Will Kalshi and Polymarket win over prop shops? Don’t bet on it.

Trading in financial markets relies on predictions: whether an asset price will rise or fall, how rates will change, whether volatility has peaked.

But when it comes to prediction markets, institutions are wary. Not only are there various legal, regulatory and operational hurdles, but some believe trade volumes aren’t high enough for firms to apply the same market-making models they use in the world of traditional finance. 

The president of one proprietary trading firm says the “very low volumes”