Kalshi asks CFTC to allow margin trading on platform — CNBC

In the United States, prediction markets platform Kalshi has filed an application with the U.S. Commodity Futures Trading Commission (CFTC) seeking permission to introduce margin trading in event contracts. If approved, certain traders will be able to buy such contracts using borrowed funds.

Access for self-clearing participants

As CNBC reports, the application was submitted by Kalshi Klear, the company's in-house clearing entity. If the CFTC approves it, contracts with margin trading capabilities will be available only to self-clearing members that have a direct relationship with Kalshi Klear and meet capital requirements.

Kalshi said it will not offer margin capabilities for contracts related to sports, culture, and “mentions” markets. Currently, all event contracts on regulated U.S. exchanges are fully collateralized.

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Attracting institutional traders

Margin trading makes it possible to borrow funds to buy an asset for an amount greater than a trader's own contribution. This mechanism is common in traditional stock and futures markets, and market participants view it as an important condition for attracting greater institutional liquidity to event-contract exchanges.

Kalshi already offers leverage for perpetual futures contracts but does not yet have similar permission for prediction markets. The company also plans to introduce a system under which capital requirements for using leverage will increase as a contract's expiration date approaches. According to Kalshi's assessment, this could make long-term event contracts more attractive to institutional traders.