Institutional money is edging into prediction markets, with a slice of derivatives firms already trading event contracts and many more preparing to follow, according to research firm Acuiti. Nine percent of institutional derivatives participants now trade prediction markets, the firm said, while a further 35% are considering entry.

Proprietary trading firms are furthest along, at 13% active and 31% weighing participation. The reading comes from the SGX Global Market Sentiment Index, a quarterly survey Acuiti produces with Singapore Exchange, and lands alongside the institutional inflows already tracked in Finance Magnates coverage.

Why Regulation Still Holds It Back

The appetite is running ahead of the rulebook. Acuiti said 57% of respondents named regulatory uncertainty as the main barrier to wider participation, and 56% pointed to CFTC clarity as the single most important catalyst for mainstream adoption.

That is the same agency that has flagged insider trading risks in the sector even as venues court professional flow. Infrastructure is already being laid, with Trading Technologies adding Kalshi connectivity to bring event contracts to professional desks.

Brokers are building access too. Interactive Brokers launched a prediction markets platform that pools contracts from several venues, a sign the plumbing is moving faster than the regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term around it.

Ross Lancaster, head of research at Acuiti, said the speed and unpredictability of the moves "has been exceptionally challenging" for firms managing directional positions.

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A Confidence Boom Built on Volatility

The prediction-markets push sits inside a wider upswing. 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 tied the mood to record activity. Energy derivatives reached 624 million contracts in March as the Strait of Hormuz closed, interest rate derivatives topped 1.1 billion contracts, and equity derivatives exceeded 10.6 billion contracts in January, a backdrop that has also pulled more brokers toward listed futures and options.

The Boom Cuts Both Ways

The headline reading masked a split. Sell-side execution desks scored 85, sell-side clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term firms 87, and proprietary trading firms 87, all records, as transaction-linked revenue rose, according to Acuiti.

Firms taking directional risk fared worse. Hedge fund confidence slipped to 74 from 76, while asset managers, at 60, were the weakest segment, and several large multi-strategy funds were reported to have booked significant losses. Acuiti runs similar benchmarks for the industry, including a study on futures commission merchants' post-trade spending.

For prediction markets, the question is whether regulatory clarity arrives fast enough to convert the 35% still on the sidelines, as venues like Kalshi already push event contracts toward derivatives territory with margin plans.