Key facts
- Kalshi is in advanced discussions with regulators to expand its perpetual futures offerings.
- The company is targeting asset classes including metals, foreign exchange, and energy.
- Perpetual futures contracts do not have expiration dates and allow investors to hold positions indefinitely.
- Critics have warned that these contracts are risky for retail investors.
- Kalshi has estimated that trading perpetual futures on overseas platforms burgeoned to $90 trillion last year.
Kalshi, a prediction markets platform known for allowing bets on events like sports and election outcomes, is in advanced discussions with regulators to broaden its offerings of never-expiring derivatives, or perpetual futures, into new asset classes. The company aims to introduce these products for markets including metals, foreign exchange, and energy, according to a company executive.
Perpetual futures, unlike traditional derivatives, do not have expiration dates, allowing investors to hold positions indefinitely. This feature, combined with the ability for traders to borrow heavily to amplify bets, has drawn criticism from some who view them as risky for retail investors. CME's outgoing CEO Terry Duffy has called them a "disaster waiting to happen."
Kalshi previously launched the first perpetual futures contracts for crypto trading in the U.S. after receiving clearance from the Commodity Futures Trading Commission (CFTC). Now, the platform is seeking approval to extend these offerings to other asset classes, with gold being a particular focus due to its retail appeal. Kalshi's chief risk officer, Udesh Jha, noted that FX, metals, and energy are in high demand due to geopolitics and seasonality, with a significant portion of current volumes coming from institutional investors.
The expansion plans come as traditional derivatives exchanges face potential disruption from perpetuals. CME has sued the CFTC, challenging the decision to allow Kalshi and Coinbase to list perpetual futures, a move seen by many as an effort to protect CME's dominant market position.
Kalshi is also exploring opportunities for perpetual futures tied to broad-based indexes and individual stocks. The CFTC itself is soliciting public input on expanding perpetual contracts to energy commodities like crude oil. If approved, trading in these new asset classes would occur during regular trading hours. Previously, perpetual futures were largely traded on offshore venues operating in a regulatory gray area, with an estimated $90 trillion traded globally last year.