Schwab's $12T Joins the Picks-and-Shovels S&P 500 Parlor 🎲

Charles Schwab, the brokerage that oversees up to $12 trillion in customer assets, is moving into the prediction markets business through a partnership with derivatives exchange Cboe Global Markets. The firm will offer all-or-nothing options contracts that let customers wager on the performance of the S&P 500, according to a Wall Street Journal report citing people familiar with the matter, marking a notable expansion for a discount brokerage long associated with traditional stock and ETF trading.

Unlike crypto-native prediction platforms Polymarket and Kalshi, which list futures contracts, Schwab's products will be structured as options, distinguishing the offering from event-based markets covering sports, politics and entertainment. CEO Rick Wurster had telegraphed the move during Schwab's first-quarter earnings call, saying the firm would "likely have prediction markets" while drawing a distinction between financial-market products and wagering on non-financial events. Schwab, which holds $11.8 trillion in total customer assets, joins the CME Group, Interactive Brokers and others now operating in the space; Interactive Brokers previously rolled out a prediction markets platform integrating Kalshi, CME and ForecastEx.

The upcoming suite will include a feature called the "Plus Zone," which pays traders a discounted multiple based on how close the S&P 500 closes to a specified market number, allowing partial payouts even when participants are "mostly right." Schwab plans to make the contracts available in the coming months and may eventually extend the offering to other indexes and key financial benchmarks, the WSJ report said.

The brokerage's push into prediction markets comes alongside other digital-asset moves. Last month, Schwab expanded spot trading for $BTC and $ETH to a batch of retail users following an employee pilot, with a phased rollout to additional customers expected over the next few months. Wurster said in July that the firm views stablecoins as "something we do want to be able to offer," signaling continued interest in adjacent product lines.

Separately, Rep. Bryan Steil (R-Wis.), who chairs the House Administration Committee, introduced legislation Thursday titled the Stop Lawmakers from Predicting Act, which would bar members of Congress, their spouses and dependent children from placing wagers on prediction markets tied to legislation, government actions or election results. Shares of SCHW finished down nearly 3% on Thursday at around $91.70, with U.S. markets closed Friday for the Juneteenth holiday.