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 40.2(a) Notification Regarding the Initial Listing

of the “Will core inflation be <above/below/between> <percent> this year?” 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 core inflation be <above/below/between> <percent> this year?” contract

(Contract). The Exchange intends to list the contract on an annual basis. The initial iteration will be listed

corresponding to 2023. Later iterations will be listed after the release of the data for September, and will

correspond to the next calendar year. The Exchange may add new strike values of <percent> as market

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

conditions:

● <above/below/between>

● <percent> (the target core CPI growth)

● <year> (the target year)

Along with this letter, Kalshi submitted 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 core inflation be <above/below/between> <percent> this year?

Rulebook: ACPICORE

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

Annual core CPI

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 core inflation be <above/below/between> <percent> this year?” Contract is a 

contract relating to the annual core inflation rate in the United States. 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 consumer price index (CPI) is the most common metric of measuring inflation. 

Inflation is an economic phenomenon whereby the value of money is reduced. “Core” 

inflation is a version of the index that strips out more volatile energy and commodity 

prices. 

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 

KalshiEX LLC 
KalshiEX LLC

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 $7,000,000 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 U.S. core CPI change in <year> is <above/below/between> <percent>, 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: 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 core inflation be <above/below/between> <percent> this year? 

Rulebook: ACPICORE 

KalshiEX LLC 
KalshiEX LLC

ACPICORE

Scope: These rules shall apply to this contract. 

Underlying: The Underlying for this Contract is the 12-month percent change in the Consumer 

Price Index for All Urban Consumers: All Items less food and energy, before seasonal 

adjustment, according to the Bureau of Labor Statistics for <year>. Revisions to the Underlying 

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

Instructions: The Underlying can be accessed at https://www.bls.gov/cpi/. A schedule of release 

dates is available on the BLS website (https://www.bls.gov/schedule/news_release/cpi.htm), and 

the data is released at 8:30am ET. Each month’s report is available at the following stable URL, 

which automatically displays the latest available report: 

https://www.bls.gov/news.release/pdf/cpi.pdf. For example, for the <year> of 2022, the value 

would be found in the CPI report for December 2022 (which will be released in January 2023), 

in the sentence “The all items index less food and energy rose (x) percent over the last 12 

months” It is not the “average inflation rate” over the year. Please also note that this value may 

slightly differ from FRED’s core CPI series modified with “percent change from year ago” due 

to the different way the two sources treat seasonal adjustment. Historical reports from prior 

months are available on the Bureau of Labor Statistics website at the following link: 

https://www.bls.gov/bls/news-release/cpi.htm. 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 Labor Statistics. 

Type: The type of Contract is an Event Contract. 

Issuance: The Contract is based on the outcome of a recurrent data release. Contract iterations 

will be issued on a recurring basis, and future Contract iterations will generally correspond to a 

given calendar year. The Exchange may add new strike values of <percent> as market conditions 

change. 

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

inclusive range between 0 and 50 at consecutive increments of 0.1. Due to the potential for 

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

suggestions by Members. 

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

Contract corresponding to different values of <year>. 

KalshiEX LLC 
KalshiEX LLC

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

are <above/below/between> <percent>. If the value of <above/below/between> is “between”, 

then <percent> shall be a pair of percentages, and an Expiration Value that is greater than or 

equal to the lower value of the percent pair and less than or equal to the greater value of the 

percent pair are encompassed in the Payout Criterion. 

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 day that the data for the 

last month of <year> is expected to be released. The Last Trading Time will be 8:25 AM. 

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 following the release of the data for the last month of <year>, or fourteen days 

following the BLS-scheduled release of the data for the last month of <year>. 

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. 

KalshiEX LLC