FIS has introduced FIS CD Prediction Clearing, a post-trade clearing solution tailored for regulated prediction markets.
The launch is aimed at meeting the rising demand for real-time processing capabilities as participation in these markets increases among both retail and institutional segments.
By shifting from fragmented batch processing to real-time clearing, FIS CD Prediction Clearing can handle high volumes of transactions. Leveraging a cloud-native architecture, this solution supports middle and back-office functions, scales with transaction volume, and aims to reduce infrastructure costs for futures commission merchants (FCMs) – both established players in prediction markets and new entrants.
Fully integrated into FIS’s broader Cleared Derivatives suite, the product benefits from existing solutions like the FIS CD Books and Records Manager. Capable of processing millions of transactions daily with real-time risk updates and 24/7 operational support, it addresses legacy systems that were not designed to meet the scale required by prediction markets.
Context and growth trajectory
Prediction markets have seen significant growth in recent years. An industry report cited by FIS projects a five-fold expansion of the sector by 2030, driven by interest from both retail and institutional participants. This scale of growth puts pressure on post-trade infrastructure originally designed for conventional financial instruments.
The launch of this solution comes amid growing scrutiny from regulators and market participants regarding the structural readiness of prediction market platforms. Post-trade clearing, involving trade confirmation, margining, and settlement, is crucial for maintaining market integrity and managing risk. The shift to real-time processing aligns with broader trends in capital markets, where T+1 settlements and increasing volumes are driving infrastructure modernization.
By integrating prediction market clearing into an existing derivatives framework, FIS offers a pathway for regulated entities to participate in these markets without needing to build bespoke clearing infrastructure. The connection with the FIS Cleared Derivatives suite may help reduce barriers to entry for FCMs already using that platform.
