KalshiEX LLC

July 6, 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(a) Notification Regarding the Amendment

of the “Will <storm name> be at least a <tropical storm/hurricane category number>?”

Contract

Dear Sir or Madam,

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

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

it is amending the “Will <storm name> be at least a <tropical storm/hurricane category number>?”

contract (Contract). The Exchange intends to list the amended contract when a new storm gets named.

The Contract’s terms and conditions (Appendix A) includes the following strike conditions:

● <storm name> (name)

● <tropical storm/hurricane category number> (hurricane category number)

● <date> (target date)

This contract is a straightforward amendment of the previous HURCAT market. The changes are minor

and as follows:

● Changing the Expiration Date to incorporate the ending of a hurricane, so that contracts can be

launched well in advance of the hurricane’s launch but also expire when the storm has passed.

Along with this letter, Kalshi submitted the following documents:

● A clean copy of the amended Contract; and

● A redline showing the changes to Appendix A, the product rules and terms and conditions of

the contract.

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

Sincerely,

Xavier Sottile

Head of Markets

KalshiEX LLC

KalshiEX LLC 
KalshiEX LLC

xsottile@kalshi.com

KalshiEX LLC 
KalshiEX LLC

KalshiEX LLC

Official Product Name: Will <storm name> be at least a <tropical storm/hurricane category number>?

Rulebook: HURCAT

Kalshi Contract Category: Weather/Climate

Hurricane Strength

July 6, 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 <storm name> be at least a <tropical storm/hurricane category number>?” 

Contract is a contract relating to the strength of various Atlantic storms. 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. 

In the last five years, Atlantic hurricanes have inflicted over $393 billion worth of 

damage in the United States. 1 Tropical storms and hurricanes can disrupt essential 

services and utilities like hospitals, water lines, and electricity, displace individuals, 

destroy homes, and lower property values of affected areas. Climate change may, 

scientists report, both increase the frequency of tropical cyclones and increase their 

severity. “Since 1975,” a 2013 study concludes, “there has been a substantial and 

observable regional and global increase in the proportion of Cat[egory] 4-5 hurricanes of 

25-30 percent per °C of anthropogenic (human-caused) global warming.” 2 Naturally, the 

larger the size of the hurricane, the larger the economic impact. The Contract allows 

affected individuals, businesses, and other investors to hedge the risk that a hurricane or 

tropical storm poses to their livelihood. 

2 Holland, G., Bruyère, C.L. Recent intense hurricane response to global climate change. Clim Dyn 42, 617–627

(2014). https://doi.org/10.1007/s00382-013-1713-0

1 https://weather.com/safety/hurricane/news/2021-04-28-hurricanes-united-states-toll-last-five-years

KalshiEX LLC 
KalshiEX LLC

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 binary 

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. 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 storm <storm name> has reached <tropical storm/hurricane category number>, 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 

KalshiEX LLC 
KalshiEX LLC

“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: July 6, 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 

TERMS OF CONTRACTS TRADED ON KALSHI 

Official Product Name: Will <storm name> be at least <hurricane category number>? 

Rulebook: HURCAT 

KalshiEX LLC 
KalshiEX LLC

HURCAT

Scope: These rules shall apply to this Contract 

Underlying: The set containing the maximum sustained wind-speeds of storm <storm name> 

from the National Oceanic and Atmospheric Administration’s National Hurricane Center 

between Issuance and <date>. 

Instructions: The information is available at 

https://www.nhc.noaa.gov/archive/YYYY/XXXXX.shtml? where YYYY is the year of the storm 

and XXXXX denotes the name of the storm. For example, 

https://www.nhc.noaa.gov/archive/2021/HENRI.shtml? is the page for 2021’s Hurricane Henri. 

Please note that the times listed on the site are in UTC and will be converted to Eastern Time. To 

find the elements of the set, navigate to the link above and go to the column entitled 

“Discussion”. Click on each of the hyperlinks. In each, navigate to the row (about 2/3rds down) 

that says INIT. In each, the maximum sustained wind-speed which is included in the set is the 

number preceding the word MPH. 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’s 

(“NOAA”) National Hurricane Center. 

Type: The type of Contract is a Binary 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. 

<tropical storm/hurricane category number>: Kalshi may list HURCAT contracts with 

<tropical storm/hurricane category number> levels of either <hurricane category number> from 

1 through 5 or <tropical storm>. For example, <tropical storm/hurricane category number> could 

take the value “Hurricane Category Two”, or “tropical storm”. 

<name> : <name> refers to a name specified by Kalshi. Kalshi may list iterations of the Contract 

corresponding to different variations of <name> from the list of NOAA Atlantic Tropical Storm 

names found here: https://www.nhc.noaa.gov/aboutnames.shtml . 

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

Contract corresponding to different statistical periods of <date>. 

KalshiEX LLC 
KalshiEX LLC

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

greater than or equal to the threshold for <tropical storm/hurricane category number>. 

If the target is <hurricane category number>, the thresholds are determined using the 

Saffir-Simpson Hurricane Scale as available on the National Weather Service’s (NWS) website 

here: https://www.weather.gov/mfl/saffirsimpson . 

● The threshold for Category 1 is sustained wind speeds of at least 74 miles per hour 

● The threshold for Category 2 is sustained wind speeds of at least 96 miles per hour 

● The threshold for Category 3 is sustained wind speeds of at least 111 miles per hour 

● The threshold for Category 4 is sustained wind speeds of at least 130 miles per hour 

● The threshold for Category 5 is sustained wind speeds of at least 157 miles per hour 

If the target is <tropical storm> the threshold is sustained wind speeds of at least 39 miles per 

hour. 

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 for the Contract will 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 (whereupon the Last Trading Time shall be 10:00 AM ET) or <date> (whereupon the 

Last Trading Time shall 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 date of the first 10:00 AM 

following the occurrence of an event that is encompassed in the Payout Criterion, the date of the 

second 10:00 AM ET following the date that no wind speed probability report is issued by 

NOAA for <name>, or the day 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. 

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. 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

HURCAT

REDLINE

Scope: These rules shall apply to this Contract 

Underlying: The set containing the maximum sustained wind-speeds of storm <storm name> 

from the National Oceanic and Atmospheric Administration’s National Hurricane Center 

between Issuance and <date>. 

Instructions: The information is available at 

https://www.nhc.noaa.gov/archive/YYYY/XXXXX.shtml? where YYYY is the year of the storm 

and XXXXX denotes the name of the storm. For example, 

https://www.nhc.noaa.gov/archive/2021/HENRI.shtml? is the page for 2021’s Hurricane Henri. 

Please note that the times listed on the site are in UTC and will be converted to Eastern Time. To 

find the elements of the set, navigate to the link above and go to the column entitled 

“Discussion”. Click on each of the hyperlinks. In each, navigate to the row (about 2/3rds down) 

that says INIT. In each, the maximum sustained wind-speed which is included in the set is the 

number preceding the word MPH. 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’s 

(“NOAA”) National Hurricane Center. 

Type: The type of Contract is an Event Contract a Binary 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. 

<tropical storm/hurricane category number>: Kalshi may list HURCAT contracts with 

<tropical storm/hurricane category number> levels of either <hurricane category number> from 

1 through 5 or <tropical storm>. For example, <tropical storm/hurricane category number> could 

take the value “Hurricane Category Two”, or “tropical storm”. 

<name> : <name> refers to a name specified by Kalshi. Kalshi may list iterations of the Contract 

corresponding to different variations of <name> from the list of NOAA Atlantic Tropical Storm 

names found here: https://www.nhc.noaa.gov/aboutnames.shtml . 

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

Contract corresponding to different statistical periods of <date>. 

KalshiEX LLC 
KalshiEX LLC

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

greater than or equal to the threshold for <tropical storm/hurricane category number>. 

If the target is <hurricane category number>, the thresholds are determined using the 

Saffir-Simpson Hurricane Scale as available on the National Weather Service’s (NWS) website 

here: https://www.weather.gov/mfl/saffirsimpson . 

● The threshold for Category 1 is sustained wind speeds of at least 74 miles per hour 

● The threshold for Category 2 is sustained wind speeds of at least 96 miles per hour 

● The threshold for Category 3 is sustained wind speeds of at least 111 miles per hour 

● The threshold for Category 4 is sustained wind speeds of at least 130 miles per hour 

● The threshold for Category 5 is sustained wind speeds of at least 157 miles per hour 

If the target is <tropical storm> the threshold is sustained wind speeds of at least 39 miles per 

hour. 

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 for the Contract will 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 (whereupon the Last Trading Time shall be 10:00 AM ET) or <date> (whereupon the 

Last Trading Time shall 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 date of the first 10:00 AM 

following the occurrence of an event that is encompassed in the Payout Criterion, the date of the 

second 10:00 AM ET following the date that no wind speed probability report is issued by 

NOAA for <name>, or the day 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. 

KalshiEX LLC 
KalshiEX LLC

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