KalshiEX LLC

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 “Will the target federal funds rate be <above/below> <percent>?” 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 “Will the target federal funds rate be <above/below> <percent>?” contract (Contract). 

This contract is a straight-forward modification to the previous “Will the target federal funds rate be 

<above/below> <percent>?” contract. The changes are as follows: 

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

throughout.

Along with this letter, Kalshi submitted the following documents:

● A clean copy of the amended Contract; and 

● A redline showing the changes from the original.

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

Sincerely, 

Elie Mishory

Chief Regulatory Officer 

KalshiEX LLC 

emishory@kalshi.com
KalshiEX LLC

KalshiEX LLC

KalshiEX LLC

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 “Will the target federal funds rate be <above/below> <percent>?” contract is a 

contract relating to the upper bound of the target federal funds range as set by the Federal 

Open Market Committee. The Contract is designed to enable market participants whose 

businesses or operations are affected by the level of the target federal funds range to 

mitigate the commercial risks associated with a higher or lower benchmark interest rate. 

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

the Contract complies with its vetting framework, which has been reviewed by the CFTC 

and formed part of the Exchange’s application for designation as a Contract Market 

(“DCM”) that was approved by the Commission. 

The target federal funds range set by the Federal Open Market Committee is a core 

indicator for the health of the US economy. The range is typically specified as 25 basis 

points wide, and so a change in the upper bound of the range, denoted as the target 

federal funds rate, is usually synonymous with a shift of the range itself. The level of the 

target federal funds range directly affects the cost of capital for major US financial 

corporations, and therefore the ability of non-financial corporations, small businesses, 

and individuals to raise or borrow money to fund investments in future production. The 

Contract can serve as an important hedging instrument for the overall health of the 

American economy, making it useful to a large class of investors.

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 Appendix B.
KalshiEX LLC

KalshiEX LLC

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, including regulations under 

the Act.

Relevant Contract Terms and Conditions: The Contract operates similar to the other 

binary contracts that the Exchange is self-certifying for trading. In particular, 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. While trading on the 

Contract is open, Members are able to adjust their positions and trade freely. Once 

trading on the Contract has closed, the market is settled by the Exchange and the long 

position holders and short position holders are paid according to the outcome of the 

market. In this case, “long position holder” refers to a Member who purchased the “Yes” 

side of the contract and “short position holder” refers to a Member who purchased the 

“No” side of the contract. Depending on the outcome of the market, as determined by the 

Exchange, one of two payout processes is triggered. If the Market Outcome is “Yes”, 

meaning that the upper bound of the target federal funds range is strictly greater than 

<percent>, then the long position holder is paid an absolute amount proportional to the 

size of their position and the short position holder receives no payment. Otherwise, if the 

Market Outcome is “No”, then the short position holder is paid an absolute amount 

proportional to the size of their position and the long position holder receives no 

payment. Further specification of the circumstances that would trigger a settlement in the 

“Yes” direction 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 REGULATION 40.2, 17 C.F.R. § 40.2

Based on the above analysis, the Exchange certifies that:

❏ the Contract is consistent with, and in accordance with the Core Principles of Section 5 of 

the Commodity Exchange Act, and the CFTC’s rules and regulations; and 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 Mishory

Title: Chief Regulatory Officer 

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

APPENDIX A – CONTRACT TERMS AND CONDITIONS

Official Product Name: Will the target federal funds rate be <above/below> <percent>?

Rulebook: FED

KalshiEX LLC
KalshiEX LLC

FED

Scope: These rules shall apply to the contract referred to as “Will the target federal funds rate be

<above/below> <percent>?”.

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

range published by the official website of the Federal Reserve. Revisions to the Underlying made

after Expiration will not be accounted for in determining the Expiration Value.

Instructions: The Underlying can be accessed in the latest table entry under the Column titled

“Level (%)”(https://www.federalreserve.gov/monetarypolicy/openmarket.htm). The linked

website displays a continuously updated list of changes to the target federal funds range in table

format. The most recent entry on the page determines the value of the Underlying. For example,

on March 16, 2020, the FOMC voted to lower the target range to “0-0.25%”, where the upper

bound is 0.25%, which is reflected in the table entry for March 16, 2020 and thus the Underlying

value would be 0.25%. Statements from meetings can be accessed at

https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm. Statements are released at

2:00 PM ET on the last day of meetings. 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 United States Federal Reserve System.

Type: The type of Contract is a Binary Contract.

Issuance: The Contract is intended to be issued one year in advance of Federal Reserve

meetings. At issuance, contracts will be issued for each scheduled meeting for 2022 (currently,

eight are scheduled). After the first meeting of 2022 has passed, the Exchange will list a Contract

corresponding to the first meeting of 2023. The Exchange may list additional contracts with

different <percent> levels for a given <meeting> according to changes in forecasts. The

Exchange may also list additional contracts corresponding to emergency meetings, which are

announced at the same source listed in <meeting>.

Percent: Kalshi may list “Will the target federal funds rate be <above/below> <percent>?”

contracts with <percent> levels that fall within an inclusive range between a maximum value of

20.00% and a minimum value of 0.00% at consecutive increments of 0.05%. Due to the potential

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

suggestions by Members.

KalshiEX LLC
KalshiEX LLC

<meeting>: Kalshi may list “Will the target federal funds rate be above <percent>?” contracts

with <meeting> values corresponding to Federal Reserve meetings over the next 12 months. The

list of meetings for the current year can be found at

https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm. The 2022 calendar can be

found at https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Payout Criterion: The Payout Criterion encompasses Expiration Values that are strictly <greater

than/less than> <percent> for <meeting>. If no data is available on the Expiration Date at the

Expiration Time, the Contract resolves to No.

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.

Last Trading Date: The Last Trading Date of the Contract will be the last day of <meeting>. If

<meeting> spans two days, then the Last Trading Date will be the second day. The Last Trading

Time will be 1:55 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 will be the sooner of the first of the first

2:05 PM ET following the release of a Federal Reserve statement for <meeting> and one week

following the last day of <meeting>. The link to find these statements is found in the

Instructions. These statements are typically titled with, “Decisions Regarding Monetary Policy

Implementation.”

Expiration time: The Expiration time of the Contract shall be 2:05 PM 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.

KalshiEX LLC
KalshiEX LLC

KalshiEX LLC

February 14, 2023May 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 “Will the target federal funds rate be <above/below> <percent>?” contract is a

contract relating to the upper bound of the target federal funds range as set by the Federal

Open Market Committee. The Contract is designed to enable market participants whose

businesses or operations are affected by the level of the target federal funds range to

mitigate the commercial risks associated with a higher or lower benchmark interest rate.

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

the Contract complies with its vetting framework, which has been reviewed by the CFTC

and formed part of the Exchange’s application for designation as a Contract Market

(“DCM”) that was approved by the Commission.

The target federal funds range set by the Federal Open Market Committee is a core

indicator for the health of the US economy. The range is typically specified as 25 basis

points wide, and so a change in the upper bound of the range, denoted as the target

federal funds rate, is usually synonymous with a shift of the range itself. The level of the

target federal funds range directly affects the cost of capital for major US financial

corporations, and therefore the ability of non-financial corporations, small businesses,

and individuals to raise or borrow money to fund investments in future production. The

Contract can serve as an important hedging instrument for the overall health of the

American economy, making it useful to a large class of investors.

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 Appendix B.

KalshiEX LLC
KalshiEX LLC

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, including regulations under

the Act.

Relevant Contract Terms and Conditions: The Contract operates similar to the other

binary contracts that the Exchange is self-certifying for trading. In particular, 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. While trading on the

Contract is open, Members are able to adjust their positions and trade freely. Once trading

on the Contract has closed, the market is settled by the Exchange and the long position

holders and short position holders are paid according to the outcome of the market. In this

case, “long position holder” refers to a Member who purchased the “Yes” side of the

contract and “short position holder” refers to a Member who purchased the “No” side of

the contract. Depending on the outcome of the market, as determined by the Exchange,

one of two payout processes is triggered. If the Market Outcome is “Yes”, meaning that

the upper bound of the target federal funds range is strictly greater than <percent>, then

the long position holder is paid an absolute amount proportional to the size of their

position and the short position holder receives no payment. Otherwise, if the Market

Outcome is “No”, then the short position holder is paid an absolute amount proportional

to the size of their position and the long position holder receives no payment. Further

specification of the circumstances that would trigger a settlement in the “Yes” direction

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

REGULATION 40.2, 17 C.F.R. § 40.2

Based on the above analysis, the Exchange certifies that:

❏ the Contract is consistent with, and in accordance with the Core Principles of Section 5 of

the Commodity Exchange Act, and the CFTC’s rules and regulations; and 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 Mishory

Title: Chief Regulatory Officer

Date: February 14, 2023May 3, 2023

KalshiEX LLC
KalshiEX LLC

Attachments:

Appendix A - Contract Terms and ConditionsAppendix 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: Will the target federal funds rate be <above/below> <percent>?

Rulebook: FED

KalshiEX LLC
KalshiEX LLC

APPENDIX A – CONTRACT TERMS AND CONDITIONSFED

TERMS OF CONTRACTS TRADED ON KALSHI

Rule 100.5

Contract: “Will the target federal funds rate be <above/below> <percent>?”

Scope: These rules shall apply to the contract referred to as “Will the target federal funds rate be

<above/below> <percent>?”.

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

range published by the official website of the Federal Reserve. Revisions to the Underlying made

after Expiration will not be accounted for in determining the Expiration Value.

Instructions: The Underlying can be accessed in the latest table entry under the Column titled

“Level (%)”(https://www.federalreserve.gov/monetarypolicy/openmarket.htm). The linked

website displays a continuously updated list of changes to the target federal funds range in table

format. The most recent entry on the page determines the value of the Underlying. For example,

on March 16, 2020, the FOMC voted to lower the target range to “0-0.25%”, where the upper

bound is 0.25%, which is reflected in the table entry for March 16, 2020 and thus the Underlying

value would be 0.25%. Statements from meetings can be accessed at

https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm. Statements are released at

2:00 PM ET on the last day of meetings. 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 United States Federal Reserve System.

Type: The type of Contract is a Binary Contract.

Issuance: The Contract is intended to be issued one year in advance of Federal Reserve

meetings. At issuance, contracts will be issued for each scheduled meeting for 2022 (currently,

eight are scheduled). After the first meeting of 2022 has passed, the Exchange will list a Contract

corresponding to the first meeting of 2023. The Exchange may list additional contracts with

different <percent> levels for a given <meeting> according to changes in forecasts. The

Exchange may also list additional contracts corresponding to emergency meetings, which are

announced at the same source listed in <meeting>.

KalshiEX LLC
KalshiEX LLC

Percent: Kalshi may list “Will the target federal funds rate be <above/below> <percent>?”

contracts with <percent> levels that fall within an inclusive range between a maximum value of

20.00% and a minimum value of 0.00% at consecutive increments of 0.05%. Due to the potential

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

suggestions by Members.

<meeting>: Kalshi may list “Will the target federal funds rate be above <percent>?” contracts

with <meeting> values corresponding to Federal Reserve meetings over the next 12 months. The

list of meetings for the current year can be found at

https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm. The 2022 calendar can be

found at https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm.

Payout Criterion: The Payout Criterion encompasses Expiration Values that are strictly <greater

than/less than> <percent> for <meeting>. If no data is available on the Expiration Date at the

Expiration Time, the Contract resolves to No.

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.

Last Trading Date: The Last Trading Date of the Contract will be the last day of <meeting>. If

<meeting> spans two days, then the Last Trading Date will be the second day. The Last Trading

Time will be 1:55 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 will be the sooner of the first of the first

2:05 PM ET following the release of a Federal Reserve statement for <meeting> and one week

following the last day of <meeting>. The link to find these statements is found in the

Instructions. These statements are typically titled with, “Decisions Regarding Monetary Policy

Implementation.”

Expiration time: The Expiration time of the Contract shall be 2:05 PM 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.

KalshiEX LLC
KalshiEX LLC

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

Outcome Review Process pursuant to Rule 6.3(c) of the Rulebook.

KalshiEX LLC