Kalshi will begin collecting employment information on users to help curb insider trading, the prediction market platform announced on Tuesday.
Key Takeaways
- Kalshi will require current employer, industry, and job function information on certain markets.
- The trading exchange is assessing a risk score for new markets.
- Kalshi is trying to stop insider information trading.
The trading exchange is using the new measures on certain markets that Kalshi deems susceptible to insider information, an issue that has raised awareness in recent months. Kalshi says the employment information will be used only if there is suspicion of that particular market, and users with questionable employment related to that market will be banned from trading on it.
“For markets with heightened insider or manipulation risk, we now collect employment information before traders can participate,” Kalshi said in a statement.
“This lets us identify presumptive insiders – people who have material, non-public information about a market’s outcome – and screen them out before a trade is ever placed.”
Kalshi will require traders in those specific markets to provide information on their current employer, industry, and job function. This is part of a new market scoring system designed by Kalshi to rate how susceptible that market is for insider trading.
Enjoying Covers content? Add us as a preferred source on your Google account
High-profile incidents
Kalshi’s new measures follow a string of concerning activity. Last week, Kalshi reported former U.S. Rep. George Santos to the Department of Justice after he allegedly made suspicious trades on Santos’ attendance at the State of the Union Address in February.
Kalshi also publicly announced in April that it had suspended three politicians from using the platform because they had purchased contracts for their races. A U.S. soldier was charged in April for profiting off inside information when he made over $400,000 off Polymarket’s market on the capture of Venezuelan President Nicolas Maduro.
“By implementing these new integrity measures, we continue to lead the industry on the issue of market integrity amongst federally regulated prediction markets,” Kalshi head of enforcement Robert DeNault said in a statement.
Rating risk
Kalshi’s new risk scoring feature will take numerous factors into consideration for users based on employment. The list includes corporate KPI or events risks, outcome concentration risk, regulatory risk, market importance, non-traditional insider risk, and national security risk.
“While Kalshi does not list markets on war, assassination, or violence, we recognize that even standard markets on leadership or foreign policy might present incidental national security concerns,” the company said. “By running an assessment on the national security risk a market might present before we list it, we can better prevent dangerous events from having a negative effect on our markets – or vice versa.”
