KalshiEX LLC

May 30, 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 40.2(a) Notification Regarding the Initial Listing

of the “Will consumer spending be <above/below/between> <count> in <month>?”

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 consumer spending be <above/below/between> <count> in <month>?”

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:

● <count> (the target level of consumer spending)

● <month> (the target month)

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 consumer spending be <above/below/between> <count> in <month>?

Rulebook: PCE

Kalshi Contract Category: Economic/Demographic Measure – U.S. Government

Consumer Spending

May 30, 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 consumer spending be <above/below/between> <count> in <month>?”

Contract is a contract relating to whether personal consumption expenditures (“PCE”)

will increase in the United States in a given month. After careful analysis, Kalshi

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

vetting framework.

Consumer spending in a given month is an important measure of economic activity

looked at to assess the health of the economy.

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 $25,000 USD on the Contract. As outlined

KalshiEX LLC
KalshiEX LLC

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 PCE is <above/below/between> <count> for <month>, 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 30, 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: Will consumer spending be <above/below/between> <count> in

<month>?

Rulebook: PCE

KalshiEX LLC
KalshiEX LLC

PCE

Scope: These rules shall apply to this contract.

Underlying: The Underlying for this Contract is personal consumption expenditures (“PCE”) for

<month> according to the Bureau of Economic Analysis, measured in millions of dollars.

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

Expiration Value.

Instructions: PCE can be found here.

1 The number for the month of February 2023 is

18,125,131 (measured in millions of dollars). 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 Bureau of Economic Analysis.

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.

<count>: Kalshi may list iterations of the Contract with <0> levels that fall within an inclusive

range between 0 and 1,000,000,000 at consecutive increments of <1>. Due to the potential for

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

suggestions by Members.

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

the Contract corresponding to variations <month>.

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

are <above/below/between> <count>.

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.

1 https://www.bea.gov/news/2023/personal-income-and-outlays-february-2023

KalshiEX LLC
KalshiEX LLC

Last Trading Date: The Last Trading Date of the Contract will be the day of the data release in

question. For convenience, this can be found at the Bureau of Economic Analysis schedule here.

2

The Last Trading Time will be 8:25 AM 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 the data for <month>, or one week 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. 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.

2 https://www.bea.gov/data/consumer-spending/main. This link is provided for convenience only and the link may

change.

KalshiEX LLC