Institutional money is moving toward prediction markets, with a segment of derivatives firms already trading event contracts, and many more poised to follow, according to research firm Acuiti. Nine percent of institutional derivatives participants are now trading in prediction markets, while another 35 percent are considering entering, the company said.
Private commercial companies are the most advanced, with an active participation rate of 13% and a participation weight of 31%. The reading comes from the SGX Global Market Sentiment Index, a quarterly survey that Acuiti produces with the Singapore Stock Exchange, and arrives alongside the SGX Index. Institutional flows already tracked in Finance Magnates’ coverage.
Why are regulations still holding it back?
Appetite is ahead of the rule book. Acuiti said 57% of respondents described regulatory uncertainty as the main barrier to broader participation, and 56% cited CFTC clarity as the most important catalyst for mainstream adoption.
This is the same agency that has Insider trading risks reported in this sector Even when places are tight for professional flow. The infrastructure has already been put in place Trading techniques add connection like this To bring event contracts to professional offices.
Brokers are building accessibility as well. Interactive Brokers has launched a prediction markets platform That collects contracts from several places, a sign that plumbing is moving faster than Systems Turn it around.
Ross Lancaster, head of research at Acuiti, said the speed and unpredictability of the moves had been “exceptionally challenging” for companies running directional positions.
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A boom in confidence built on volatility
The prediction markets push lies within a broader rally. The same survey put overall industry confidence at 79 in the second quarter, up from 75, its highest reading in five quarters and a third straight quarterly gain.
Acuiti linked mood to activity recording. Energy derivatives reached 624 million contracts in March with the closure of the Strait of Hormuz, interest rate derivatives exceeded 1.1 billion contracts, and equity derivatives exceeded 10.6 billion contracts in January, a backdrop that also pushed more brokers towards investing. Listed futures and options.
Prosperity cuts both ways
Reading the title obscures the division. Sell-side execution offices scored 85 points from the sell-side Clearing 87 company, and 87 proprietary trading companies, all record numbers, with higher revenues associated with the deals, according to Acquiti.
Companies taking directional risks performed worse. Hedge fund confidence fell to 74 from 76, while asset managers, at 60, were the weakest sector, and several large multi-strategy funds were reported to have suffered significant losses. Acuiti operates similar industry standards, including… A study of futures traders’ post-trade spending.
For prediction markets, the question is whether regulatory clarity arrives quickly enough to transform the 35% that are still on the margins, as places like Calci already are. Pushing event contracts into derivatives territory with margin plans.
This article was written by Damian Schmil at www.financemagnates.com.
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