Charles Schwab is preparing to enter prediction-style trading via a partnership with Cboe Global Markets. Its first contracts would track the S&P 500 closing level. The Wall Street Journal reported Schwab customers could gain access in the coming months.
The planned products would use all-or-nothing options. Investors would speculate on where the U.S. benchmark index is going to close at a specific level or range. If the outcome is correct, a payout would be made according to the terms of the contract.
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Charles Schwab Eyes More Index-Based Contracts
Sources close to the discussions told the Journal that the offering is still in the development process. The report did not specify a date for a public launch. It also did not reveal contract sizes, pricing, customer eligibility rules, or other product terms.
Charles Schwab’s version would be unique among the futures-based event contracts that Kalshi and Polymarket offer. Those are political, sports, economic, and other public outcomes. Schwab’s first products would be based on quantifiable outcomes in the finance markets.
The brokerage would start with S&P 500-related contracts, the report said. Other market indexes are also discussed as contracts. The Journal did not specify which indexes were being considered.
Schwab and Cboe are also planning a separate options feature for forecasts that fall close to the selected index level. Cboe refers to the mechanism as the plus zone. It would enable a partial payout if a prediction does not hit the exact closing value but is within a specified range.
The development also brings Charles Schwab to the ranks of well-known companies working on event-driven trading products. CME Group and Interactive Brokers already have extended into comparable products. The products allow users to trade on the defined outcome only, as opposed to purchasing or selling the underlying index.
Prediction Markets Draw More Institutional Interest
The market has gained more interest as prediction markets have expanded beyond elections and sports. Financial contracts now cover market moves and scheduled economic events. According to the Journal, Schwab’s entry would be kept small and focused compared to the diverse menus provided by crypto-native platforms.
Kalshi recently reported that the volume of institutional trading has increased by 800% over the last six months. The company has expanded its Wall Street presence and added products. Its update indicated increased professional market participant activity.
Polymarket has also been continually profitable in fees. DeFiLlama data shows that about $1.5 million in fees were collected in the last 24 hours. The platform recorded roughly $10 million during the prior seven days.
The partnership comes as Charles Schwab expands its digital asset operations. The brokerage earlier in June announced it will expand direct crypto services to registered investment advisors. It is aiming for spot trading, transfers, and custody services on its advisor platform to be completed by 2027.
This comes after Schwab Crypto, the firm’s spot Bitcoin and Ethereum trading service for retail investors. Select customers in the U.S. were granted access this year on a phased basis. With the addition of another product category, the new Cboe partnership would expand the firm’s retail and wealth-management services.
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