- Interactive Brokers Group (IBG) reports $6 million in trading volume on ForecastEX’s new political derivatives, with 800 active traders since the October launch.
- ‘Prop traders’ have been instrumental in boosting liquidity, with election contracts driving most of the trading activity.
- IBG plans to expand ForecastEX into economic and environmental event-driven markets, aiming for long-term growth and regulatory integrity.
Interactive Brokers Group (IBG) has reported a significant uptick in trading activity following the launch of political derivatives on its ForecastEX platform, as detailed in its Q3 2024 earnings call. Introduced in October, political contracts on ForecastEX have attracted around 800 active traders, with trading volume already reaching $6 million.
“The volume up to yesterday was around $6 million. Most of it is in the election contracts,” said CEO Milan Galik during the earnings call, noting that the platform’s growth was driven by a mix of individual and proprietary (prop) traders. Prop traders, who use their own capital to trade, have been particularly instrumental in increasing liquidity on the platform.
Steady growth in political contracts
ForecastEX’s political derivatives offering follows the Commodity Futures Trading Commission’s (CFTC) September decision to lift a ban on political contracts in the U.S. The company sees this as a significant opportunity for growth, particularly in the lead-up to the U.S. presidential election.
“We were very excited that the judge decided in favor of listing the political contracts on ForecastEx,” Galik said.
With heightened interest from traders and the upcoming election, IBG expects increased trading volume and market volatility, viewing the traction generated by the U.S. presidential election as a key entry point into event-driven derivatives.
Long-term focus on regulated markets
Operating under a regulated framework is crucial for IBG as it seeks to ensure the integrity of its markets. The company stressed the importance of maintaining a credible and transparent trading environment, especially as it expands into new categories of derivative markets.
Galik emphasized the need for an “incorruptible arbiter” in the form of a “state-regulated agency” to ensure the legitimacy of market results. “Nobody can claim that the results are manipulated,” he added. It is clear that IBG views its future derivatives markets as a long-term strategy, one that hinges on maintaining the legitimacy and credibility of its platform for sustained growth.
Beyond politics
Although political derivatives have provided a strong foundation for ForecastEX, IBG has broader ambitions for the platform. The company plans to expand into contracts focused on economic and environmental events, building on the momentum generated by political trading.
Read more: How to Bet on Politics
“The elections are just a lucky interlude now. What is really going to be our long-term focus with ForecastEx— the economic indicators and the climate contracts,” said Galik.
The CEO believes that new customers brought in by political events will evolve into long-term traders as the platform introduces more market categories.
Expansion into global markets
For now, political derivatives on ForecastEX are available only to U.S. customers due to regulatory restrictions. However, Galik alludes that expansion efforts are underway in other regions. Plans are in place to offer similar products in Europe, the UK, and Canada, extending beyond political contracts to include environmental, economic, and social event-driven derivatives.
With political derivatives paving the way, IBG’s long-term strategy for ForecastEX is clear: expand into new sectors, maintain regulatory integrity, and ensure sustainable growth in event-driven markets.
