S&P and Kalshi Partner to Extend Indexing to Real-World Events

Author: Kalshi Team

Compiled by: TechFlow

TechFlow Editor's Note:The century-long evolution of financial markets is essentially a history of measurement through Indexing, transforming discrete assets into standardized benchmarks. From the launch of the Dow Jones Industrial Average in 1896 to the S&P 500 reshaping global passive investing in 1957, indices have formed the foundation of modern asset allocation, passive funds (ETFs), and derivative risk hedging.

However, the global financial system has long lacked a unified, quantified, standardized measurement tool for discrete events that shape real-world business and macroeconomic trends, such as election political dynamics, supply chain disruptions, extreme weather, and sudden geopolitical conflicts. Now, S&P Dow Jones Indices (S&P DJI), a century-old index provider, has officially entered into a major multi-year strategic partnership with Kalshi, a leading compliant prediction market regulated by the U.S. CFTC.

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

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

The Dow Jones Industrial Average was born in 1896, and the S&P 500 followed in 1957. Their underlying logic is simple: aggregating discrete individual stocks into a unified benchmark yardstick, enabling market participants to view broader macro market trends more clearly and thoroughly.

Over time, financial products derived from 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 the upside of the overall market without betting on the success or failure of any single company, while comfortably hedging broad-market macro volatility risk.

These indices have become the pillars of the global financial system, widely adopted by retail investors, pension funds, and sovereign institutions around the world. By the end of 2024 alone, assets directly tracking or benchmarked to the S&P 500 had already surpassed $20 trillion.

As financial markets continue to evolve, indices and the financial derivatives built around them have gradually expanded beyond the stock market, extending comprehensively into multiple asset classes such as bonds, commodities, and foreign exchange.

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

This is precisely the core direction we are building together with S&P Dow Jones Indices: new macro indices composed of Kalshi event contracts as underlying components.

Event contracts can directly map public expectations about future real-world outcomes into transparent market prices. As traders match in real time on Kalshi, these prices acutely 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 allow people to capture at a glance the trajectory of macro expectation shifts across an entire specific event category.

Imagine the unprecedented breadth this could open in the financial world:

A political power dynamics index, aggregating comprehensive expectations for U.S. election races and control of both chambers of Congress;

A supply chain risk index, gathering market forward-looking signals on potential risks such as global trade disruptions and shipping bottlenecks;

A macro index tracking the impact of artificial intelligence on employment, helping society gauge in real time structural expectation shifts in the labor market;

A comprehensive sports event index, quantifying major event trends that affect the economic lifelines of broadcasters, brand advertisers, host cities, and small storefront businesses;

A weather risk index, measuring extreme weather probabilities that profoundly determine crop yields, seasonal energy consumption, and corporate quarterly revenues.

Each index can distill and package dispersed individual event contracts into an intuitive composite indicator, helping decision-makers discern the systemic evolution of related risks.

For example, an enterprise closely monitoring weather-related risks can use this to holistically monitor the aggregate expected risk across all regions in which it operates, while political analysts can review macro-level shifts in election dynamics across multiple constituencies.

S&P Dow Jones Indices brings the depth of expertise needed to transform these emerging prediction markets into long-term, stable, and consistently market-tracked standard metrics.

Compiling an index requires rigorous, objective constituent inclusion criteria, a scientifically sound weighting model, and dynamic adjustment mechanisms as the underlying market structure evolves.

Over the long term, financial products built around these real-world event indices will provide the market with diversified exposure to such events and create new tools for hedging real-world shocks.

Just as stock indices have become the foundation of mutual funds and derivatives markets, indices built on event contracts will, in the future, support a broad range of hedging products covering the everyday real-world risks faced by individuals and businesses.

In addition, this strategic partnership will enable us to launch 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 based entirely on official S&P data.

This provides investors and professional traders with a new way to access exposure to these benchmark indices directly through Kalshi markets.

S&P Dow Jones Indices calculates the indices using its proven, authoritative methodology and publishes official fair values, and it is these official data that will directly determine the final settlement outcomes of the relevant contracts on Kalshi.

For traditional financial institutions that already use these benchmark indices extensively to manage large portfolios, this brings the indices they know best and trust most onto our regulated exchange, with settlement fully anchored to the same authoritative official data sources on which they have long relied.

The partnership is greatly expanding new dimensions for individuals and institutions to use Kalshi's prediction markets and manage real-world macro risks.

One day, global investors will be able to track and participate in every major real-world event shaping our daily lives as easily as they track and trade the S&P 500 index today.

Explore the new official S&P index markets on Kalshi.

Source: TechFlow