Susquehanna International Group (“SIG”) onboards as the first major institutional market maker on Kalshi. SIG is one of the largest options and ETF market makers on the planet, with approximately 2 Trillion dollars of ETF volume per year. SIG has set up a dedicated trading division to trade prediction markets on Kalshi. 

This is the first time in the history of prediction markets that a world-class Wall Street institution has committed to the asset class. The launch of SIG has the potential to revolutionize prediction markets by making them like traditional markets — liquid and dynamic. You can now freely trade six figures or 100,000 shares at a time in some of Kalshi’s major markets. 

Today marks a pivotal moment for Kalshi and the prediction market ecosystem: we are entering a new phase… of abundant liquidity. Launching SIG on Kalshi is the culmination of years of selling and building and reflects the tireless effort and perseverance it took us to get to this point. I am happy we are here as this milestone has the potential to change everything. 

“It would be incredible… but these markets are not liquid.”

I’ve said this often: the idea of building an exchange where people can trade on any future event just like they do a stock is not new. People on Wall Street have been fantasizing about it for decades. In fact, a large % of trading activity on traditional assets, like stocks, is driven by a conviction about a future event (“I think TikTok will be banned from the US… I will buy Snapchat stock”). 

Event contracts are the most elegant implementation of this trade: take your view of the world and turn it directly and precisely into a trade.

When Luana and I started building Kalshi, we took the idea to traders, institutions, regulators, and smart friends. Two issues were clear:

1. Regulation… the obvious bottleneck
2. Liquidity… the Boogeyman

Kalshi’s first arc was about solving the regulatory issues, culminating in our regulatory approval from the CFTC. Kalshi’s second arc has been fighting the challenge of low liquidity, which weighs heavily on the industry. Liquidity is an incredibly tough challenge to solve because it is a self-fulfilling prophecy: it can be a destructive vicious cycle that is dragging itself down or a virtuous and abundant cycle.

Without enough liquidity, users can’t enter trades as freely as they’d like, and, equally important, users can’t exit trades as freely as they’d like. The introduction of Susquehanna can change everything… The vicious cycle turns into a virtuous one. 

The first institution to commit to prediction markets:

SIG is the first large-scale institution to onboard to Kalshi as a committed market maker. SIG is one of the top market makers on Wall Street and plays a significant role in ensuring liquidity in some of the largest and most liquid markets, including ETFs and options.

It is much harder for large (or really any) institutions to trade an entirely new asset class that they are not currently pricing or trading on a traditional venue — it requires new models, new technology, and a dedicated desk: in short, a much bigger bet. SIG has made this bet and has done so in a significant way: they have set up a dedicated trading desk exclusively focused on event contracts. 

The vicious cycle turns virtuous.

The first market maker is by far the hardest step to achieve. Once the exchange is liquid, it becomes much more attractive for other institutional players. Why? Because it’s liquid! More precisely, it’s because 1) it’s less risky, 2) other people are helping you price so that you can have a benchmark, and 3) there will inevitably be more volume. 

SIG is committed to providing liquidity in various markets, starting with indices, economics, crypto, FX, and ad-hoc events. They will be expanding this over time to cover an increasing proportion of Kalshi markets. SIG will be providing close to 30x the liquidity that was previously available in select markets:

1. Depth: 100,000 contracts or more 
2. Spreads: 2-3¢ or less (on average)
3. Availability: 98% availability across all trading hours

With SIG onboard, you can now enter and exit large positions freely, without much price slippage, and at any point of the day. 

The vicious cycle turns virtuous.

The first market maker is by far the hardest step to achieve. Once the exchange is liquid, it becomes much more attractive for other institutional players. Why? Because it’s liquid! More precisely, it’s because 1) it’s less risky, 2) other people are helping you price so that you can have a benchmark, and 3) there will inevitably be more volume. 

Kalshi’s geared up to create a dominant retail-first exchange:

Alongside SIG, Kalshi is building the next-generation trading ecosystem where people can trade on anything. Our vision is to capture anything of interest into a tradable asset and bring a little more truth to this world through the power of markets.

We are already on track. Since the beginning of the year, Kalshi’s active customer base has grown by 5x, exchange volume is up by 50%, and we have listed more markets in Q1 than all of 2023. 

With SIG in the ecosystem, Kalshi unlocks significant liquidity: we have upgraded from a knife to a sledgehammer… We can now double down on our distribution efforts, both direct (via kalshi.com) and intermediated through brokers (soon 👀). 

The time to join is now:

In a few years, “Will Kalshi define an entirely new category?” might be more “priced in”. This an opportune time to join us on our mission to build the future of the financial system:

• For trading shops, hedge funds, and market makers: We are integrating more market makers. If you want to integrate into Kalshi as an institutional market maker, please visit us at https://kalshi.com/market-makers
• For brokers: We are currently integrating with brokers. If you are interested in integrating with us as a broker participant (“FCM”), visit us at https://kalshi.com/brokers

We are also hiring across the board: engineering, product, growth, BD, regulatory, and so on. If you are interested in building the first serious shot at disrupting financial exchanges in decades, bringing a little more truth to this world, or both, you know where to go (kalshi.com/careers, just in case). 

"This is not the beginning of the end, but just the end of the beginning." - CFTC Chairman Tarbert on Kalshi’s Regulatory Approval Day, quoting Winston Churchill.

The opinions and perspectives presented in this article belong solely to the author(s). Trading on Kalshi involves risk and may not be appropriate for all. Members risk losing their cost to enter any transaction, including fees. You should carefully consider whether trading on Kalshi is appropriate for you in light of your particular circumstances, investment experience and financial resources. Any trading decisions you make are solely your responsibility and at your own risk. Past performance is not necessarily indicative of future results. No representation is being made that any account will or is likely to achieve profits or losses similar to any described. Any research views expressed represent those of the individual author and do not necessarily represent the views of Kalshi or its affiliates. Any demonstrative examples are hypothetical situations, used for explanation purposes only, and should not be considered investment advice or the results of actual market experience. While Kalshi strives to provide accurate and timely information, there may be inadvertent inaccuracies, errors and omissions, for which we apologize and expressly disclaim any liability. We reserve the right to make changes and corrections at any time, without notice. The content is provided on an "AS IS," "AS AVAILABLE" Basis. Any information denoting past or historical performance is not indicative of future performance and no reliance shall be placed on such information.