Jeremy Maletz, head of macro trading and prediction markets at Susquehanna International Group, says prediction markets are already good enough to hedge real money, even on contracts that barely trade.

Speaking on Bloomberg’s Odd Lots this week, Maletz said the firm will quote tens of millions in risk against a market that has traded as little as $100,000.

A prediction market does not need deep volume to matter, he argued. It needs a fair price.

Why Thin Markets Still Work

Maletz said the real product is price discovery, not liquidity.

A contract that has traded only around $100,000 in volume can still reflect the work of sharp forecasters, and that may be enough for Susquehanna to quote tens of millions in risk against it.

That flips the usual complaint.

Traders see a sleepy contract and assume it is useless.

Maletz said the firm will just be the liquidity, taking the other side for any institution that needs a hedge against something like new regulation or the Strait of Hormuz.

The Hormuz Trade Is Already Live

Maletz named the Strait of Hormuz as the kind of one-off geopolitical risk a company might want to hedge, the sort of event that does not map cleanly onto any traditional instrument.

There is already a deep market for it on Kalshi, the CFTC-regulated venue where Susquehanna operates.

Its Hormuz traffic contract has drawn more than $18 million in volume, and the odds have been sliding. Traders now price roughly a 41% chance normal flows return before October, climbing to 57% by December, with all those levels down on the day. The contracts resolve off IMF PortWatch data, settling “Yes” once the seven-day average of crossings clears 60.

The same blockade drives a separate Kalshi market on US gas prices, the tangible version of Maletz’s pitch. An airline or trucking fleet can hedge that fuel shock with a contract instead of a basket of proxy trades.

Maletz said the firm sticks to licensed exchanges and steers clear of crypto-native platforms, where he sees more insider trading risk and where the DOJ has started cracking down.

The Ticker Behind The Trend

Susquehanna is private, so the cleanest public proxy is Intercontinental Exchange (NYSE:ICE), owner of the New York Stock Exchange.

ICE has committed up to $2 billion to Polymarket and now packages its data into signals for institutional traders, according to the company. If Maletz is right that these prices are becoming hedging tools, ICE is positioned to sell the picks and shovels.

Image: Shutterstock