In brief
- Charles Schwab is reportedly entering the prediction market space in collaboration with Cboe Global Markets.
- The firm had previously telegraphed it may look to add prediction markets, but not for sports or entertainment.
- Markets will instead focus on S&P 500 performance to start, and are expected to roll out in the coming months.
Global financial giant Charles Schwab is gearing up to test its hand at the burgeoning prediction markets industry, according to a new report from the Wall Street Journal.
The discount brokerage tipped its hand earlier this year during its first quarter earnings call, with CEO Rick Wurster saying it would “likely have prediction markets.” But Wurster drew a distinction between financial market offerings and those that allow users to wager on sports, politics, and entertainment.
According to the report, which cites people familiar with the matter, Schwab will offer contracts via Cboe Global Markets that allow people to make wagers on the performance of the S&P 500, the popular equities index that tracks a basket of the largest publicly traded firms.
The markets will act similarly to asset price markets offered by prediction markets like Kalshi and Polymarket, in which predictors are provided a binary choice about whether an asset will finish higher or lower than a given price.
For example, on Myriad—a product of Decrypt’s parent company, Dastan—predictors can wager on whether or not Bitcoin will be above $62,000 at a particular day and time.
The firm is also expected to offer a feature called the “Plus Zone,” which pays people based on how close the S&P 500 closes to the market number, paying out a discounted multiple even if they are “mostly right.”
Charles Schwab’s markets are due to roll out in the coming months and may eventually be offered against other indexes or key financial benchmarks, according to the report.
Last month, Schwab expanded its customer offerings, launching spot trading for Bitcoin and Ethereum to a batch of its retail users. The launch followed a successful employee pilot, with a phased rollout to even more customers expected over the next few months.
The firm, which has $11.8 trillion in total customer assets, also showed some interest in joining the growing stablecoin opportunity, with Wurster saying last July that it’s “something we do want to be able to offer.”
Shares of SCHW finished down nearly 3% on Thursday, changing hands around $91.70. U.S. markets are closed Friday for the Juneteenth holiday.