Kalshi obtains approval to provide institutional investors with margin trading.

Prediction market platform Kalshi has received regulatory clearance to offer margin trading to professional clients, marking a significant shift from traditional models that require fully collateralized positions. The move aims to make Kalshi more attractive to institutional investors as trading volumes and industry interest continue to grow.

The license, granted to Kalshi’s affiliate Kinetic Markets, permits the firm to operate as a futures commission merchant, according to a filing with the National Futures Association. Before margin trading can go live, Kalshi still needs approval from the Commodity Futures Trading Commission (CFTC) for rule changes allowing trades without full upfront collateral.

Margin trading allows investors to open positions with less capital up front, a standard practice in conventional markets but new to regulated prediction markets. Competitors, including crypto-based platforms like Polymarket, still require fully collateralized positions.

Prediction markets enable users to speculate on real-world events, from elections to economic data releases. Volumes have surged in recent months, despite legal scrutiny from state regulators who argue some contracts resemble unlicensed gambling.

The growth of the sector has been bolstered by funding and institutional support. Earlier this month, Kalshi raised over $1 billion in a funding round that valued the platform at $22 billion. Meanwhile, Intercontinental Exchange, owner of the New York Stock Exchange, doubled its investment in rival Polymarket, bringing its total commitment to nearly $2 billion.

Kalshi’s margin trading feature will initially be limited to institutional clients and could debut on new products before expanding to core event contracts.