According to a report by The Wall Street Journal, citing sources familiar with the matter, Charles Schwab is partnering with Cboe Global Markets to launch a new type of event-driven contract linked to the S&P 500. This would be the first time the major U.S. brokerage firm has entered the prediction market business, and the product is expected to be available to clients in the coming months.

Contracts settle based on the index closing results.

These contracts use a "yes or no" approach. If the S&P 500 closes above or below a predetermined level, the contract will pay a fixed amount based on the outcome, or it will expire invalid. Its structure is closer to binary options than event-driven futures contracts commonly found on platforms like Polymarket and Kalshi.

Sources familiar with the matter said the two sides also discussed product design to complement a Cboe feature called "Plus Zone." Traders could receive partial payment even if the final result was close to the target range, rather than hitting the preset price level exactly.

This may be expanded to more financial benchmarks in the future.

The report also stated that the two sides had discussed expanding the relevant products from the S&P 500 to other market indices or financial benchmarks. However, Charles Schwab currently prefers to focus on events in the financial markets with objectively verifiable results, rather than political, sporting, or other real-world events.

This means that its market positioning will be closer to traditional financial derivatives rather than fully entering the broader event betting or public issue contract market.

Prediction markets attract more retail platforms to enter the market.

Recently, prediction markets have been attracting more retail trading platforms and crypto companies. Coinbase and Robinhood have both recently launched related products, attempting to win users in this emerging trading category.

If Charles Schwab officially launches its related contracts, it means that traditional brokerages are also joining the competition. For the market, the expansion of such products may further blur the lines between retail derivatives trading and prediction markets, and encourage more financial institutions to test similar structures.