A prediction-market operator that runs an exchange and owns a trading desk on it has two roles: setting the venue’s rules and taking positions against other participants. Kalshi has proposed limiting its affiliate’s trading to 5% of quarterly exchange volume as the Commodity Futures Trading Commission considers a conflict-of-interest rule. That is an offer in a rulemaking process, not a protection already in force.
Dan Bernstein reports for Sportico that Kalshi would apply the cap separately to single-event contracts and parlays traded through a request-for-quote system outside the central order book. It also proposes independent surveillance, information barriers between the exchange and its desk, and quarterly disclosure of affiliated trading volume. Kalshi says its trading affiliate has accounted for roughly 1.5% of exchange volume this year; that number comes from the company.
The CFTC has floated a stronger order-book restriction: affiliated desks would have last priority at a given price, behind independent market makers. Kalshi opposes that provision, arguing it would be burdensome and easy to evade. Other commenters disagree about the proper line: according to Bernstein, CME Group favors an outright ban on exchange-affiliate principal trading, while Fanatics argues against constraining affiliates.
An affiliated desk can supply liquidity when other traders will not. It can also earn trading profits in markets its parent operates. The question for customers is whether the exchange’s control over information and execution gives its own desk an advantage, and whether a volume cap and surveillance would meaningfully constrain that risk. The article reports a proposed response to that question, not evidence that Kalshi’s desk has abused its position. Nor is the 5% cap small merely because it is a single digit: Bernstein cites an estimate that 5% of September maker volume would have represented about $2.3 billion in trading volume, not profit.