2 weeks Ago
Robinhood announced on Monday that it will begin offering US presidential election event contracts amid growing demand for speculative trading products among retail investors, Reuters reported. The new feature will enable users to profit from speculating on the competitive race between Vice President Kamala Harris and former President Donald Trump , with recent polling indicating a narrow lead for Harris, though still within the margin of error. Robinhood shares rallied 4% after the announcement.
The company said it would start rolling out the contracts on US Election to a limited number of users, who must be US citizens. Event derivatives trading enables traders to buy and sell contracts that speculate on specific outcomes, such as elections, economic indicators, or policy changes. Though relatively new and generally considered high-risk, event derivatives have grown in popularity in recent years.
Earlier this month, Robinhood had expanded its offerings by introducing futures and index options trading to its mobile app, said the Reuters report. Prediction platforms like PredictIt, which allow users to trade shares on potential future outcomes, have also seen increased activity leading up to the election, the news report added. Interactive Brokers Group (IBKR) and Kalshi are also offering contracts through which investors can bet on the results of the US Election on November 5.
As Robinhood continues its evolution from a platform associated with retail investors to a comprehensive financial services provider, it aims to compete with established brokerages serving institutional clients. Committed to expanding margins and prioritizing “profitable growth” in 2024, Robinhood has seen its stock surge by over 100% year-to-date. In September, a federal judge ruled in favor of allowing Americans to use derivatives for event betting, dealing a setback to the U.
S. Commodity Futures Trading Commission (CFTC), which had attempted to block such activities. The ruling was upheld by an appeals court in October, Reuters reported.
Read US Presidential Election Live Updates here (With inputs from Reuters).
