KalshiEX LLC

November 22, 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 <person> be the next CEO of Microsoft?” 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 <person> be the next CEO of Microsoft?” contract (Contract). The

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

A) includes the following strike conditions:

● <person> (the target CEO candidate)

● <date> (the target date)

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 <person> be the next CEO of Microsoft?

Rulebook: MSFTCEO

Kalshi Contract Category: Science/Technology

Next Microsoft CEO

November 22, 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 <person> be the next CEO of Microsoft?” Contract is a contract relating to

who will succeed Satya Nadella as CEO of Microsoft. After careful analysis, Kalshi

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

vetting framework.

Satya Nadella’s tenure at Microsoft has been a great success, with an enormous increase

in its stock valuation; however, it has been more than nine years since he took the top job.

When Sam Altman was (apparently briefly) hired at Microsoft, some suggested that he

could succeed Nadella over the next few years.

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 $25,000 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. 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 <person> is announced to be the next CEO of

Microsoft by <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: November 22, 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 <person> be the next CEO of Microsoft?

Rulebook: MSFTCEO

KalshiEX LLC
KalshiEX LLC

MSFTCEO

Scope: These rules shall apply to this contract.

Underlying: The Underlying for this Contract is releases from Microsoft. Revisions to the

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

Source Agency: The Source Agency is Microsoft.

Type: The type of Contract is an Event Contract.

Issuance: After the initial Contract, Contract iterations will be listed on an as-needed basis at the

discretion of the Exchange and corresponding to the risk management needs of 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>.

<person>: <person> refers to a candidate for CEO specified by Kalshi. Kalshi will rely on the

financial and business press in identifying such persons.

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

<person> has been announced to be or to be becoming the next CEO of Microsoft. Interim,

acting, or temporary CEOs do not qualify. If there are multiple CEOs, then both persons would

satisfy the Payout Criterion. It is sufficient if an announcement is made that <person> will

become CEO of Microsoft, including after <date>.

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.

Last Trading Date: The Last Trading Date of the Contract will be the sooner of the first 10:00

AM ET following <date> (whereupon the Last Trading Time will be 10:00 AM ET), the first

10:00 AM ET following the announcement of a new CEO (whereupon the Last Trading Time

will be 10:00 AM ET), or <date> (whereupon 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 occurrence of an event that is encompassed in the Payout Criterion,

KalshiEX LLC
KalshiEX LLC

the first 10:00 AM ET following the announcement of a new CEO, the date of the first 10:00

AM ET following <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