Cboe Launches First Predictions Market Product
Quick Look
- Global markets operator Cboe has launched its first predictions market product, featuring binary option contracts based on the Mini-S&P 500 Index.
- This move taps into the growing consumer demand for speculating on real-world events, with platforms like Kalshi and Polymarket seeing significant trading volume increases.
AI-generated summary
Why It Matters
Prediction markets, where users speculate on real-world events, are gaining popularity among investors. Cboe is launching its first product in this growing sector.
Global markets operator Cboe has launched its first predictions markets product, the latest financial-markets company working to capitalize on consumer demand in the fast-growing sector.
The offering includes binary option contracts based on the Mini-S&P 500 Index, the company said in a press release on Tuesday.
Prediction markets, which allows users to speculate on various real-world events such as sports and even political outcomes, have been rising in popularity among investors. The combined monthly global trading volume on Kalshi and Polymarket has risen to about $24 billion in April from less than $5 billion in September last year, according to data compiled by the Pew Research Center.
Cboe's contracts are available on Interactive Brokers and will roll out at Charles Schwab over the coming months, the company said. Additional retail brokerage platforms will offer access over time, it added.
"We have seen continued customer demand for shorter-dated, outcome-based trading," said JJ Kinahan, head of retail expansion and alternative investment products at Cboe, in the statement. The firm is looking to build on the fast growth of its zero-day-to-expiry, or 0DTE, options, he said.
Earlier, CNBC reported that Meta Platforms CEO Mark Zuckerberg has directed staff to create a prediction markets platform, citing a person familiar with the company's plans who asked not to be named. The New York Times was first to report the development, which sent stocks like DraftKings and Robinhood lower, on Tuesday.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
Open Questions
- Will Cboe's prediction market gain significant traction?
- How will regulatory bodies view this product expansion?
