Remy Blaire: And while it's lunchtime here in New York, it is 11 a.m. over in Chicago at Cboe.
Let's head on over to FINTECH.TV correspondent Mark Payton, who's live from the Cboe trading floor.
Hey, Mark, great to have you back on. So get us caught up on the trading action over at Cboe.
Mark Payton: Hey, Remy.
A quiet morning for the broader market after yesterday's rally. The S&P 500 was essentially flat. It dipped just a little bit, about a tenth of a percentage point. It's still close to record territory.
And here at Cboe, the VIX is around 14.4, down more than 2% today. So despite all of the geopolitical headlines we've been following, we're really not seeing much of a move into volatility this morning.
We're also keeping an eye on the bond market, with the 10-year Treasury yield right around 4.97%, remaining below 5% but starting to creep up just a little bit.
Oil is still one of the bigger stories we're watching. Oil is moving again today. A big part of that move is coming from the latest developments in the Middle East and talks to reopen the Strait of Hormuz.
That's helping ease some of the concerns we've had around global oil supply.
So that's the picture right now. The S&P basically flat, volatility moving lower, Treasury yields staying below 5%, and oil continuing to pull back.
Remy Blaire: And Mark, while I have you here, I do want to get your take on prediction markets.
So Kalshi is asking regulators to allow margin trading on some of its event contracts. So what exactly would that mean, and why does it matter?
Mark Payton: Yeah. So, I mean, this is an interesting development because it could make prediction markets much more attractive to institutional traders.
So right now, Kalshi's event contracts are generally fully collateralized. In other words, traders have to put up enough capital to cover the potential loss on their position.
What Kalshi is asking the CFTC to approve would allow certain qualified traders to instead trade eligible contracts on margin.
So they would still have to put up collateral, but they wouldn't necessarily have to put up the full amount upfront.
And that's important because it makes these trades much more capital efficient.
If you're an institution trading longer-term events, something tied to the economy, financial markets or even politics, that contract could stay open for months.
So instead of having all that capital tied up in the event, using margin would allow them to keep more of that money available for other investments.
And that's similar to the way traditional futures markets already operate.
Now, this isn't something Kalshi is proposing for everybody. Initially, it's aimed at qualified market participants rather than the typical retail trader, and certain contracts, including sports, culture and so-called mention markets, would be excluded.
There is a trade-off here as well. Margin introduces leverage, and leverage introduces additional risk.
So the CFTC would have to be comfortable with cautious margin requirements and risk controls before approving it.
But the bigger picture, Remy, we're seeing prediction markets begin to adopt more of the structure of traditional derivatives markets, and that could open the door to more institutional money coming into this space.
Remy.
Remy Blaire: Well, Mark, thank you so much for breaking that down for us.
Appreciate your time this afternoon, and we look forward to speaking with you again tomorrow morning.
