Aug. 10 (Reuters) - Prediction markets giant Kalshi has joined hands with Nasdaq NDAQ.O to adopt the U.S. exchange heavyweight's market surveillance tool, as it looks to bolster the monitoring and oversight of trading activity on its platform.
The multi-year partnership, unveiled on Monday, reflects a broader push by Kalshi to strengthen trade surveillance, as prediction markets face mounting pressure from lawmakers following high-profile alleged insider trading cases that have intensified scrutiny of suspicious trades.
Phased rollout and regulatory reporting
Kalshi plans to implement Nasdaq's market surveillance platform in a phased approach, pairing its existing surveillance framework with advanced monitoring capabilities for prediction markets and perpetual-style derivatives.
"This deal reinforces Kalshi's commitment to market integrity," said Max Crowley, vice president of business development at Kalshi, adding the partnership gives it surveillance data used by the world's largest exchanges.
Integrating Nasdaq's round-the-clock surveillance platform with Kalshi's trading infrastructure will assist in real-time detection of market abuse, manipulation, and insider trading and support delivering trade data to the Commodity Futures Trading Commission in the format the agency requires.
Regulatory scrutiny around Kalshi trading
The top U.S. derivatives regulator last month fined former Republican Representative George Santos $35,000 over alleged manipulative trading on Kalshi. A White House teleprompter operator is also under investigation over potential insider trading on Kalshi, Reuters reported.
Kalshi, which has also ramped up hiring in its surveillance unit this year, had referred suspicious trading activity in both cases to regulators. The platform prohibits market manipulation and insider trading.
Nasdaq highlights surveillance demand in prediction markets
Nasdaq's market surveillance platform serves over 50 exchanges and 20 international regulators globally, helping detect potentially abusive trading behaviors across asset classes.
"Prediction markets are among the fastest-growing segments of the financial landscape, and they demand surveillance infrastructure with the scale and expertise that can match that pace," said Tony Sio, head of regulatory strategy and innovation at Nasdaq.
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