Kalshi Seeks CFTC Approval for Margin Trading in Prediction Markets
Prediction market platform Kalshi has submitted a proposal to the Commodity Futures Trading Commission (CFTC) for margin trading on selected event contracts. The proposal targets qualified institutional participants, excluding sports-related markets and retail investors.
The current binary model of event contracts will change under this new framework. Instead of requiring traders to put up collateral for maximum possible loss, they will use a new formula based on adverse modeling of price swings. This allows for bigger trades at a lower cost of entry.
The clearinghouse can grant margin to either side or both, depending on their vulnerabilities, especially when there is sudden resolution of the event. The proposal also includes features such as concentration charges, liquidity adjustments, and volatility floors to protect against liquidation costs and exposure in stressed markets.