Prediction markets are a hot topic in institutional circles with 9% of derivatives firms being active participants and a further 35% considering entry, according to Acuiti’s The SGX Global Market Sentiment Report Q2 2026, a quarterly survey conducted with the Singapore Exchange.

Proprietary trading firms are leading the pack at 13% active and 31% weighing participation. Meanwhile buy-side firms are more reticent. Currently, there are no asset managers trading prediction markets although 29% are thinking about it. For hedge funds specifically, the figure is 44%.

The report noted that among those who are already active or considering participation, Kalshi and Polymarket, the two largest venues, are the most popular.

Although several firms have not taken the plunge, they told Acuiti they are analysing data from the markets and using the information as signals to inform their trading strategies.

One reason cited was the ability of prediction markets to isolate specific event risk such as for example, the outcome of a central bank meeting or a regulatory ruling.

As one respondent noted, a binary contract settled on a specific outcome provides a more precise hedge than a traditional macro instrument that may only partially respond to the relevant event.

The main barrier to wider adoption for 57% is regulatory uncertainty while 56% noted greater clarity from the Commodities Futures Trading Commission CFTC) would be the single most important catalyst.  

This reflects a strong preference among some institutional participants for accessing prediction markets through familiar, regulated infrastructure rather than via native platforms.  A fifth of respondents also wanted to see evidence of reduced insider trading which has been an ongoing concern about the derivatives market.

 The CFTC though is making progress and in mid-June, released a significant Notice of Proposed Rulemaking (Proposed Rule) that would reshape the regulatory treatment of prediction markets under the Commodity Exchange Act (CEA).  The formal comment period closes at the end of July.

However, respondents outside the US in particular emphasised that CFTC approval, while necessary, is not sufficient and that they also need clarity from their domestic regulators before they can participate.

The lack of regulation is not the only obstacle though. Many respondents wanted to see established derivatives exchanges launching a comprehensive prediction market product suite before deciding to trade.

Several structural gaps are also mentioned as stumbling blocks. About a third of respondents point to lack of prime brokerage or clearing infrastructure, insufficient market liquidity and a dearth of internal expertise.

Breaking it down by cohort, proprietary firms are most concerned over the absence of clearing and margining infrastructure while asset managers are more likely to highlight compliance and legal, as well as reputational concerns. This, the report noted, reflected their more conservative nature.