RESOLVING THE LEDGER
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Prediction market platform Kalshi is announcing Tuesday a new partnership with compliance technology company Comply as its push into institutional trading continues, the company told CNBC exclusively.
Comply — which works with more than 5,000, primarily financial, firms — is adding Kalshi's prediction markets trade data to its regulatory software.
The platform gives companies who use Comply's technology, for traditional securities and digital assets, the ability to see employees' trades on event contracts, to make sure they're following a company's policies and not using material, non-public information to trade. The technology will also extend to Kalshi's perpetual futures contracts, too.
"Most firms are still figuring out what a reasonably designed prediction market compliance program looks like, and that's exactly where we come in," said Comply's chief regulatory service officer Jamila Mayfield in a statement. "Comply brings both the technology and the regulatory expertise to build programs that hold up under scrutiny."
Comply's technology already covers prediction market trades on platform Polymarket through a partnership with ZenLedger, a cryptocurrency tax management and accounting company, according to a press release.
Kalshi's partnership with Comply follows a similar one between the prediction market and StarCompliance, another compliance technology company that allows clients to see employees' trades, announced in June .
Max Crowley, vice president of business development at Kalshi, told CNBC in an interview that these compliance partnerships come up as the company has continued to have conversations with firms potentially interested in institutional trading . Many are used to technology like that of Comply's when trading on traditional assets, and expect the same if they're to move into the prediction market space, he said.
"We're actively working with institutions, and I think, more and more we've heard from these firms… 'Do we have compliance surveillance on our side?'" Crowley said. "We have an internal surveillance team, every day we're actively going through all the activity that is happening on the platform… But then firms say, 'that's all good, but we also need visibility.'"
CNBC previously reported that companies across sectors are grappling with the rise of prediction markets , and legal experts said few — beyond highly-regulated financial institutions with large compliance departments — have figured out how to alter their internal policies surrounding the new asset class for employees.
Sudhir Jain, Kalshi's chief compliance officer, said some companies may be considering blocking their employees from trading outright on any event contract as a policy. However, he said technology like Comply's can avoid protocols like that.
"Without knowing what employees are doing, their only choice is to say, from a policy perspective, don't trade at all," Jain said. "Now they have the data; they can monitor it."
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
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