KalshiEX LLC

May 3, 2023

SUBMITTED VIA CFTC PORTAL

Secretary of the Commission

Office of the Secretariat

U.S. Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, D.C. 20581

Re: KalshiEX LLC – CFTC Regulation 40.6 Notification Regarding the Amendment of

the “What will the highest federal funds rate set by the Federal Reserve be by <date>?”

Contract

Dear Sir or Madam,

Pursuant to Section 5c(c) of the Commodity Exchange Act and Section 40.6 of the regulations of the

Commodity Futures Trading Commission, KalshiEX LLC (Kalshi) hereby notifies the Commission that

it is amending the “What will the highest federal funds rate set by the Federal Reserve be by <date>?”

contract (Contract).

This contract is a straight-forward modification to the previous “What will the highest federal funds rate

set by the Federal Reserve be by <date>?” contract. The changes are as follows:

1. The position limit has been changed from $25,000 to $7,000,000, with conforming changes.

Along with this letter, Kalshi submitted the following documents:

● A clean copy of the amended Contract; and

● A redline showing the changes to the original.

If you have any questions, please do not hesitate to contact me.

Sincerely,

Xavier Sottile

Head of Markets

KalshiEX LLC

xsottile@kalshi.com

KalshiEX LLC
KalshiEX LLC

KalshiEX LLC

Official Product Name: What will the highest federal funds rate set by the Federal Reserve be by <date>?

Rulebook: TERMINALRATE

Kalshi Contract Category: Political Decision

Highest Fed Rate

May 3, 2023

CONCISE EXPLANATION AND ANALYSIS OF THE PRODUCT AND ITS

COMPLIANCE WITH APPLICABLE PROVISIONS OF THE ACT, INCLUDING CORE

PRINCIPLES AND THE COMMISSION'S REGULATIONS THEREUNDER

Pursuant to Commission Rule 40.2(a)(3)(v), the following is a concise explanation and analysis

of the product and its compliance with the Act, including the relevant Core Principles, and the

Commission's regulations thereunder.

I. Introduction

The “What will the highest federal funds rate set by the Federal Reserve be by <date>?”

Contract is a contract relating to monetary policy decisions made by the Federal Reserve.

After careful analysis, Kalshi (hereafter referred to as “Exchange”) has determined that

the Contract complies with its vetting framework.

The Federal Reserve Bank is currently in a hiking cycle. There is uncertainty what the

‘terminal’, or highest, rate that the bank will set. This contract is intended to capture the

risk associated with the peak of the hiking cycle in a given period.

Further information about the Contract, including an analysis of its risk mitigation and

price basing utility, as well as additional considerations related to the Contract, is

included in Confidential Appendices B, C, and D.

Pursuant to Section 5c(c) of the Act and CFTC Regulations 40.2(a), the Exchange hereby

certifies that the listing of the Contract complies with the Act and Commission

regulations under the Act.

General Contract Terms and Conditions: The Contract operates similar to other event

contracts that the Exchange lists for trading. The minimum price fluctuation is $0.01 (one

cent). Price bands will apply so that Contracts may only be listed at values of at least

$0.01 and at most $0.99. Further, the Contract is sized with a one-dollar notional value

and has a minimum price fluctuation of $0.01 to enable Members to match the size of the

contracts purchased to their economic risks. The Exchange has further imposed position

limits (defined as maximum loss exposure) of $7,000,000 USD on the Contract. As

KalshiEX LLC
KalshiEX LLC

outlined in Rule 5.12 of the Rulebook, trading shall be available at all times outside of

any maintenance windows, which will be announced in advance by the Exchange.

Members will be charged fees in accordance with Rule 3.6 of the Rulebook. Fees are

charged in such amounts as may be revised from time to time to be reflected on the

Exchange’s Website. Additionally, as outlined in Rule 7.2 of the Rulebook, if any event

or any circumstance which may have a material impact on the reliability or transparency

of a Contract’s Source Agency or the Underlying related to the Contract arises, Kalshi

retains the authority to designate a new Source Agency and Underlying for that Contract

and to change any associated Contract specifications after the first day of trading. That

new Source Agency and Underlying would be objective and verifiable. Kalshi would

announce any such decision on its website. All instructions on how to access the

Underlying are non-binding and are provided for convenience only and are not part of the

binding Terms and Conditions of the Contract. They may be clarified at any time.

Furthermore, the Contract’s payout structure is characterized by the payment of an

absolute amount to the holder of one side of the option and no payment to the

counterparty. During the time that trading on the Contract is open, Members are able to

adjust their positions and trade freely. After trading on the Contract has closed, the

Expiration Value and Market Outcome are determined. The market is then settled by the

Exchange, and the long position holders and short position holders are paid according to

the Market Outcome. In this case, “long position holders” refers to Members who

purchased the “Yes” side of the Contract and “short position holders” refers to Members

who purchased the “No” side of the Contract. If the Market Outcome is “Yes,” meaning

that the highest upper bounds of the federal funds target rate range set by the Federal

Reserve (the terminal rate) is <above/below/between> <percent> between Issuance and

<date>, then the long position holders are paid an absolute amount proportional to the

size of their position and the short position holders receive no payment. If the Market

Outcome is “No,” then the short position holders are paid an absolute amount

proportional to the size of their position and the long position holders receive no

payment. Specification of the circumstances that would trigger a Market Outcome of

“Yes” are included below in the section titled “Payout Criterion” in Appendix A.

KalshiEX LLC
KalshiEX LLC

CERTIFICATIONS PURSUANT TO SECTION 5c OF THE COMMODITY EXCHANGE

ACT, 7 U.S.C. § 7A-2 AND COMMODITY FUTURES TRADING COMMISSION RULE

40.2, 17 C.F.R. § 40.2

Based on the above analysis, the Exchange certifies that:

❏ The Contract complies with the Act and Commission regulations thereunder.

❏ This submission (other than those appendices for which confidential treatment has been

requested) has been concurrently posted on the Exchange’s website at

https://kalshi.com/regulatory/filings.

Should you have any questions concerning the above, please contact the exchange at

ProductFilings@kalshi.com.

______________________

By: Xavier Sottile

Title: Head of Markets

Date: May 3, 2023

KalshiEX LLC
KalshiEX LLC

Attachments:

Appendix A - Contract Terms and Conditions

Appendix B (Confidential) - Further Considerations

Appendix C (Confidential) - Source Agency

Appendix D (Confidential) - Compliance with Core Principles

KalshiEX LLC
KalshiEX LLC

APPENDIX A – CONTRACT TERMS AND CONDITIONS

Official Product Name: What will the highest federal funds rate set by the Federal Reserve

be by <date>?

Rulebook: TERMINALRATE

KalshiEX LLC
KalshiEX LLC

TERMINALRATE

Scope: These rules shall apply to this contract.

Underlying: The Underlying for this Contract is the highest upper bound of the federal funds

target rate range announced at a meeting of the Federal Open Market Committee that occurs

between Issuance and <date> according to the Board of Governors of the Federal Reserve

System. Revisions to the Underlying made after Expiration will not be accounted for in

determining the Expiration Value.

Instructions: The federal funds target rate range can be found here.

1

It is under the Column

labeled “Level”. These instructions on how to access the Underlying are provided for

convenience only and are not part of the binding Terms and Conditions of the Contract. They

may be clarified at any time.

Source Agency: The Source Agency is the Federal Reserve System.

Type: The type of Contract is an Event Contract.

Issuance: Contracts may be listed targeting both a year and a Federal Reserve hiking cycle.

<percent>: Kalshi may list iterations of the Contract with <percent> levels that fall within an

inclusive range between -100.00 and 100.00 at consecutive increments of <0.25>. Due to the

potential for variability in the Underlying, the Exchange may modify <percent> levels in

response to suggestions by Members.

<date>: <date> refers to a calendar date specified by Kalshi. Kalshi may list iterations of the

Contract corresponding to different statistical periods of <date>.

Payout Criterion: The Payout Criterion for the Contract encompasses the Expiration Values that

are <above/below/between> <percent>. If the value of <above/below/between> is “between,

then <percent> shall be a pair of values and the Payout Criterion shall encompass Expiration

Values that are greater than or equal to the lesser of the pair and less than or equal to the greater

of the pair.

Minimum Tick: The Minimum Tick size for the referred Contract shall be $0.01.

Position Limit: The Position Limit for the $1 referred Contract shall be $7,000,000 per Member.

1 https://www.federalreserve.gov/monetarypolicy/openmarket.htm

KalshiEX LLC
KalshiEX LLC

Last Trading Date: The Last Trading Date of the Contract will be <date>. The Last Trading

Time will be 11:59 PM ET.

Settlement Date: The Settlement Date of the Contract shall be no later than the day after the

Expiration Date, unless the Market Outcome is under review pursuant to Rule 7.1.

Expiration Date: The Expiration Date of the Contract shall be the sooner of the date of the first

10:00 AM ET following <date> when data is available, or one week after <date>.

Expiration time: The Expiration time of the Contract shall be 10:00 AM ET.

Settlement Value: The Settlement Value for this Contract is $1.00.

Expiration Value: The Expiration Value is the value of the Underlying as documented by the

Source Agency on the Expiration Date at the Expiration time.

Contingencies: Before Settlement, Kalshi may, at its sole discretion, initiate the Market

Outcome Review Process pursuant to Rule 6.3(c) of the Rulebook. Additionally, as outlined in

Rule 7.2 of the Rulebook, if any event or any circumstance which may have a material impact on

the reliability or transparency of a Contract’s Source Agency or the Underlying related to the

Contract arises, Kalshi retains the authority to designate a new Source Agency and Underlying

for that Contract and to change any associated Contract specifications after the first day of

trading.

KalshiEX LLC
KalshiEX LLC

KalshiEX LLC

Official Product Name: What will the highest federal funds rate set by the Federal Reserve be by <date>?

Rulebook: TERMINALRATE

Kalshi Contract Category: Political Decision

Highest Fed Rate

12/22/2022May 3, 2023

REDLINE

CONCISE EXPLANATION AND ANALYSIS OF THE PRODUCT AND ITS

COMPLIANCE WITH APPLICABLE PROVISIONS OF THE ACT, INCLUDING CORE

PRINCIPLES AND THE COMMISSION'S REGULATIONS THEREUNDER

Pursuant to Commission Rule 40.2(a)(3)(v), the following is a concise explanation and analysis

of the product and its compliance with the Act, including the relevant Core Principles, and the

Commission's regulations thereunder.

I. Introduction

The “What will the highest federal funds rate set by the Federal Reserve be by <date>?”

Contract is a contract relating to monetary policy decisions made by the Federal Reserve.

After careful analysis, Kalshi (hereafter referred to as “Exchange”) has determined that

the Contract complies with its vetting framework.

The Federal Reserve Bank is currently in a hiking cycle. There is uncertainty what the

‘terminal’, or highest, rate that the bank will set. This contract is intended to capture the

risk associated with the peak of the hiking cycle in a given period.

Further information about the Contract, including an analysis of its risk mitigation and

price basing utility, as well as additional considerations related to the Contract, is

included in Confidential Appendices B, C, and D.

Pursuant to Section 5c(c) of the Act and CFTC Regulations 40.2(a), the Exchange hereby

certifies that the listing of the Contract complies with the Act and Commission

regulations under the Act.

General Contract Terms and Conditions: The Contract operates similar to other event

contracts that the Exchange lists for trading. The minimum price fluctuation is $0.01 (one

cent). Price bands will apply so that Contracts may only be listed at values of at least

$0.01 and at most $0.99. Further, the Contract is sized with a one-dollar notional value

and has a minimum price fluctuation of $0.01 to enable Members to match the size of the

contracts purchased to their economic risks. The Exchange has further imposed position

KalshiEX LLC
KalshiEX LLC

limits (defined as maximum loss exposure) of $25,0007,000,000 USD on the Contract.

As outlined in Rule 5.12 of the Rulebook, trading shall be available at all times outside of

any maintenance windows, which will be announced in advance by the Exchange.

Members will be charged fees in accordance with Rule 3.6 of the Rulebook. Fees are

charged in such amounts as may be revised from time to time to be reflected on the

Exchange’s Website. Additionally, as outlined in Rule 7.2 of the Rulebook, if any event

or any circumstance which may have a material impact on the reliability or transparency

of a Contract’s Source Agency or the Underlying related to the Contract arises, Kalshi

retains the authority to designate a new Source Agency and Underlying for that Contract

and to change any associated Contract specifications after the first day of trading. That

new Source Agency and Underlying would be objective and verifiable. Kalshi would

announce any such decision on its website. All instructions on how to access the

Underlying are non-binding and are provided for convenience only and are not part of the

binding Terms and Conditions of the Contract. They may be clarified at any time.

Furthermore, the Contract’s payout structure is characterized by the payment of an

absolute amount to the holder of one side of the option and no payment to the

counterparty. During the time that trading on the Contract is open, Members are able to

adjust their positions and trade freely. After trading on the Contract has closed, the

Expiration Value and Market Outcome are determined. The market is then settled by the

Exchange, and the long position holders and short position holders are paid according to

the Market Outcome. In this case, “long position holders” refers to Members who

purchased the “Yes” side of the Contract and “short position holders” refers to Members

who purchased the “No” side of the Contract. If the Market Outcome is “Yes,” meaning

that the highest upper bounds of the federal funds target rate range set by the Federal

Reserve (the terminal rate) is <above/below/between> <percent> between Issuance and

<date>, then the long position holders are paid an absolute amount proportional to the

size of their position and the short position holders receive no payment. If the Market

Outcome is “No,” then the short position holders are paid an absolute amount

proportional to the size of their position and the long position holders receive no

payment. Specification of the circumstances that would trigger a Market Outcome of

“Yes” are included below in the section titled “Payout Criterion” in Appendix A.

KalshiEX LLC
KalshiEX LLC

CERTIFICATIONS PURSUANT TO SECTION 5c OF THE COMMODITY EXCHANGE

ACT, 7 U.S.C. § 7A-2 AND COMMODITY FUTURES TRADING COMMISSION RULE

40.2, 17 C.F.R. § 40.2

Based on the above analysis, the Exchange certifies that:

❏ The Contract complies with the Act and Commission regulations thereunder.

❏ This submission (other than those appendices for which confidential treatment has been

requested) has been concurrently posted on the Exchange’s website at

https://kalshi.com/regulatory/filings.

Should you have any questions concerning the above, please contact the exchange at

ProductFilings@kalshi.com.

______________________

By: Eliezer MishoryXavier Sottile

Title: Chief Regulatory OfficerHead of Markets

Date: 12/22/2022May 3, 2023

KalshiEX LLC
KalshiEX LLC

Attachments:

Appendix A - Contract Terms and Conditions

Appendix B (Confidential) - Further Considerations

Appendix C (Confidential) - Source Agency

Appendix D (Confidential) - Compliance with Core Principles

KalshiEX LLC
KalshiEX LLC

APPENDIX A – CONTRACT TERMS AND CONDITIONS

Official Product Name: What will the highest federal funds rate set by the Federal Reserve

be by <date>?

Rulebook: TERMINALRATE

KalshiEX LLC
KalshiEX LLC

TERMINALRATE

Scope: These rules shall apply to this contract.

Underlying: The Underlying for this Contract is the highest upper bound of the federal funds

target rate range announced at a meeting of the Federal Open Market Committee that occurs

between Issuance and <date> according to the Board of Governors of the Federal Reserve

System. Revisions to the Underlying made after Expiration will not be accounted for in

determining the Expiration Value.

Instructions: The federal funds target rate range can be found here.

1

It is under the Column

labeled “Level”. These instructions on how to access the Underlying are provided for

convenience only and are not part of the binding Terms and Conditions of the Contract. They

may be clarified at any time.

Source Agency: The Source Agency is the Federal Reserve System.

Type: The type of Contract is an Event Contract.

Issuance: Contracts may be listed targeting both a year and a Federal Reserve hiking cycle.

<percent>: Kalshi may list iterations of the Contract with <percent> levels that fall within an

inclusive range between -100.00 and 100.00 at consecutive increments of <0.25>. Due to the

potential for variability in the Underlying, the Exchange may modify <percent> levels in

response to suggestions by Members.

<date>: <date> refers to a calendar date specified by Kalshi. Kalshi may list iterations of the

Contract corresponding to different statistical periods of <date>.

Payout Criterion: The Payout Criterion for the Contract encompasses the Expiration Values that

are <above/below/between> <percent>. If the value of <above/below/between> is “between,

then <percent> shall be a pair of values and the Payout Criterion shall encompass Expiration

Values that are greater than or equal to the lesser of the pair and less than or equal to the greater

of the pair.

Minimum Tick: The Minimum Tick size for the referred Contract shall be $0.01.

Position Limit: The Position Limit for the $1 referred Contract shall be $25,0007,000,000 per

Member.

1 https://www.federalreserve.gov/monetarypolicy/openmarket.htm

KalshiEX LLC
KalshiEX LLC

Last Trading Date: The Last Trading Date of the Contract will be <date>. The Last Trading

Time will be 11:59 PM ET.

Settlement Date: The Settlement Date of the Contract shall be no later than the day after the

Expiration Date, unless the Market Outcome is under review pursuant to Rule 7.1.

Expiration Date: The Expiration Date of the Contract shall be the sooner of the date of the first

10:00 AM ET following <date> when data is available, or one week after <date>.

Expiration time: The Expiration time of the Contract shall be 10:00 AM ET.

Settlement Value: The Settlement Value for this Contract is $1.00.

Expiration Value: The Expiration Value is the value of the Underlying as documented by the

Source Agency on the Expiration Date at the Expiration time.

Contingencies: Before Settlement, Kalshi may, at its sole discretion, initiate the Market

Outcome Review Process pursuant to Rule 6.3(c) of the Rulebook. Additionally, as outlined in

Rule 7.2 of the Rulebook, if any event or any circumstance which may have a material impact on

the reliability or transparency of a Contract’s Source Agency or the Underlying related to the

Contract arises, Kalshi retains the authority to designate a new Source Agency and Underlying

for that Contract and to change any associated Contract specifications after the first day of

trading.

KalshiEX LLC