Kalshi CEO: The potential market size for institutional risk transfer block trades could reach $10-15 trillion
Odaily reported that regarding the recent completion of the first customized commodity transaction on the Kalshi platform, Kalshi CEO Tarek Mansour posted on X, saying, "Historically, the bottleneck for institutional risk transfer has been liquidity. The bottleneck for liquidity lies in the lack of price benchmarks for every type of relevant risk (for example, WTI for oil). Kalshi has built a large community of top global super forecasters who are world-class in risk pricing. This enables us to provide price benchmarks for a broader range of issues faced by individuals and institutions. Institutions have begun adopting these price benchmarks by incorporating them into traditional asset pricing models. Although there is still work to be done, we are seeing rapid expansion in data use cases and integrations."
"The next phase is to use price benchmarks to transfer risk via block trades and RFQs (Requests for Quotation). This phase is still early, but has started to take shape. The market size for risk transfer on nontraditional financial targets is still hard to estimate. The closest reference is the reinsurance market and banks' derivatives divisions: reinsurance is about $700 billion; insurance-linked securities and parametric insurance (like catastrophe bonds) are about $12-13.5 billion; bank derivatives (structured products, dealer-to-dealer, exotics, etc.) are about $20-40 billion. The current market is about $1-1.5 trillion, but most of it is illiquid and traded OTC (i.e., with a single counterparty). Whenever major OTC markets switch to exchange trading, the market grows significantly due to establishing price benchmarks, narrowing spreads, breaking Wall Street's monopoly on access, and bringing in entirely new participants—interest rate swaps grow 10-15 times, equity options 20-30 times, energy derivatives 5-8 times. Institutional use cases for prediction markets could create a $10-15 trillion market, and there is even more upside, depending on how much it democratizes products currently exclusive to Wall Street."
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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