Every portfolio carries risks that no stock, bond or futures contract prices directly: an election that rewrites tax law, a central bank decision that reprices everything, a hurricane that closes a coastline. For decades, investors hedged those exposures with proxies, assets that might move the right way when the event landed. Prediction markets have started selling the thing itself: a contract that pays precisely when the event happens, and nothing when it does not.
The capital has noticed. Combined monthly volume on Kalshi and Polymarket grew from under $5 billion in September 2025 to about $24 billion by April 2026, according to Jefferies figures. In February 2026, Intercontinental Exchange launched Polymarket Signals and Sentiment, packaging prediction-market odds, with historical data for backtesting, as a data product for professional investors. Tradeweb distributes Kalshi event-contract data, FIS is building clearing infrastructure, and Clear Street and Interactive Brokers have integrated Kalshi contracts for their clients.
The credibility test came from the Federal Reserve itself. A February 2026 Federal Reserve Board working paper found Kalshi's macroeconomic markets deliver well-calibrated, rapidly updating forecasts, and that on the day before each Fed meeting, the market's median and most likely outcome had a perfect record, a statistically significant improvement over fed funds futures, the instrument professionals have used for decades. When the market that prices an event beats the market that merely correlates with it, the event contract stops being a curiosity and becomes a benchmark.
Institutions are now building the pipes to use it at size. In August 2026, Cantor Fitzgerald began offering institutional block trading on Kalshi to roughly 3,000 institutional clients, with Susquehanna providing pricing and liquidity, including custom contracts for bespoke risks that traditional insurance does not cover. Kalshi's clearinghouse has also asked the CFTC to permit margin for qualified self-clearing members; event contracts are currently fully collateralized, which ties up capital for months on long-dated hedges. Kalshi has said its institutional trading volume rose more than 800% in six months.
Plenty of hedge funds are still watching rather than trading: liquidity in long-dated contracts remains thin, and standardization is young. But the direction is set. A market that began as a forecasting toy now clears institutional block trades, feeds the world's largest exchange operator's data business, and out-forecasts the futures pit on the Fed. Event risk has a price now, quoted in cents, and capital markets are learning to read it.
Sources: Sikt Intelligence; PYMNTS; Jefferies; Federal Reserve Board; Cantor Fitzgerald
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