Exhibit L – Regulatory Compliance

Attached please find an updated copy of Kalshi’s Regulatory Compliance Chart. Additionally, please find an analysis

of the regulatory considerations relating to FCMs carrying customer accounts on Kalshi. We have included the

analysis in Excel format in case the Division finds this useful in reviewing the application.
KALSHIEX LLC REGULATORY CHART

CONTRACT MARKET CORE PRINCIPLES DESCRIPTION OF COMPLIANCE AND RELEVANT REFERENCES

Core Principle 1 – Designation as a Contra

Market:

(A) In General. —To be designated, and

maintain a designation as a contract marke

a board of trade shall comply with —

(i) any core principle described in

this subsection; a

(ii) any requirement that the

Commission may impose by rule or

regulation pursuant to section 8a

(B) Reasonable Discretion of Contra

Market — Unless otherwise determined by

the Commission by rule or regulation,

board of trade described in subparagraph

(A) shall have reasonable discretion 

establishing the manner in which the board

of trade complies with the core principles

described in this subsectio

KalshiEX LLC (“Kalshi”) received its order of designation as a designated contract market by t

Commission on November 3rd, 2020. The Order prohibits FCMs from carrying customer accounts, and

Kalshi requests an amendment to the Order to allow for FCMs to carry customer accounts. All materials

herein were submitted in support of Kalshi’s application for designation as a contract market.

materials were amended to conform to the requested change to Kalshi’s designation to allow FCMs 

carry customer accounts.

Core Principle 2 – Compliance with Rules:

(A) In General. —The board of trade shall

establish, monitor, and enforce compliance

with the rules of the contract market,

including —

The Exchange has adopted the Rulebook, which provides the requirements for accessing and trading on

the Exchange. Pursuant to Chapter 3 of the Rulebook, FCM Members, FCM Customer Kalshi Traders and

direct members (“Members” can refer to all three, or FCM Customer Traders and direct members, as

context indicates) must utilize the Exchange’s services in a responsible manner, comply with the Rule

cooperate with Exchange investigations, inquiries, audits, examinations and proceedings, and o

1
REGULATORY CHART

(i) access requirements;

(ii) the terms and conditions of a

contracts to be traded on the

contract market; and

(iii) rules prohibiting abusive tra

practices on the contract marke

(B) Capacity of Contract Market. —The

board of trade shall have the capacity to

detect, investigate, and apply appropria

sanctions to any person that violates a

rule of the contract market.

(C) Requirement of Rules. —The rules of

the contract market shall provide the board

of trade with the ability and authority to

obtain any necessary information 

perform any function described in th

subsection, including the capacity to car

out such international information-sha

agreements as the Commission may require.

high standards of integrity, market conduct, commercial honor, fair dealing and equitable principles of

trade. The policies and procedures designed to ensure compliance with the Rulebook are set forth in the

Compliance Manual (Exhibit O-1) and Market Surveillance and Oversight Procedures (Exhibit O-2).

Access requirements. Chapter 3 of the Rulebook provides clear and transparent access criteria and

requirements for Exchange Members.

● Jurisdiction. Pursuant to Rule 2.13 and the Member Agreement, attached as Exhibit N-1, Members con

to the jurisdiction of the Exchange before they are granted access to the Exchang

● Impartial access. Rule 3.1 provides clear and transparent access criteria and other requirements f

Members. The Exchange will apply access criteria in an impartial manner, including through the applica

process described in Rule 3.1.

● Limitations on access. Failure of an applicant to demonstrate a capacity to comply with the requirements 

the Rulebook or the Applicable Law may lead to a denial of the application under Rule 3.3. A hearing a

appeals process will likewise ensure that any such denial of access is applied in a fair and impartial manne

Access to the Exchange may be suspended or revoked through the Exchange’s disciplinary process as

described in Chapter 9. The hearing and appeals processes set forth in Rule 9.2 will ensure that such

decisions are made in a fair and impartial manne

Abusive trading practices prohibited. Chapter 5 of the Rulebook sets forth the Exchange’s code of condu

and specifically prescribes the methods by which Members may trade contract

Capacity to detect and investigate rule violations. The Exchange has made adequate arrangements

has adequate resources to enforce its Rules. Pursuant to Rule 3.2, the Exchange has the right to inspect

Members and requires the provision of information concerning its business, as well as contracts execut

on the Exchange and in related markets. Pursuant to Rule 9.2, each Member is required to cooperate with

an Exchange investigation by making an appearance and making its books and records available to

Exchange. As set forth in the Compliance Manual, the Market Regulation Department performs tra

practice surveillance, market surveillance and real-time market monitoring to ensure that Mem

adhere to the Rules of the Exchange.

2

KALSHI
REGULATORY CHART

Regulatory Services Provider. The Exchange does not have a Regulatory Services Agreement with a

Regulatory Services Provider (“RSP”) at this time; however, it may elect to engage a Regulatory Servic

Provider in the future.

Compliance staff and resources. The Exchange has adopted sufficient compliance resources to ensure

it can conduct audit trail reviews, trade practice surveillance, market surveillance, real-time ma

monitoring and complete any inquiries or investigations in a timely manner. The Exchange’s comp

staffing and resources include the Chief Regulatory Officer (“CRO”) and Exchange employees 

Market Regulation Department. Exhibit E provides a summary of the personnel qualificatio

regulatory professionals and Exhibit F provides an analysis of staffing requirements necessary to carry 

the regulatory program and qualifications of each key staff p

The Exchange will also monitor the size and workload of its compliance staff annually to ensure adequa

resources. Pursuant to Rule 2.6, the Exchange’s Regulatory Oversight Committee (“ROC”) will assist t

Board in monitoring the design, implementation and effectiveness of the Exchange’s regulatory pr

The ROC will prepare an annual report assessing the effectiveness, sufficiency and independence

Exchange’s self-regulatory program. The annual report will: (i) describe the Exchange’s self-regulatory

program and its expenses, staffing and structure; (ii) catalogue disciplinary actions taken during the 

and (iii) review the performance of disciplinary committees and panels as well as the performance of t

Chief Regulatory Offic

Automated trade practice surveillance and real-time market monitoring. As set forth in the Compli

Manual (Exhibit O-1) and Market Surveillance and Oversight Procedures (Exhibit O-2), the Exchange will

employ a trade surveillance system for daily surveillance and real-time monitoring. The system loads a

processes daily orders and trades no later than 24 hours after completion of the trading day, with

Exchange making best efforts to load orders and trades on an hourly basis. The system has the capabili

to detect and flag specific trade execution patterns and trade anomalies; compute, retain, and

trading statistics; compute trade gains and losses; reconstruct the sequence of market activity; p

3

KALSHI
REGULATORY CHART

market analyses; and support Members to perform in-depth analyses and ad hoc queries of trade-related

data.

Pursuant to Chapter 7 of the Rulebook, the Exchange may cancel or adjust trades when necessary to

mitigate market disrupting events caused by the improper or erroneous use of the Exchange or by sy

defects or malfunctions. The Exchange may review a trade based on its independent analysis of mark

conditions or upon request from a Member. In such circumstances, the Exchange will notify Members 

a trade is under review.

Investigations and Investigative Reports. Pursuant to Chapter 9 of the Rulebook, the Market 

Department is authorized to investigate trading activities on the Exchange and initiate enf

procedures to ensure compliance with the Rules. The Market Regulation Department will likewi

commence an investigation upon the receipt of a request from the Commodity Futures Tra

Commission (“CFTC” or the “Commission”) staff or upon the discovery or receipt of information 

indicates a possible basis for a finding that a violation has occurred or will occur. Absent mi

circumstances, all investigations must be completed within twelve months after the date the inv

is opened. The Market Regulation Department will prepare a written investigative report regar

whether the evidence gathered during an inquiry or investigation forms a reasonable basis to believe 

a violation within the Exchange’s jurisdiction has occurred or is about to occur or whether the evid

gathered results in closing the matter without further action or through a summary action. Any

investigative report will include the reasons for initiating the investigation (including a su

complaint, if any), all relevant facts and evidence gathered, and the recommendation of the Mark

Regulation Department. Under Rule 9.5, investigations may be resolved through a letter of 

however, no more than one warning letter for the same potential violation may be issued to th

Member during a rolling 12-month period.

Ability and authority to obtain information and international information-sharing agreements. Ru

requires Members to promptly provide information and documents reasonably requested by t

Exchange. Rule 9.2 requires Members to cooperate with an Exchange investigation by makin

4

KALSHI
REGULATORY CHART

appearance and making its books and records available to the Exchange. Pursuant to Rule 2.15, the

Exchange may enter into information-sharing agreements, as the Commission may require, with a

Person or body (including the Commission, the National Futures Association (“NFA”), any Self-Regula

Organization, any exchange, market, or clearing organization, or foreign regulatory authority

coordinate surveillance with other markets.

Core Principle 3 - Contracts Not Readily

Subject to Manipulatio

The board of trade shall list on the contract

market only contracts that are not readily

susceptible to manipulat

The Exchange’s contracts and market have been designed so that its contracts are not readily susceptib

to manipulation. In that regard, the Exchange intends to exclusively list cash-settled contracts. Accordin

an unlimited supply of contracts can be originated by the Exchange in the form of event contracts that

1

settle pursuant to Chapter 6 of the Ruleboo

The Exchange maintains various safeguards against outcome manipulation and access to non-publ

information, including (i) limits on trader exposures, (ii) automatic trade surveillance and suspic

behavior detection, (iii) user monitoring and know-your-customer, and (iv) sanctions and referrals to

Commission.

See also Exhibit M – Rules 5.13(n) and 5.13(i).

Core Principle 4 - Prevention of Mark

Disruptio

The board of trade shall have the capacity

and responsibility to prevent manipulatio

price distortion, and disruptions of

delivery or cash settlement process throu

The Exchange uses a trade surveillance system that monitors the trading on the Exchange to prevent

manipulation, price distortion and disruptions of the settlement process. The Exchange also 

real-time market surveillanc

The Exchange sets position limits and position accountability levels and receives reports of large pos

in order to assess a Member’s compliance; maintains both a trade practice and market surveillan

1 Drafting note: The Exchange has discussed with the Division listing contracts that are not binary but pay out on a “scale”, for example, a contract on

temperature that pays out depending on how far the recorded temperature is from the strike (as opposed to a “winner take all” binary structure).

5

KALSHI
REGULATORY CHART

market surveillance, compliance, and

enforcement practices and procedure

including —

(A) methods for conducting real 

monitoring of trading; and

(B) comprehensive and accurate trade

reconstruction

program to monitor for market abuses, including manipulation; and, has disciplinary procedures f

violations of the Ruleboo

Core Principle 5 - Position Limits 

Accountability:

(A) In General. —To reduce the potenti

threat of market manipulation or conges

(especially during trading in the delivery

month), the board of trade shall adopt for

each contract of the board of trade, as is

necessary and appropriate, positi

limitations or position accountability

speculators.

(B) Maximum Allowable Positi

Limitation. — For any contract that 

subject to a position limitation establi

by the Commission pursuant to secti

4a(a), the board of trade shall set the

position limitation of the board of trade 

level not higher than the position limita

established by the Commission.

Rule 5.14 of the Rulebook sets forth the rules for limits on trading. Although, there is no underlying cash

market, the Exchange adopts position limits to reduce the threat of market outcome manipulation

fraud, and to protect retail Members from excess exposure. Contract limits are market dependent,

however a maximum loss exposure limit of $25,000 USD per Member/per contract will be adopted.

The Surveillance System will also generate alerts for various situations regarding open interest and lar

positions. The alerts include, but are not limited to, the following: (a) whenever an account exceeds

reportable level; (b) whenever a contract position attempts to exceed the position limit; and, (c) wh

Member open interest exceeds contract open interest by predefined limit

See Core Principle 3 – Contracts Not Readily Susceptible to Manipulat

Core Principle 6 - Emergency Authority:

6

KALSHI
REGULATORY CHART

The board of trade, in consultation 

cooperation with the Commission, sha

adopt rules to provide for the exercise of

emergency authority, as is necessary and

appropriate, including the authority —

(A) to liquidate or transfer open positio

in any contract;

(B) to suspend or curtail trading in any

contract; and

(C) to require market participants in a

contract to meet special margin

requirements.

Rule 2.8 of the Rulebook sets forth the rules for declaring emergency authority. The Exchange reserves the

right to trigger emergency authority under the Rulebook and will charge a duly authorized representati

to notify Members and the Commission as promptly as reasonably practica

The Exchange will use reasonable efforts to notify the Commission prior to implementing, modify

terminating an Emergency Rule. If such prior notification is not possible or practicable, the Exc

notify the Commission as soon as reasonably practica

Core Principle 7 - Availability of General

Informatio

The board of trade shall make available to

market authorities, market participants,

the public accurate information concerni

—

(A) the terms and conditions of t

contracts of the contract market; and

(B) (i) the rules, regulations, a

mechanisms for executing transactions o

through the facilities of the contract marke

and (ii) the rules and specificat

describing the operation of the contra

market’s electronic matching platform; 

trade execution facilit

Rule 2.17 of the Rulebook sets forth the rules for public information and how it is presented. T

Rulebook and the specifications of each contract will be made public on the Exchange website and re

accessible via the Platform. The Exchange will post non-confidential materials associated with regu

filings, including the Rulebook, at the time the Exchange submits such filings to the Commi

7

KALSHI
REGULATORY CHART

Core Principle 8 - Daily publication 

Trading Informatio

The board of trade shall make public daily

information on settlement prices, vol

open interest, and opening and closing

ranges for actively traded contracts on t

contract market.

Consistent with Rule 2.17 of the Rulebook, the Exchange website will provide the public with informati

regarding settlement prices, price range, volume, open interest, and other related market informatio

actively traded contract

Core Principle 9 - Execution of Transacti

(A) In General. —The board of trade shall

provide a competitive, open, and ef

market and mechanism for executi

transactions that protects the pri

discovery process of trading in the

centralized market of the board of trade.

(B) Rules. —The rules of the board of

trade may authorize, for bona fide busine

purposes —

(i) transfer trades or office trad

(ii) an exchange of futures in

connection with a cash commodi

transaction; futures for ca

commodities; or futures for swap

or

(iii) a futures commission merchant,

acting as principal or agent, to ent

into or confirm the execution 

contract for the purchase or sale of a

commodity for future delivery if the

Chapter 5 of the Rulebook sets forth the rules and mechanics of the execution of transactions. All tra

will occur on the Exchange, which provides an efficient mechanism for executing transactions. Ord

executed impartially in accordance with the Exchange’s Trading System execution algorithm base

price then time priorit

Although the Exchange permits FCMs to carry cutomer accounts, the Exchange does not permit transfer

trades, office trades, and related transact

8

KALSHI
REGULATORY CHART

contract is reported, recorded, or

cleared in accordance with the rules

of the contract market or a DCO.

Core Principle 10 - Trade Informatio

The board of trade shall maintain rules and

procedures to provide for the recording and

safe storage of all identifying tra

information in a manner that enables t

contract market to use the information

(A) to assist in the prevention 

customer and market abuses; and

(B) to provide evidence of any violatio

of the rules of the contract market.

As an electronic trading system, the Exchange’s Trading System maintains all order information (wheth

the order results in a consummated trade) and transactions pursuant to its Trade Information Po

(Exhibit S). Therefore, the Exchange maintains a full audit trail enabling the Exchange, or the Commission,

to reconstruct complete details of all trades.

The Exchange’s business continuity and disaster recovery plan (Exhibits V-2 and V-3) also require that a

Exchange trade information is maintained at a separate data cente

Core Principle 11 - Financial Integrity of

Transaction

The board of trade shall establish and

enforce —

(A) rules and procedures for ensuring the

financial integrity of transactions ent

into on or through the facilities of t

contract market (including the clearance and

settlement of the transactions wi

derivatives clearing organization);

(B) rules to ensure —

(i) the financial integrity of any

(I) futures commission merchant;

and

Each Member must be in good standing and in compliance with the Member eligibility standards set forth

in Chapter 3 of the Rulebook. All contracts offered by the Exchange are cleared through Eris Clearing,

fully collateralized DCO which is described in Chapter 6 of the Rulebook.

The Exchange requires that all trading be fully cash collateralized, therefore no margin or leverage will be

permitted, and accounts must be pre-funded. Accordingly, the protection of customer funds is monit

by the Exchange and ensured by the Exchange’s clearinghouse partner as “Member Property”.

9

KALSHI
REGULATORY CHART

(II) introducing broker; and

(ii) the protection of customer fund

Core Principle 12 - Protection of Marke

and Market Participant

The board of trade shall establish and

enforce rules —

(A) to protect markets and market

participants from abusive pract

committed by any party, including abusi

practices committed by a party acting

agent for a participant; a

(B) to promote fair and equitable trading

on the contract market.

Chapter 5 of the Exchange Rulebook protects the market and Members from abusive, disruptiv

fraudulent, noncompetitive and unfair conduct and trade practices. Improper conduct and trade p

will be investigated and adjudicated as described in Chapter 9 of the Rulebook (Discipline and Ru

Enforcement). The Exchange will conduct a trade practice, market and financial surveillance monito

program pursuant to its Compliance Manual (Exhibit O-1) and Market Surveillance and Oversight

Procedures (Exhibit O-2).

See also Core Principles 2 and 3.

Core Principle 13 - Disciplinary Procedures:

The board of trade shall establish and

enforce disciplinary procedures that

authorize the board of trade to discipline,

suspend, or expel members or market

participants that violate the rules of t

board of trade, or similar methods for

performing the same functions, includi

delegation of the functions to third pa

Chapter 9 of the Rulebook sets forth rules related to Discipline and Rule Enforcement. The Exchange has a

Market Regulation Department which is the oversight and enforcement arm of the Exchange. The Mark

Regulation Department is headed by the Head of Market Surveillance and supervised by the CRO, w

reports directly to the Regulatory Oversight Committee. The Market Surveillance and Oversig

Procedures (Exhibit O-2) provide an overview of the automated tools supporting the functions of

Market Regulation Department. Likewise, the Exchange Rulebook provides detailed rules related 

preliminary inquiries, investigations, disciplinary actions, appeals, and sanctions for vio

Exchange’s Rulebook.

See also Exhibit M – Rule 2.7.

Core Principle 14 - Dispute Resolution: Chapter 10 of the Rulebook sets forth the rules related to dispute resolution. Members will ha

prescribed window following contract settlement to deliver notice of their dispute to the Exchange. If 

10

KALSHI
REGULATORY CHART

The board of trade shall establish and

enforce rules regarding, and provide

facilities for alternative dispute resolut

appropriate for, market participants and a

market intermediaries.

disputes are validated and deemed material to contract settlement, the Appeals Committee s

investigate all claims and consider appropriate restitu

Core Principle 15 - Governance Fitness

Standards:

The board of trade shall establish and

enforce appropriate fitness standards f

directors, members of any disciplinary

committee, members of the contra

market, and any other person with direct

access to the facility (including any party

affiliated with any person described in t

paragraph).

The Exchange’s Rulebook sets forth the eligibility criteria for the Members of the Board, Committee

Officers, and the Disciplinary Panel. The Exchange collects information on such persons and verif

information supporting compliance with eligibility crite

Based on this information collected by the Exchange, all current Board Members, Committee Memb

Officers, and Disciplinary Panel Members satisfy the fitness standards of the Ex

Core Principle 16 - Conflicts of Interes

The board of trade shall establish and

enforce rules —

(A) to minimize conflicts of interest in t

decision making process of the contract

market; and

(B) to establish a process for resolving

conflicts of interest described 

subparagraph (A).

The Exchange Rulebook contains rules that address conflicts of interest in decision-making, methods 

ascertain the presence of conflicts of interest and to make decisions in the event of such a conflict

addition, the Rulebook contains rules on limitations on the use or disclosure of material non-pu

information gained through the performance of official duties by Board Members, Committe

and Exchange personnel gained through the performance of their duties or otherwis

The Exchange will have a Regulatory Oversight Committee (“ROC”) charged with overseeing t

Exchange’s regulatory program on behalf of the Board, including making recommendations to the Boa

that will, in its judgment, be best to promote the interests of the Exchange. The ROC will include at least

two members who would qualify as Public Directors.

11

KALSHI
REGULATORY CHART

The Exchange also maintains a Disciplinary Panel subject to certain rules regarding composition as 

preclude any group or class of industry participants from dominating or exercising disproport

influence on the Panels. The Panel will include at least one member who would qualify as a Publ

Director.

The Rulebook also provides for appeal to a panel appointed by the Board and that the appellate body

must also include at least one member who would qualify as a Public Director.

Core Principle 17 - Composition 

Governing Boards of Contract Markets:

The governance arrangements of the board

of trade shall be designed to permit

consideration of the views of mark

participant

The Board shall comprise the number of Directors set forth in the Operating Agreement, which sha

include Public Directors in at least the number or percentage required under the CEA or CFTC Regulation

but in any event, no less than thirty-five (35) percent of Directors shall be Public Director

Each Director shall be appointed in accordance with the Operating Agreement and serve until his or

successor is duly appointed, or until his or her earlier resignation or removal, with or without ca

See also Exhibit M – Rule 2.2.

Core Principle 18 - Recordkeeping:

The board of trade shall maintain records of

all activities relating to the business 

contract market —

(A) in a form and manner that is

acceptable to the Commission; and

(B) for a period of at least 5 years.

The Exchange has instituted a Recordkeeping Policy (Exhibit O-1) which provides that all books a

records required to be kept by the Policy, the Rulebook, or by the Commodity Exchange Act and CFTC

Regulations shall be kept for a period of five years from the date thereof and shall be readily access

during the first two years of the five year period. “Readily accessible” means immediately available du

the time period a futures contract is in effect and 2 years after the termination of the futures cont

for the remainder of the period (year 3 to year 5) within 3 business days. All such books and records shall

be open to inspection by any representative of the Commission or the United States Departmen

Justic

See also Exhibit M – Rule 2.14.

12

KALSHI
REGULATORY CHART

Core Principle 19 - Antitrust Considerati

Unless necessary or appropriate to achieve

the purposes of this Act, the board of trade

shall not —

(A) adopt any rule or taking any acti

that results in any unreasonable restraint of

trade; or

(B) impose any material anticompe

burden on trading on the contract market.

The Exchange’s Rulebook and business have been designed to avoid any unreasonable restraints on trade

or the imposition of any material anticompetitive burden on 

Core Principle 20 - System Safeguards:

The board of trade shall:

(A) establish and maintain a program of

risk analysis and oversight to identify a

minimize sources of operational ris

through the development of appropriate

controls and procedures, and the

development of automated systems, that

are reliable, secure, and have adequate

scalable capacity;

(B) establish and maintain emergency

procedures, backup facilities, and a plan f

disaster recovery that allow for the time

recovery and resumption of operations

the fulfillment of the responsibilities

obligations of the board of trade; a

The Exchange has developed a program of risk analysis and oversight to identify and minimize sources 

operational risk, through the development of appropriate controls and procedures, and the developme

of automated systems that are reliable, secure, and have adequate scalable capacity as described in

Exhibit V.

This program is described in Exhibit V, which includes information regarding the security of those system

the Exchange’s risk assessment reviews, internal controls for operations, functional testing, se

testing and capacity planning and testing. The Exchange likewise conducts periodic audits, internal te

and external testing to verify the integrity of its technology system

See Exhibit V – Technology Questionnair

13

KALSHI
REGULATORY CHART

(C) periodically conduct tests to verify

that backup resources are sufficient

ensure continued order processing a

trade matching, price reporting, mark

surveillance, and maintenance of a

comprehensive and accurate audit trail.

Core Principle 21 - Financial Resources:

(A) In General. —The board of trade shall

have adequate financial, operational,

managerial resources to discharge each

responsibility of the board of trade.

(B) Determination of Adequacy. —T

financial resources of the board of tra

shall be considered to be adequate if the

value of the financial resources exceeds t

total amount that would enable the contract

market to cover the operating costs of t

contract market for a 1-year period, as

calculated on a rolling basis.

The Exchange will maintain financial resources that exceed the total amount that would enable t

contract market to cover the operating costs of the contract market for a one-year period, as calculated 

a rolling basis.

See Exhibit I – Financial Resources.

Core Principle 22 - Diversity of Board of

Directors:

The board of trade, if a publicly traded

company, shall endeavor to recruit

individuals to serve on the board of

directors and the other decision-making

bodies (as determined by the Commission)

of the board of trade from among, and to

Not applicable.

14

KALSHI
REGULATORY CHART

have the composition of the bodies reflec

broad and culturally diverse pool of qualifi

candidates.

Core Principle 23 - Securities and Exchan

Commission:

The board of trade shall keep any such

records relating to swaps defined in s

1a(47)(A)(v) open to inspection a

examination by the Securities and Exch

Commission.

Not applicable.

15

KALSHI