00:00Shree, how much of this is, you know, maybe you want to hedge the central bank decision or just ICE
00:05trying to get into prediction markets?
00:07Well, a bit of both, right? You have seen the massive growing popularity of these prediction markets, of these binary
00:12contracts, the yes or no events.
00:15Now you're taking that core appeal of prediction markets, those betting markets, and repackaging it for Wall Street, making it
00:21regulated, making it centrally cleared,
00:23and giving investors a pure play hedge, a way to deal with the big events that shape financial markets.
00:30That is, critically, when you think about it, the big central bank decisions.
00:34And we're talking about the Federal Reserve, the Bank of England, the European Central Bank.
00:37And also when you have the EIA gas storage number, ICE is saying we'll also give you an opportunity to
00:42do that.
00:43Up until now, if you had to hedge these events, you had to look for proxy instruments, which were good,
00:48have been popular, have been used,
00:49especially if you think about the CME complex.
00:52Now this, from ICE, is a direct challenge to that.
00:55They're saying ignore the proxy instruments.
00:57Let's make this a direct pure play action.
01:01It's a yes or no event.
01:02And this could be a way to draw big institutional investor money.
01:06And just to strip it back a little bit, if you think about the growth of prediction markets as the
01:11appeal being in, say, sports investing or betting on sport events,
01:14the real money, however, might be in the financial events, in the institutional investors being drawn to these products.
01:22And that is what ICE seems to be going for here.
01:24Do we have any idea of how many institutions were already using some of the Polymarket bets?
01:28Because it makes sense.
01:29You could know what some big event is going to be, but you don't necessarily know the market reaction.
01:33So it's hard to find that clean proxy.
01:35So has this already been widely used among institutions?
01:38Is this just trying to grab market share?
01:39Maybe not from other futures markets, but from Polymarket?
01:43I think it would be fair to say that institutional investors have been curious, but not really active,
01:47because they don't see the liquidity, especially for economic event-based contracts.
01:53Yes, there's a lot of interest in sports events and some of the other political events where you've seen big
01:58volumes on platforms like Polymarket and Calci,
02:00but not necessarily for economic events, not in the kind of liquidity that would draw the biggest players.
02:06But you could so easily see when a product like this is rolled out, it could draw in the big
02:11market makers.
02:12People like Citadel Securities and others would want to jump into a market like this because it is an extension
02:17of the kind of services they offer to investors anyway.
02:19They would like to sit in the middle of these markets.
02:21Yeah, and for what it's worth, I mean, someone like an AQR has talked about being interested in trading Polymarket.
02:26So maybe to your point, this is an easier way to do it.
02:28You did, though, mention it's particularly interesting.
02:30We were talking about this in the break that ICE is doing this because they have an investment in Polymarket,
02:34right?
02:34Right. It's a two-pronged strategy.
02:36They made a massive investment, nearly $2 billion in Polymarket, betting on the growth of that platform,
02:42which, mind you, is facing a lot of regulatory challenges.
02:45It's not even available in the U.S., but it is focused on a retail crypto-native audience.
02:50And on the other hand, this is for a pure, onshore, Wall Street, centrally clear, regulated audience.
02:57So ICE is playing both sides of this and is betting that if either one takes off, it's a big
03:02win for them.
03:03If both of them take off, it's a home run.
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