agreement with the Commodity Futures Trading Commission (CFTC) and is required by federal law to offer its services nationwide.

However, states with regulated sports betting industries argue that Kalshi and others have strayed into illegal territory.

Not only does Kalshi allow customers to set future predictions on the price of gold or oil, but they can also trade shares on the next ball game. States including Arizona and New Jersey argue that Kalshi is looking and acting like a sportsbook dressed up as a derivatives platform. That’s vehemently denied by the prediction market and backed up by the CFTC.

Despite the legal minefield ahead, it’s not enough to deter investment firms like Cantor Fitzgerald, who are making a very bold prediction of their own on the industry’s future success.