Susquehanna enters prediction markets as dedicated liquidity provider

Pascal Bandelier has been in this business long enough to know that calling something "the next one" is a bet in itself. The co-CEO of Cantor Fitzgerald said exactly that when his bank announced it would act as introducing broker for institutional block trades on Kalshi — prediction markets are the next market Cantor will institutionalise, following the same path it has walked in equities and fixed income across eight decades.

The structure matters more than the headline. Cantor is not simply giving clients access to Kalshi's order book. It is facilitating block trades negotiated at a single price, outside the central book — the same mechanism institutional desks use in equity markets when a position is too large to work through the tape without moving it. The mechanics are familiar. The underlying contracts are not, and that gap is where this either works or doesn't.

Susquehanna Predictions is providing the liquidity. Joe Grubb, Head of Business Development at the firm, described large institutional risk transfer as "the next area of material growth" for prediction markets. Susquehanna calls itself the first quantitative trading firm to build a dedicated prediction-markets business. That claim is worth something — not because it establishes priority, but because it tells you the firm has already priced these contracts at volume, learned where the spreads compress and where they don't, and decided the business is worth formalising.

The consensus read on this announcement is that it accelerates institutional adoption and deepens liquidity. I don't think that's where the stress will show first. The model Cantor and Susquehanna are importing works in markets where the underlying is continuously observable and manipulation is expensive. Prediction markets on political events, corporate earnings, and — until very recently — sports mentions do not always satisfy those conditions. Kalshi pulled its sports mention markets this month under CFTC review, following a case in which a teleprompter operator traded profitably on words the president would say. That case did not break the market. It illustrated a structural feature of speech-based contracts that Kalshi's own legal team had already flagged internally.

Institutional block trades amplify that problem, not reduce it. A sophisticated counterparty with an information edge in a thin contract can extract more value from a block trade than from retail order flow precisely because the block sets a single price for a large position. Susquehanna knows this. The question is whether the contracts on which Kalshi can offer deep, manipulation-resistant markets are also the contracts institutional clients want to hedge.

I have watched this sequencing before — a credible intermediary enters a new asset class, brings infrastructure that genuinely works, and then discovers that the infrastructure's arrival has outpaced the underlying market's integrity. The intermediary is not wrong about the opportunity. The timing is the variable.

Max Crowley at Kalshi said the bank is looking for partners who see "new use cases and hedging opportunities." That framing is accurate and slightly incomplete. Hedging a position in an event contract requires confidence that the contract resolves cleanly, that the resolution is not knowable in advance by one side, and that the market will be there to unwind against when the hedge is no longer needed. Kalshi is currently defending that last condition on multiple legal fronts while the CFTC reviews the second one. Cantor and Susquehanna are pricing the infrastructure before the regulatory framework that will determine which contracts survive has finished being written.