Kalshi Applies to CFTC for Margin Trading...Chooses 'Leverage' Card to Compete with Polymarket

▲ Kalshi, Prediction Market, New York Stock Exchange/AI Generated Image

Kalshi, a US-regulated eligible prediction market platform, is pursuing the introduction of margin trading for event contract products to attract institutional investors and expand liquidity.

According to CoinGape, a virtual asset and financial media outlet, on September 22 (local time), Kalshi Klear, Kalshi's self-clearing house, officially submitted documents to the US Commodity Futures Trading Commission (CFTC) requesting approval for margin trading on event contracts. If regulatory approval is granted, eligible investors will be able to purchase event contracts using borrowed funds instead of the existing method of depositing full cash.

Currently, event contracts on regulated exchanges in the US operate only on a fully collateralized basis, requiring 100% margin deposit. While Kalshi has supported leverage in perpetual futures contracts, the leverage feature has not been applied to prediction market event contracts, which are its core products. Kalshi explained the reason for its application, stating, "We aim to increase capital efficiency based on the characteristics of binary contracts, where the final payout is fixed, allowing the maximum potential loss to be known in advance."

However, safeguards to prevent excessive speculation are also included. Kalshi plans to allow margin trading only to self-clearing members who meet certain capital requirements. Short-term speculative markets dealing with sports, popular culture, and the number of mentions of specific words are completely excluded from margin trading. Furthermore, as the contract expiration date approaches, margin requirements will be gradually increased to control settlement risk due to rapid volatility.

As competition for global prediction market share with Polymarket intensifies, attention is focused on whether Kalshi can overcome regulatory hurdles. It is anticipated that if CFTC approval is obtained, large-scale liquidity from institutional hedge funds and professional investors will flow in, further deepening the prediction market.

[Article Summary]

-Kalshi has submitted an application to the CFTC for approval of margin trading for event contracts through its self-clearing house.

-It targets self-clearing members who meet capital requirements, while markets related to sports and popular culture are excluded.

-With safeguards in place to increase margin requirements as expiration approaches, the focus is on whether it can attract institutional investors and expand liquidity.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*