Interactive Brokers, an automated global electronic broker, announced the expansion of Forecast Contracts into Europe today (Wednesday). These event-based contracts allow investors to take positions on clearly defined outcomes related to financial, economic, and climate indicators. Trading is available nearly 24 hours a day, 6 days a week.

Managing Events-Driven Risks

Interactive Brokers explained that forecast contracts offer a straightforward way to express a view or manage risk tied to a specific event. Each Forecast Contract is based on a simple yes-or-no question.

“Investors worldwide are increasingly seeking tools that help them manage event-driven risks with precision and simplicity,” said Milan Galik, Chief Executive Officer at Interactive Brokers. “By extending access to Forecast Contracts in Europe, we’re giving investors more ways to act on their views and manage risk through our comprehensive, global platform.”

Investors can trade through IBKR ForecastTrader, a dedicated web-based interface, or other interactive broker platforms. Contracts also pay an interest-like incentive coupon based on the market value of open positions. The incentive accrues daily and is paid monthly. The current annualized rate is 3.83 percent APY. This rate is subject to change and terms apply.

Forecast Contracts are available to eligible clients of Interactive Brokers LLC, Interactive Brokers Ireland Limited, Interactive Brokers Canada Inc., and Interactive Brokers Hong Kong Limited. ForecastEx LLC, a wholly owned subsidiary of Interactive Brokers and a CFTC-regulated Designated Contract Market, lists the product.

Expanding Beyond the US

Recently, in the US, Interactive Brokers expanded access to election forecast trading and enhanced protection for uninvested cash balances in brokerage accounts.

The broker’s ForecastTrader platform now enables US clients to take positions on more than 100 primary election races across 22 states. Through the use of “Forecast Contracts,” investors can trade yes-or-no predictions on a range of political, economic, financial, and climate events.

These event contracts are reportedly structured so that a correct prediction pays out $1, while an incorrect one pays nothing. Prices for each contract fluctuate based on market sentiment and have been available through the broker since October 2024, when they were introduced ahead of the presidential election. IBKR also took the offering to Canada.

Prediction markets have long operated on the fringes of mainstream finance, facing persistent regulatory scrutiny and legal ambiguity. Despite this, interest in these markets tends to surge during election cycles, driven by their track record of accurately forecasting political outcomes.

These platforms gained renewed attention after correctly predicting Donald J. Trump’s re-election in 2024. While regulatory concerns remain, the predictive accuracy and real-time sentiment reflected in market pricing continue to attract traders and political observers alike.

Source: Finance Magnates