Author: Kalshi Team
Compiled by Deep潮 TechFlow
Shenchao Overview: The century-long evolution of financial markets is essentially a history of transforming discrete assets into standardized benchmarks through "indexing." From the introduction of the Dow Jones Industrial Average in 1896 to the reshaping of global passive investing by the S&P 500 in 1957, indices have formed the foundation of modern asset allocation, passive funds (ETFs), and derivatives-based risk hedging.
However, the global financial system has always lacked a unified, standardized quantitative tool to measure discrete events that shape real-world commerce and macroeconomic trends—such as election politics, supply chain disruptions, extreme weather, and sudden geopolitical conflicts. Today, S&P DJI, a century-renowned index provider, has officially entered into a multi-year landmark strategic partnership with Kalshi, the leading compliant prediction market under U.S. CFTC regulation.
The two parties will collaborate to create a next-generation real-world event index system based on event contracts, marking the first time the S&P 500 and Dow Jones indices will be introduced to Kalshi for compliant contract settlement. This partnership signifies that prediction markets are evolving from discrete, point-based speculation into a macro-level financial infrastructure accessible and hedgeable by mainstream institutional investors worldwide.
S&P Dow Jones Indices and Kalshi are collaborating to build the next-generation financial markets. Through this multi-year strategic partnership, we will jointly develop new indices based on Kalshi event contracts and provide investors with a novel way to trade S&P Dow Jones Indices benchmarks on the Kalshi platform.
The Dow Jones Industrial Average was established in 1896, followed by the S&P 500 in 1957. Both indices are built on a simple principle: aggregating individual stocks into a unified benchmark to help market participants better understand and track broader market trends.
Over time, financial products derived from these core benchmarks have completely transformed the global investment paradigm.
Index funds, exchange-traded funds (ETFs), futures, and options provide global investors with effective diversification opportunities, enabling them to benefit from overall market gains without betting on the success or failure of any single company, while also allowing for prudent hedging against macroeconomic market fluctuations.
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, assets directly tracking or benchmarked against the S&P 500 had surpassed $20 trillion.
As financial markets continue to evolve, indices and the financial derivatives built around them have expanded beyond the stock market, encompassing diverse asset classes such as bonds, commodities, and foreign exchange.
The next milestone in this evolution is to comprehensively extend this rigorous, index-based measurement framework to the real-world events that profoundly shape everyone’s life.
This is precisely the core direction we have developed in collaboration with S&P Dow Jones Indices: a new macro index composed of Kalshi event contracts as underlying components.
Event contracts directly translate public expectations about the future of real-world events into transparent market prices. As traders engage in real-time matching on Kalshi, these prices dynamically reflect the market’s evolving expectations of the likelihood of various potential outcomes.
Packaging a closely related set of event contracts into an index will enable users to instantly capture the macro trajectory of expectation shifts across an entire category of events.
Imagine the unprecedented breadth this would open up in the financial world:
A political power structure index aggregating comprehensive expectations of U.S. election outcomes and control of both chambers of Congress;
A supply chain risk index that aggregates market-forward signals regarding potential risks such as global trade disruptions and shipping delays;
A macro index tracking the impact of artificial intelligence on employment, helping society monitor real-time structural shifts in labor market expectations.
A comprehensive sports event index that quantifies the trends of major events impacting the economic lifelines of broadcasters, brand advertisers, host cities, and local small businesses along the streets.
A meteorological risk index that measures the probability of extreme weather events significantly impacting crop yields, seasonal energy consumption, and corporate quarterly revenues.
Each index condenses and packages disparate individual event contracts into an intuitive composite metric, helping decision-makers understand the systemic evolution of related risks.
For example, a company closely monitoring weather risks can use this to comprehensively assess the overall expected risk across all its operational regions; political analysts can gain a macro-level overview of aggregated electoral trend shifts spanning multiple constituencies.
S&P Dow Jones Indices brings deep expertise in transforming these emerging trading markets into standardized, long-term, and continuously trackable benchmarks for the entire market.
Constructing an index requires establishing rigorous and objective criteria for component inclusion, a scientific and standardized weighting methodology, and a dynamic adjustment mechanism to adapt to changes in the underlying market structure.
In the long term, financial products built around these real-world event indices will provide the market with diversified exposure to such events and introduce entirely new tools for hedging against 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 wide range of financial products designed to hedge against the diverse real-world risks faced by individuals and businesses.
In addition, this strategic partnership will enable us to directly list compliant contracts tied to the S&P 500 Index, the Dow Jones Industrial Average, and other S&P flagship indices on Kalshi, with final cash settlement fully based on official, authoritative S&P data.
This provides a new pathway for individual investors and professional traders to gain direct exposure to the aforementioned benchmark indices through Kalshi markets.
S&P Dow Jones Indices applies its proven, authoritative methodology to calculate indices and publish official fair values, and these official data will directly determine the final settlement outcomes of related contracts on the Kalshi platform.
For traditional financial institutions that have long relied on these benchmark indices to manage large portfolios, this brings their most familiar and trusted indices to our compliant exchange, with settlement fully anchored to the same authoritative official data sources they have depended on for years.
The collaboration between both parties is significantly expanding new dimensions for individuals and institutions to trade on Kalshi markets and manage real-world macro risks.
One day in the future, global investors will be able to easily track and participate in shaping every major real-world event that affects our daily lives, just as they now track trading in the S&P 500 index.
Explore the newly launched official S&P index markets on the Kalshi platform.