Kalshi Launches Gold & Silver Perpetuals

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You're listening to Bloomberg Businessweek with Carol Massar and Tim Stenovec on Bloomberg Radio.

Carol Massar (0:15)

Kalshi, planning to seek regulatory approval to start offering the country's first regulated perpetual futures tied to single stocks, and that includes names, Tim, like Tesla, Apple and NVIDIA, a few of those well-known names.

Tim Stenovec (0:27)

Yeah, reading this from the Wall Street Journal, the contracts known as perps let traders bet around the clock and pile on leverage that amplifies their potential gains and losses with the lack of expiration date further tightening the risk.

Carol Massar (0:38)

Yeah, exactly. Kalshi plans to launch around 60 perps tied to popular ETFs and single stocks of companies with a market value of at least $100 billion. That's according to one of the people familiar with the matter. This is all we should point out due to reporting in the Wall Street Journal. There's more. The company also launching 24-7 Kalshi's perpetuals on gold and silver and said to be fully regulated by the CFTC. There's lots to talk about.

Tim Stenovec (1:04)

Yeah, back with us, Udesh Jha, Chief Risk Officer of the Prediction Market Kalshi, joining us from London. Jha just recently appointed this position a few months ago, coming from the derivatives marketplace over at CME Group. He was an MD and head of Post Trade Services since early 2020 He was there for about 16 years. Good to have you back on the program. When we spoke with you in July, we discussed how Kalshi created this tool that plots the future price of compute power.

How do you think about this, perpetuals, gold and silver, and also potentially single-stock perpetuals, building on that?

Udesh Jha (1:41)

Thanks for having me. It's great to be on your show. I think gold and silver are a very natural extension to our crypto perpetuals which have gotten to a really good start. We've had about 45 billion of trades already on them. And gold and silver, which we launched yesterday, we are seeing some really encouraging signs in terms of the volume as well as open interest. But more importantly, I think why gold and silver? I think the macro story speaks for itself. They are a much bigger asset class than, let's say, crypto, 15 to 20 times the size of crypto.

Gold, not just a store of value, but in today's day and age with inflation coming in at rates higher than target for the last few years, one of the best hedge is to hold gold.

And silver with its story around AI, data centers and so on and so forth. But what we are doing is we are bringing that market broadly to the reach of folks who could not have afforded this type of trade. And what do I mean by that? We are perpetual provide you much better liquidity because they are not spread across multiple contracts. The contract sizes are small.

We trade 24 seven and most importantly, they avoid role costs. If you want to hold gold and silver for a long period of time, which many want to hold, you don't have to go in and pay role costs every month. So there is a significant cost benefit. And some of these things, the size of the contract role, have prevented a very large scale adoption into this market. And that's what we are bringing in, in addition to the regulated framework that Kalshi provides.

Tim Stenovec (3:31)

Udesh, you mentioned that this increases access for people. And I wonder who specifically this is for, within the Kalshi ecosystem and folks who are not yet part of the Kalshi platform. Like who is this product for?

Udesh Jha (3:46)

This product is built both for the institutions as well as the retail masses. As you are aware, we have several million Kalshi traders. And many of them, because of the nature of this contract, because of the size, because of the benefit of not being roles, have now access as opposed to going in and trading through intermediate brokers on data futures, which are a lot more expensive and in many forms, either through role costs or access.

Carol Massar (4:24)

How are you making decisions about what you offer up next, as you seem to increasingly move into the traditional world, the finance and trading? What's guiding it?

Udesh Jha (4:40)

Great question. I think there are a few things. One, obviously, is client demand in terms of, is this product good for hedging? Is this product good for speculative needs? Is this something that our constituents are demanding? Second, very important, is we also bring products that we feel we can risk manage.