Wall Street firms move into prediction markets
Two major prime brokers are reportedly working to give their hedge fund clients access to Kalshi’s prediction markets. According to a Bloomberg report, both Clear Street and Marex Group Plc confirmed they expect to open up access to these markets soon.
Clear Street, valued at over $12 billion, appears to be leading the way. CEO Ed Tilly mentioned the firm expects its first Kalshi trade to clear in late March. Marex, with a valuation around $2.6 billion, plans to follow in the coming months.
Institutional demand grows
Thomas Texier, Marex’s global clearing head, noted strong interest from large financial institutions. “Over the last few weeks, we’ve seen very large hedge funds coming to us and saying, ‘Can you give us access to these markets?'” he said. The firm is also considering using prediction markets to hedge its own positions.
Kalshi CEO Tarek Mansour believes institutional adoption will accelerate significantly in 2026. He pointed to prediction markets’ utility in providing data on future events and investment hedging. “This is no longer an early-adopter space – it is becoming a core pillar of the financial ecosystem,” Mansour stated in a LinkedIn post.
He added that billions flow through these markets weekly, and major news networks now regularly cite Kalshi markets alongside traditional market tickers.
Regulatory uncertainty remains
Despite the growing interest, Clear Street’s CEO emphasized caution. The prediction market space exists in a regulatory gray area, with multiple lawsuits filed by state regulators across the US.
Two main issues concern regulators: whether sports markets qualify as sports betting under current laws, and the potential for insider trading given the wide range of markets offered.
Earlier this week, executives from major exchanges like Nasdaq and CME called for clearer regulation to support prediction market adoption in the US. “Markets thrive when we have consistent regulation, and it allows investors, first of all, to be protected,” Nasdaq CEO Adena Friedman said at a recent conference.
Jurisdictional questions persist
The regulatory landscape remains complicated. The Commodities Futures Trading Commission claims primary oversight of the sector, while the Securities and Exchange Commission says it will also play a role.
This jurisdictional overlap creates uncertainty for firms looking to enter the space. Still, the demand from institutional investors seems strong enough that major financial players are willing to navigate these challenges.
Prediction markets have grown substantially over the past year, evolving from niche platforms to tools that major financial institutions now consider part of their investment and hedging strategies. The involvement of prime brokers like Clear Street and Marex suggests this trend will continue, though perhaps at a measured pace given regulatory considerations.
It’s interesting to watch traditional finance gradually embrace these newer market structures. The caution expressed by some executives makes sense – nobody wants to move too quickly into uncertain territory. But the demand from hedge funds appears genuine, which usually means money will find a way.
