Just under half of proprietary trading firms across the globe are evaluating trading in prediction markets, including three-quarters of US-based firms, the latest Acuiti Proprietary Trading Management Insight Report has found.

Prediction markets are among the fastest growing areas within global trading and are generating growing interest within the proprietary trading community. Largely driven to date by retail participation, these markets now look set to gain increased traction from institutional firms.

This quarter’s report found that 10% of proprietary trading firms are already trading on prediction markets with a further 35% considering doing so. In the US, three-quarters of firms were either trading prediction markets or considering doing so.

Of those firms that were already trading on prediction markets, almost all were either ultra-low latency or predominantly algo – although interest in trading the markets is broader. However, predominantly point-and-click firms were currently not likely to be evaluating the market at this stage.

“Prediction markets are potentially on the cusp of significant institutional growth, which will drive liquidity and volumes on the market, as well as revenues for the venues and brokers that offer the contracts,” says Will Mitting, founder of Acuiti.

“However, while there is opportunity, there are also unique challenges associated with firms trading the market, which we look at in the report. Risk management is a key challenge. It is easy to see how a prop firm models where the price of gold or the S&P might be at the end of the day, or even the likely outcome of a sporting event, but how do you model the likely date of Taylor Swift’s wedding?”

The quarterly Proprietary Trading Management Insight Report, which is produced in partnership with Avelacom, is based on a survey of the Acuiti Proprietary Trading Expert Network, which comprises senior proprietary trading executives around the world. The report provides insights into the key trends facing the community.

“As more proprietary trading firms consider trading prediction markets, low-latency infrastructure will remain essential for maintaining a competitive edge,” says Aleksey Larichev, CEO of Avelacom.  “Looking ahead to 2026, we anticipate growing demand for colocation services and low latency connectivity across both new and established markets. Reliability and redundancy will become increasingly important to align with firms’ risk management frameworks.”

This quarter’s report also found that proprietary trading firms are looking ahead to 2026 with confidence with over 70% of the network anticipating an above-average performance for their business next year. This is filtering through to technology investment with firms boosting budgets in 2026.

Other key findings in this quarter’s report include:

• Proprietary trading firms are still planning to start trading in India but recognise increased regulatory risk following SEBI’s charges against Jane Street
• UK proprietary trading firms are calling on the FCA to reduce capital requirements under IFPR
• Low latency firms in the US are adjusting approaches to hiring following the introduction of a $100,000 charge for H-1B visas

The report also features a Q&A with Osaka Exchange’s Kensuke Yasu on growing volumes, the upcoming launch of FX, the opportunities for proprietary trading firms and the potential to launch crypto derivatives.

Source: Acuiti