Brokerage firm Charles Schwab, with up to $12 trillion in customer assets, is venturing into the prediction markets industry. The firm is collaborating with derivatives exchange Cboe to launch a market that tracks the S&P 500’s performance.
Charles Schwab To Roll Out Prediction Markets
According to a WSJ report, the brokerage firm is partnering with Cboe Global Markets to launch all-or-nothing options contracts that will enable customers to place wagers on the S&P 500’s performance. The TradFi giant will become the latest to offer prediction markets, joining the likes of the CME and Interactive Brokers.
As CoinGape reported, Interactive Brokers launched its prediction markets platform with Kalshi, CME Group, and ForecastEx integration. Meanwhile, it is worth noting that Charles Schwab’s prediction market will differ from what crypto prediction market platforms Polymarket and Kalshi offer.
The brokerage’s contracts will be options, while these prediction market platforms list futures contracts. The firm plans to make the contracts available to customers in the coming months, WSJ reported, citing people familiar with the matter.
Charles Schwab is also reportedly planning to roll out an options offering that will allow traders to earn a partial payout if they are mostly right, even if the index’s closing price isn’t exactly what they predicted. The brokerage is also rolling out this offering with a Cboe feature called the “plus zone.”
Plans For Other Markets
According to the WSJ report, Charles Schwab and Cboe are also discussing rolling out options contracts that will track other indexes. However, the brokerage plans to stick to events with verifiable outcomes in the finance space rather than other prediction markets that top crypto prediction market platform Polymarket and Kalshi offer.
Prediction markets continue to gain greater adoption despite the scrutiny from regulators. Kalshi revealed that its institutional trading volume surged 800% in six months as it expanded its offerings to Wall Street.
The prediction market platform also recently saw its trading volume hit record highs thanks to World Cup bets. Polymarket is also seeing success of its own, with the protocol ranking among the top crypto protocols by fees. DeFiLlama data shows that the platform has taken in $1.5 million in fees over the last 24 hours and $10 million over the last seven days.
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