KalshiEX LLC

January 5, 2024

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 40.2(a) Notification Regarding the Initial Listing

of the “Will <month> <year> be the hottest <month> on record?” Contract

Dear Sir or Madam,

Pursuant to Section 5c(c) of the Commodity Exchange Act and Section 40.2(a) of the regulations of the

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

it is self-certifying the “Will <month> <year> be the hottest <month> on record?” contract (Contract).

The Exchange intends to list the contract on a monthly basis. The Contract’s terms and conditions

(Appendix A) includes the following strike conditions:

● <month> (the target month)

● <year> (the target year)

Along with this letter, Kalshi submits the following documents:

● A concise explanation and analysis of the Contract;

● Certification;

● Appendix A with the Contract’s Terms and Conditions;

● Confidential Appendices with further information; and

● A request for FOIA confidential treatment.

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: Will <month> <year> be the hottest <month> on record?

Rulebook: HMONTH

Kalshi Contract Category: Weather/Climate

Hottest Month on Record

{{Date_of_Submission}}

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 <month> <year> be the hottest <month> on record?” Contract is a contract

relating to whether a given month will be the hottest month on record (e.g. will January

2024 be the hottest January yet recorded). After careful analysis, Kalshi (hereafter

referred to as “Exchange”) has determined that the Contract complies with its vetting

framework.

During the 20th century, Earth’s average temperature increased by approximately 2°F.

Such temperature increases, though they may seem small, have already affected our

world: glaciers have melted, sea levels have risen, and heat waves have grown more

intense.1 The Intergovernmental Panel on Climate Change (“IPCC”), a consortium of

over 1,300 scientists from around the world, has projected a temperature increase of

anywhere from 2.5 to 10°F during the 21st century.

2 The magnitude of the increase,

however, will determine the future effects of climate change—including whether sea

levels will rise by one foot or eight feet, how often the South is hit by extreme heat

waves, how bad droughts are in the Southwest, and how severe wildfires are in

California. This Contract allows individuals and corporations to hedge the economic risks

associated with the pace of global warming, including the risk of flooding, wildfires, and

extreme weather.

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.

2 https://climate.nasa.gov/effects/

1 https://climate.nasa.gov/effects/

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 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 $25,000 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. A new Source Agency can be added via a Part 40 amendment. 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 <month> <year> is the hottest <month> on record, 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: January 5, 2024

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: Will <month> <year> be the hottest <month> on record?

Rulebook: HMONTH

KalshiEX LLC
KalshiEX LLC

HMONTH

Scope: These rules shall apply to this contract.

Underlying: The Underlying for this Contract is the global land and ocean temperature

anomalies for all <months> (e.g. all Januaries). Revisions to the Underlying made after

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

Instructions: Monthly global temperature anomalies are available at

https://www.ncdc.noaa.gov/cag/global/time-series. Please navigate to the link, select “1-month”

from the dropdown menu next to “Timescale”. Select the month in question from the dropdown

menu next to “Month”. Select “Global” in the dropdown menu next to “Region”. Choose “Land

and Ocean” from the dropdown menu next to “Surface”. Then click “Plot”. Make sure the end

year is the year of the month in question. The value of the Underlying will be in the column

named “Anomaly” in the row with the year of the month in question. 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 National Oceanic and Atmospheric Administration.

Type: The type of Contract is an Event Contract.

Issuance: The Contract is based on the outcome of a recurrent data release, which is issued on a

monthly basis. Thus, Contract iterations will be issued on a recurring basis, and future Contract

iterations will generally correspond to the next month.

<month>: <month> refers to a calendar <month> specified by Kalshi. Kalshi may list iterations

of the Contract corresponding to variations of <date>.

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

Contract corresponding to variations of <date>.

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

<month> <year> is the hottest <month> recorded.

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 $25,000 per Member.

KalshiEX LLC
KalshiEX LLC

Last Trading Date: The Last Trading Date of the Contract will be the last day of <month>

<year>. 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 the release of data for <month> <year> or three months after the Last

Trading 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.

KalshiEX LLC