S&P Teams Up With Kalshi to Bring Index Business to Real-World Events

Author: Kalshi Team

Compiled by: TechFlow

TechFlow Brief: The century-long evolution of financial markets is essentially a history of measurement where discrete assets are transformed into standardized benchmarks through "indexing." From the debut of the Dow Jones Industrial Average in 1896 to the S&P 500 index reshaping global passive investing in 1957, indices have formed the cornerstone of modern asset allocation, passive funds (ETFs), and derivative risk hedging.

However, the global financial system has long lacked a unified, quantitative standardized measurement tool for discrete events that shape real-world business and macroeconomic trends (such as election political landscapes, supply chain disruptions, extreme climate events, and sudden geopolitical conflicts). Today, S&P Dow Jones Indices (S&P DJI), an index compilation giant with a century-old reputation, has officially entered into a multi-year heavyweight strategic partnership with Kalshi, the leading compliant prediction market under U.S. CFTC regulation.

The two parties will jointly pioneer a next-generation real-world event index system based on event contracts, and for the first time bring the S&P 500 and Dow Jones indices to Kalshi for compliant contract settlement. This partnership marks the evolution of prediction markets from discrete point-by-point speculation to a macro-system-level financial infrastructure that can be allocated and hedged by mainstream global institutional investors.

S&P Dow Jones Indices and Kalshi are joining forces to build the next generation of financial markets. Through this multi-year strategic partnership, we will co-build new indices based on Kalshi event contracts and provide investors with a brand-new way to trade S&P Dow Jones Index benchmarks on the Kalshi platform.

The Dow Jones Industrial Average was born in 1896, followed closely by the S&P 500 index in 1957. The underlying logic of both is remarkably simple: to consolidate discrete individual stocks into a single, unified benchmark yardstick, enabling market participants to view broader macroeconomic market trends more clearly and thoroughly.

Over time, financial products derived around these core benchmarks have completely reshaped the global investment paradigm.

Index funds, exchange-traded funds (ETFs), futures, and options have provided global investors with effective avenues for diversified allocation, allowing them to share in the upside benefits of the overall market without having to bet on the success or failure of any single company, while calmly hedging against macro volatility risks in the broad market.

These indices have become the backbone of the global financial system, widely adopted by retail investors, pension funds, and sovereign institutions worldwide. By the end of 2024 alone, the assets directly tracking or using the S&P 500 index as a performance benchmark exceeded $20 trillion.

As financial markets continue to evolve, indices and the financial derivatives built around them have gradually broken through the boundaries of the equity market, expanding comprehensively to diverse asset classes such as bonds, commodities, and foreign exchange.

The next milestone in this evolution is to fully extend this rigorous index-based measurement framework to the real-world events that profoundly shape everyone's lives.

This is precisely the core direction we are pioneering alongside S&P Dow Jones Indices: a new class of macroeconomic indices composed of Kalshi event contracts as their underlying components.

Event contracts can directly map public expectations regarding the future trajectory of the real world onto transparent market prices. As traders execute real-time matching on Kalshi, these prices sharply reflect the dynamic evolution of market expectations regarding the probability of various potential events occurring.

Packaging a highly correlated set of event contracts into an index will enable people to instantly capture the trajectory of macroeconomic expectation shifts across an entire category of specific events.

Imagine the unprecedented and vast opportunities this opens up in the financial world:

A political power landscape index, aggregating comprehensive expectations regarding nationwide election outcomes and congressional chamber control;

A supply chain risk index, pooling forward-looking market signals regarding potential risks such as global trade interruptions and shipping bottlenecks;

A macroeconomic index tracking the impact of AI on employment, helping society take the pulse of structural expectation shifts in the labor market in real time;

A comprehensive sports events index, quantifying major tournament trends that influence the economic lifelines of broadcasters, brand advertisers, host cities, and small local businesses along the streets;

A weather risk index, measuring the probability of extreme weather that profoundly dictates crop yields, seasonal energy consumption, and corporate quarterly revenues.

Each index distills and packages scattered individual event contracts into an intuitive composite metric, helping decision-makers gain insight into the systematic evolutionary patterns of related risks.

For example, a company closely monitoring weather risk can use it to comprehensively track the aggregate expected risk across all regions where its operations are located; while political analysts can view the comprehensive shift in election sentiment across multiple districts from a macro perspective.

S&P Dow Jones Indices brings decades of deep expertise in transforming these emerging trading markets into long-term, stable standard measures that can be continuously tracked by the entire market.

Compiling an index means establishing rigorous and objective inclusion criteria for components, scientifically standardized weighting models, and dynamic adjustment mechanisms as the underlying market structure evolves.

In the long run, financial products built around these real-world event indices will provide the market with diversified risk exposure to participate in such events, and create entirely new tools for hedging against real-world shocks.

Just as stock indices have become the cornerstone of public funds and the derivatives market, indices built on event contracts will, in the future, underpin a wide range of risk-hedging financial products that comprehensively cover the everyday real risks faced by individuals and businesses.

Furthermore, this strategic partnership will also empower us to directly list compliant contracts on Kalshi linked to the S&P 500 index, the Dow Jones Industrial Average, and other flagship S&P indices, with final cash settlement entirely based on official, authoritative S&P data.

This provides a brand-new pathway for broad investors and professional traders to directly gain exposure to the aforementioned benchmark indices through the Kalshi market.

S&P Dow Jones Indices uses its time-tested authoritative methodology to calculate and publish official fair values for the indices, and it is precisely this official data that will directly determine the final settlement outcomes for relevant contracts on the Kalshi platform.

For traditional financial institutions that have already deeply utilized these benchmark indices to manage massive portfolios, this brings their most familiar and trusted indices to our compliant exchange, with settlement entirely anchored to the same authoritative official data sources they have relied on for years.

The collaboration between the two parties is greatly expanding new dimensions for individuals and institutions to utilize the Kalshi trading market and manage real-world macroeconomic risks.

In the future, global investors will be able to easily track and engage with every major real-world event that shapes our daily lives, just as they do today tracking and trading the S&P 500 index.

Explore S&P's brand-new official index markets on the Kalshi platform.