Robinhood targets the prediction market, derivative exchange to launch in 2026.

Robinhood and Susquehanna International Group have formed a joint venture to launch a new derivation exchange to expand its prediction market products. The new exchange will begin operations in 2026, acquiring the MIAXdx derivation clearinghouse and swap execution platform from Miami International Holdings.

Robinhood and Susquehanna joint venture to create prediction market infrastructure

Robinhood is further entering the prediction market through a partnership with Susquehanna International Group by establishing a new joint venture that will create a futures and derivation exchange and clearinghouse. According to the plan, Robinhood Markets Inc. will hold the majority stake in this new exchange, while Susquehanna will play a key role as a liquidity provider. Susquehanna is one of the world's leading quantitative trading firms, with over 40 years of experience in options and derivation market making, and its involvement will provide ample liquidity and professional risk management capabilities to the new exchange.

The new exchange will acquire the MIAXdx derivation clearinghouse and swap execution platform from Miami International Holdings. MIAXdx is a designated contract market authorized by the Commodity Futures Trading Commission (CFTC), which means it has passed rigorous regulatory scrutiny and has a comprehensive compliance framework. By acquiring an existing regulated platform, Robinhood can significantly shorten the preparation time for the new exchange, avoiding the lengthy process of applying for CFTC approval from scratch.

MIAX will retain a 10% equity stake in the new exchange, which provides Robinhood with control while maintaining a strategic partnership with MIAX. As a significant operator of options exchanges in the United States, MIAX has extensive experience in trading system technology, market regulation, and compliance operations, and its ongoing participation will provide technical and operational support to the new exchange.

The new exchange is expected to offer futures and derivative products, including prediction markets, and plans to start operations in 2026. JB Mackenzie, Vice President and General Manager of Futures and International Business at Robinhood, stated in a statement: “Robinhood sees strong demand from customers for prediction markets, and we are excited to continue developing on this foundation. Our investments in infrastructure will allow us to provide a better experience and more innovative products for our customers.”

Core Features of the New Exchange

Holding Structure: Robinhood holds the majority, Susquehanna acts as the first-day liquidity provider, and MIAX retains a 10% stake.

Regulatory Qualification: Acquisition of MIAXdx authorized by the CFTC, obtaining a ready-made compliance framework.

Product Range: Futures, derivation products, prediction market contracts

Operating Hours: Expected to start operations in 2026

The prediction market has become Robinhood's fastest-growing product line

Robinhood pointed out that the prediction market has become its fastest-growing product line, with over 1 million customers trading more than 9 billion contracts to date. This figure reveals the explosive growth of the prediction market among retail investors. 1 million customers represent a significant proportion of Robinhood's total user base, indicating that the prediction market has transitioned from a niche product to the mainstream. The trading volume of 9 billion contracts is even more astonishing, showing that users not only register but also trade frequently.

In March this year, Robinhood partnered with Kalshi to launch a prediction market hub through its application’s Robinhood Derivatives platform, covering U.S. politics, macroeconomic indicators, and sports events. In August, Robinhood once again collaborated with Kalshi to introduce sports markets related to NFL and NCAA football. This rapid expansion of product lines demonstrates Robinhood's high regard for the business potential of prediction markets.

The appeal of prediction markets lies in their simplicity and entertainment value. Users can place bets on future events (such as election results, economic data, or sports matches), with contract prices reflecting the market's collective expectations of the likelihood of those events occurring. Compared to traditional stock or futures trading, the concept of prediction markets is easier to understand, lowering the psychological barrier to financial investment. For Robinhood's core user base—young retail investors—prediction markets combine investment with entertainment, making them highly attractive.

From a revenue perspective, the prediction market provides Robinhood with high-frequency trading opportunities. Each event can generate millions of small transactions, and Robinhood earns fees or spreads from each trade. Compared to the zero-commission model of stock trading, the prediction market can offer a more stable stream of trading income. In addition, the user stickiness of the prediction market is extremely high, with users frequently returning to the platform to check contract price changes and event progress, increasing trading frequency and platform activity.

The transition of the prediction market from the fringe to the mainstream industry

(Source: The Block)

Analysts at Bernstein stated earlier this month that the prediction market is evolving from simple event betting to a broader information trading venue. The analysts observed a surge in trading volume on platforms such as Robinhood and Kalshi, indicating that the prediction market is increasingly being accepted by mainstream markets. This transition is not just about the increase in trading volume, but also represents a qualitative change in market functionality.

Early prediction markets mainly served entertainment needs, but as the number of participants increased and liquidity improved, prediction markets began to exhibit their information aggregation function. Economic studies show that when a large number of participants trade based on their own information and judgments, market prices often accurately reflect the true probabilities of events. This “crowd wisdom” effect makes prediction markets more accurate than expert predictions in certain situations.

For example, during the 2024 U.S. presidential election, the market prices of Polymarket and Kalshi predicted Trump's victory earlier and more accurately than traditional polls. This accuracy attracted the attention of hedge funds, political analysts, and corporate decision-makers, who began to view prediction markets as important sources of information. Some companies even established internal prediction markets, allowing employees to make predictions on business decisions to assist management in judgment.

According to data from The Block, since September, the monthly trading volume of Kalshi, which is regulated by the US, has exceeded that of its competitor Polymarket. In October, Kalshi's trading volume was $4.4 billion, while Polymarket's trading volume was $3.02 billion. This data comparison is highly strategic. Polymarket operates on a blockchain and is not open to US users (although many US users access it via VPN), while Kalshi is a fully compliant platform regulated by the CFTC. Kalshi's trading volume surpassing Polymarket indicates that compliant prediction market platforms have significant potential in the US market.

This industrial shift provides Robinhood with the business logic to establish its own exchange. Rather than relying on Kalshi as a partner and sharing revenue, it is better to build its own infrastructure and capture the entire value chain. By acquiring MIAXdx and collaborating with Susquehanna, Robinhood can fully control product design, pricing strategies, and user experience without being constrained by third-party platforms.

2026 Operational Goals and Market Competition Landscape

The new exchange is expected to start operations in 2026, giving Robinhood ample preparation time. Establishing a derivation exchange that meets CFTC standards requires completing multiple tasks: integration and testing of technical systems, establishment of a risk management framework, deployment of a market monitoring system, and recruitment and training of employees. Through the acquisition of MIAXdx, Robinhood has obtained a ready-made core system, but still requires a significant amount of customization development to adapt to its retail-oriented business model.

Susquehanna's role as a first-day liquidity provider is crucial. The success of the new exchange depends on whether there is sufficient liquidity; if the bid-ask spread is too wide or the transaction speed is too slow, the user experience will be greatly compromised. Susquehanna's commitment to providing market-making services means that the exchange can guarantee a basic level of liquidity regardless of market conditions. The statement also mentioned that other liquidity partners will join subsequently, indicating that Robinhood is actively recruiting more market makers to enhance market depth.

From the perspective of the competitive landscape, Robinhood's new exchange will directly challenge Kalshi's market position. Kalshi is currently the largest regulated prediction market platform in the United States, with a trading volume of $4.4 billion in October. Robinhood has a large user base (over 24 million active users) and strong brand recognition. If it can successfully direct these users to the new exchange, it may surpass Kalshi in a short period of time. This competition will drive the rapid development of the entire prediction market industry, benefiting users with lower trading costs, a richer selection of products, and a better user experience.

For the cryptocurrency industry, Robinhood's deepening layout in the prediction market is of significant importance. The prediction market is essentially a financial innovation that aligns closely with the ideals of decentralization and financial democratization pursued by cryptocurrencies. Although Robinhood's new exchange adopts a traditional centralized structure and is regulated by the CFTC, it provides a reference for a compliance path for crypto-native prediction market platforms like Polymarket. In the future, blockchain technology may combine with regulated prediction market infrastructure to create new financial products that offer both transparency and compliance.