From: Lave Jonathan 

To: "Jarek Mansour"; "Sam Vergara"; "Jeffrey Bandman"; "Luana Lopes Lara" 

Cc: Lee. Jasmine 

Subj ect: Kalshi DCM Application First Round of Questions 2-5-20 

Date: Wednesday, February 5, 2020 8:58:00 AM 

Attachments: Kalshi DCM Application First Round of Questions 2-5-20.docx 

All 

Please find our first round of questions. Questions regarding compliance with system 

safeguards wil l be sent at a later date. 

To keep the review moving along, please provide responses by February 21. In addition, 

please let us know when you expect to be ready to demonstrate your CLOB and surveillance 

functionalities. 

Thank you 

Jonathan 

Jonathan M. Lave 

Associate Director, Market Review 

Division of Market Oversight, U.S. Commodity Futures Trading Commission 

1155 21st Street, NW I Washington, DC 20581 I jlaye@cftc.gov 

Tel : 202.418.5983 
Kalshi DCM Application: First Round ofQuestions 

1) In the compliance manual rb)(4) 

b)(4) 

2) Please explain how Kalshi will ensure that the market making affiliate will not be able to access 

the DCM's non-public information. Where will the affiliate be located in relation to the contract 

market (e.g. same building, same floor or same room)? 

3) Commission regulation 38.151: Exhibit K b)(4) 

b)(4) 

4) Commission regulation 38.151: Please add a provision to the compliance manual or rulebook 

that b)(4) 

5) Commission regulation 38.152: Please specify in the rulebook the specific prohibitions listed in 

Commission regulation 180. 1: (I) Use or employ, or attempt to use or employ, any manipulative 

device, scheme, or artifice to defraud; (1) Use or employ, or attempt to use or employ, any 

manipulative device, scheme, or artifice to defraud; (2) Make, or attempt to make, any untrue or 

misleading statement of a material fact or to omit to state a material fact necessary in order to 

make the statements made not untrue or misleading; or (3) Engage, or attempt to engage, in any 

act, practice, or course ofbusiness, which operates or would operate as a fraud or deceit upon any 

person. Specify in the rulebook prohibitions against wash trading and front-running. 

6) Commission regulation 38.153: Please add rules that members must keep complete and 

accurate books and records and that such books and records should be available for inspection by 

an authorized representative ofthe exchange, or upon request ofthe Commission. Members must 

keep records ofall transactions for a total offive years and that such records be readily accessible 

for the first two years. 

7) Commission regulation 38.155: Exhibit F, 

b)(4) 

resources) indicate (b)(4) 

1 
b)(4) 

8) Commission regulation 38.156: Kalshi Rule 3. l(a)(5)(iii) specifies that a member must 

certify that "it will trade only for itself and will not serve as an intermediary for any other 

Person." Please confirm that Kalshi does not allow intermediated trading. 

9) Commission regulation 38.156: The regulation requires that a DCM have the capacity 

to detect, among other violations, pre-arranged trading and money passes. b)(4l 

b)(4) We will also 

need to see a demonstration ofthis during our demo meeting. 

10) Commission regulation 38.157: What process will Kalshi use to adjust price or cancel trades 

when necessa1y to mitigate market disrupting events caused by malfunctions in its platform? 

Commission regulation 38.157 requires that these standards must be clear, fair, and publicly 

available. 

11) Commission regulation 38.157: Pursuant to commission regulation 38.157, where orders 

contain errors that cause disruption, DCMs must have the ability to adjust or cancel trades. 

Kalshi's error trade authority, as set forth in Rule 5.10, is limited to instances in which all parties 

to a contract (more than 50%) notify Kalshi of a potential error. Where only a one party to a 

trade has made an error (or where only one party agrees that there was an error), Kalshi would not 

have the authority to adjust or cancel the trade, even ifit causes disruption. Please explain. In 

addition, please explain how Kalshi will handle fat finger errors. 

12) Commission regulation 38.200: Please add a provision to the compliance manual or other 

document which provide~(b)(4) 

~b)(4) 

2 
13) Commission regulation 38.250: Please explain how Kalshi will utilize audit trail data on 

individual traders' market activity on an ongoing basis in order to detect and prevent 

manipulation, price distortions, and disruptions to the cash settlement process. 

14) Commission regulation 38.254(a): The regulation requires that Kalshi "have rules that require 

traders in its contracts to keep records oftheir trading, including records of their activity in the 

underlying commodity and related derivatives markets, and make such records available, upon 

request, to the DCM." Please add such rules to the rulebook. 

15) Commission regulation 38.254(b): Please clarify whether Kalshi will have participants trading 

through intermediaries and ifso how the exchange will comply with regulation 38.254(b). 

16) Commission regulation 38.255: Will Kalshi monitor for large trader positions? If so, please 

point to the relevant document that describes how Kalshi will do this. 

17) Commission regulation 38.256: Please add to Exhibit S that~b)(4) I 

b)(4) 

18) Commission regulation 38.330: Please add a provision to rulebook or other document stating 

b)(4) 

19) Commission regulation 38.350: Please set forth in rule 2.8l(b)(4) 

fb)(4) I ~---------~ 

20) Commission regulation 38.552: (b)(4) 

rbX4J 

21) Commission regulation 38.553: The regulation requires that Kalshi must enforce its audit trail 

and recordkeeping requirements through at least annual reviews of all members and persons and 

firms subject to DCM recordkeeping rules to verify their compliance with the DCM's audit trail 

and recordkeeping requirements. Please add a provision to the rule book that requires all 

members and persons and firms subject to Kalshi's recordkeeping rules to verify their compliance 

with Kalshi's audit trail and recordkeeping requirements. Please explain how Kalshi will conduct 

verification. What sanctions will be imposed on members who do not satisfy the recordkeeping 

requirements? 

3 
22) Commission regulation 38.701: Please add to compliance manual or rulebook requirement that 

[""'' I 

23) Commission regulation 38.703: Please amend the rules to clarify that ifthe compliance staff 

determines that a reasonable basis exists for finding a violation and that adjudication is warranted, 

it must direct that the person or entity alleged to have committed the violation be served with a 

notice ofcharges. The notice ofcharges will adequately state the acts, conduct, or practices in 

which the respondent is alleged to have engaged; state the rule, or rules, alleged to have been 

violated ( or about to be violated); and prescribe the period within which a hearing on the charges 

may be requested. The notice will also advise that the charged respondent is entitled, upon 

request, to a hearing on the charges. 

24) Commission regulation 38.704: Please clarify in rule 9.7 that.... f b_)(4_l ___________. 

b)(4) 

25) Commission regulation 38.707: Please add rules providing: 1) at a hearing, the enforcement 

staff must present their case on those charges and sanctions that are the subject of the hearing; 2) 

the respondent is entitled to appear personally at the hearing, to cross-examine any persons 

appearing as witnesses at the hearing, and to call witnesses and to present such evidence as may 

be relevant to the charges; and 3) persons within Kalshi's jurisdiction who are called as witnesses 

must participate in the hearing and to produce evidence. 

26) Commission regulation 38.710: Please point to a provision in the rulebook which sets forth the 

requirements in Commission regulation 38.710 or add such a provision. 

27) Commission regulation 38.750: Please add more detail to the arbitration rules. Note that the 

NF A arbitration rules are an example ofacceptable rules. 

28) Commission regulation 38.850: Please revise rule 2.2 to comport with the definition ofpublic 

director set forth in the guidance on, and acceptable practices in, compliance with core principles 

for core principle 16. 

29) Commission regulation 38.850: Ifaccurate, please specify that the rule 2.4(a) restrictions also 

include serving on a disciplinary panel. 

30) Commission regulation 38.850: Please revise rule 2.6 to state that the ROC will 

4 
(1) Monitor the contract market's regulatory program for sufficiency, effectiveness, and 

independence; 

(2) Oversee all facets ofthe program, including trade practice and market surveillance; 

audits, examinations, and other regulatory responsibilities with respect to member firms 

(including ensuring compliance with financial integrity, financial reporting, sales 

practice, recordkeeping, and other requirements); and the conduct ofinvestigations; 

(3) Review the size and allocation ofthe regulatory budget and resources; and the 

number, hiring and termination, and compensation of regulatory personnel; 

(4) Supervise the contract market's chiefregulatory officer, who will rep01t directly to the 

ROC; 

(5) Recommend changes that would ensure fair, vigorous, and effective regulation; and 

(6) Review regulatory proposals and advise the board as to whether and how such 

changes may impact regulation. 

31) Commission regulation 38.1000: Please add a provision to the compliance manual thatfbl(4) 

['''' 

32) Commission regulation 38.1100: Exhibit I states: b)(4) 

(b)(4) To demonstrate compliance with 

Core Principle 21, Kalshi must submit financial information about the KalshiEX LLC, not the 

parent company. Kalshi must also submit KalshiEX LLC projected operating costs for the next 

12 months and demonstrate that KalshiEX LLC has liquid assets that exceed 6 months of 

operating expenses. The liquid assets have to be backed up by a bank statement showing the 

existence ofthose assets. 

5 
From: 

To: 

Cc: 

Subject: 

Date: 

Attachments: 

Jarek Mansour 

Lave, Jonathan 

Lee. Jasmine: Sam Yerqara: Jeffrey Bandman: Luana Lopes Lara 

[EXTERNAL] Re: Kalshi DCM Application Flrst Round of Questions 2-5-20 

Friday, February 21, 2020 6:25:56 PM 

Submission - Kalshi DCM Application First Round of Questions 2-21-20.zip 

FOIA - Confidentiality Reauest.odf 

Jonathan and Jasmine, 

Thank you again for the questions and valuable feedback you have provided with respect to 

KalshiEX LLC's DCM application. Attached find answers to the questions provided and 

amendments we have made to the relevant exhibits as requested as "Submission - Kalshi DCM 

Application First Round ofQuestions and Answers 2-21-20". As always, we welcome any 

feedback and thoughts that you have with respect to this round of answers. 

We are submitting simultaneously a petition for confidential treatment ofthe application 

materials to the Assistant Secretary ofthe Commission for Freedom ofInformation pursuant 

to Section 145.9(d) ofthe Commission's regulations promulgated under the Act, a copy of 

which is enclosed with this letter. 

Ifyou have any questions regarding this submission, please don't hesitate to contact me 

at tarek@kalshi.com or 617-909-1097. 

Sincerely, 

Tarek Mansour 

Chief Executive Officer 

Sent via Superhuman 

On Wed, Feb 05, 2020 at 5:58 AM, Jonathan Lave <JLave@cftc.gov> wrote: 

All 

Please find our first round of questions. Questions regarding compliance with system 

safeguards will be sent at a later date. 

To keep the review moving along, please provide responses by February 21. In addition, 

please let us know when you expect to be ready to demonstrate your CLOB and surveillance 

functionalities. 

Thank.you 
Jonathan 

Jonathan M. Lave 

Associate Director, Market Review 

Division ofMarket Oversight, U.S. Commodity Futures Trading Commission 

1155 21st Street, NW IWashington, DC 20581 Ij1ave@cftc.gov 

Tel: 202.418.5983 
From: 

To: 

Cc: 

Subject: 

Date: 

Attachments: 

Lee Jasmine 

tarek@kalshLcom; Luana Lopes Lara; Jeffrey Bandman; Sam Vergara 

Laye. Jonathan 

Kalshi DCM Application - 2nd Round questions 2.25.20 

Tuesday, February 25, 2020 2:31:21 PM 

Kalshi Second Round of Questions 2.25.20.docx 

imaae002.ona 

imaae004.pna

imaae006.ona 

imaqe008.png 

imaae0l0.ona 

Hello Tarek, 

Please find attached the 2nd Round of questions related to the Kalshi DCM appl ication review, 

compiled by staff. 

In the interest of keeping things moving along wit h the review, please provide Kalshi's response by 

March 10. 

Also, please let us know when you expect to be ready to demonstrate your CLOB and surveil lance 

functionalities. For your reference, we sent the demo list via e-mail on January 9. 

Kind Regards, 

Jasmine Lee 

Special Counsel, Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5226 

JLee@cftc.gov 

[DJ ~~~ 
Kalshi Second Round of Questions 

1. Rule 6.3(b)(1) in the Kalshi rulebook states that Kalshi will notify all Members which 

Contract is going to pay a Settlement Value and which Contract will not Pay a Settlement 

Value. Doesn't each Contract pay a Settlement Value, either to the long or the short? We 

note that Rule 6.3(a) states that when a Contract expires and has a Payout Criterion that 

encompasses the Expiration Value ofthe Underlying, the Contract will pay the 

Settlement Value to the holders ofthe long positions, while ifa Contract expires and has 

a Payout Criterion that does not encompass the Expiration Value ofthe Underlying it will 

pay the Settlement Value to the holders ofthe short positions. 

2. Rules 5.3 and 6r3 prtvide that Kalshi will settle trades. Settlement is generally done by 

the DCO. Have b)(

4l nd Kalshi agreed to a different arrangement? Ifnot, please explain 

how these rules comport with the role ofthe DCO at settlement or revise the rules. 

3. Rule 6.3(b )(2) states that Kalshi will "immediately" settle the Contracts, while Rule 

6.3( c: states thatl(b)(4) 

fb)(4) 

4. Rule 6.4(a) states that "l(b)(4) lwill...distribute funds to the account. ..." Typically, 

Clearing Member funds would be held by the DCO's settlement bank rather than by the 

DCO itself. Should this language be broadened to provide for the possibility that fbl(4ll 

fbl(4

l Iwill cause its settlement bank to distribute the funds? 

5. In the Clearing Services Term Sheet,l(bl(4l 

b)(4) 

6. (This question is related to the two previous questions) l<b)(4l Iofthe Clearing 

Services Term Sheet states b)(4) 

7. Rule 6.2 provides "Kalshi will maintain, on its system, a record ofMember balances and 

Contracts. Kalshi will also maintain a Member Account, which will reflect funds used by 

Members to buy and sell Contracts. Kalshi may also maintain a 'proprietary account,' 

which will be credited with all fees debited from Member Accounts due to trades and 

expiration settlements." The term "Member Account" is defined in the rulebook to be "an 

account carried by Kalshi's Derivatives Clearing Organization partner, [REDACTED], 

on behalf ofa Member." Is the "Member Account" referred to in 6.2 the same as the 

defined term? Ifso, please explain how an account can be carried by the DCO and 

maintained by Kalshi? Ifnot, please revise as appropriate. 

8. Various rules (e.g. Rules 3.6, 6.2 and 9.5) provide that Kalshi will be able to remove 

money from the Member Account, which as noted above is "carried at the DCO." Staff 

believes that this an unusual arrangement and it may lead to a Member Account being 

I 
underfunded. Has~greed to this arrangement? Ifso, what protections are in place to 

ensure that Member Accounts continue to have sufficient funds? 

9. Various rules refer to a "Kalshi settlement account." Where is the account held? What 

funds will be entered into the account? Who will have control over the account? What 

purpose does it serve? 

10. Rule 8.1 refers to "member funds on deposit with Kalshi." What member funds will be 

on deposit at Kalshi? What is the account in which they be held? 

11. Please list all ofthe types of accounts that will be associated with Kalshi, and for each 

account, state the purpose ofthe account, where the account will be held, what funds will 

be in the account, and who will have access to the funds. 

12. b)(4) 

13. Finally, please provide a very recent balance sheet for KalshiEX LLC (as recent as 

1/31/20 if available). 
From: Laye Jonathan 

To: tarek@kalshi.com; Luana Lopes Lara; Jeffrey Bandman; Sam Vergara 

Cc: Lee. Jasmine 

Subject: Kalshi DCM Application - 3rd Round questions 2.28.20 

Date: Friday, February 28, 2020 8:43:00 AM 

Attachments: Kalshi Third Round of Questions 2.28.20.docx 

imaaeoo1 ona 

Tarek: 

Attached, please find the 3rd round of questions related to the Ka lshi DCM application review. In the 

interest of keeping things moving along wit h the review, please provide Kalshi's response by March 

10. 

Best 

Jonathan 

Jonathan M. Lave 

Associate Director, Market Review 

Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5983 

jlave@cftc.gov 
I 

Kalshi Third Round of Questions 

1) Please clarify the extent to which l(bl(4l 

b)(4) 

2) Please provide a copy of your signed A WS Service Agreement. 

3) Kalshi has indicated that b)(4l 

'------------...,.,,...,..,.,.,...----------r' ~bl(4l !. Please clarify the extent to which b)(4l ~---------~ fb}(4) I 

4) Please describe the capacity and performance testing you have completed on the trading 

engine and related infrastructure. Has Kalshi established benchmarks or internal SLAs 

for messages/sec or transactions/sec? 

5) Please provide an update on the current state ofKalshi's overall governance organization, 

including plans for fi lling vacancies on the Board. 

6) Please provide a copy ofthe system safeguards and cybersecurity awareness training. 

7) Please provide results ofmost recent internal and external penetration test and related 

vulnerability scan results. 

8) Has Kalshi considered retaining an independent firm to conduct IT control testing, either 

prior to or after launch? Ifso, please provide the contractl(b)(4l I 

9) What measures have been taken to address separation of duties and the principle ofleast 

privilege, in light ofKalshi's small staff? 

10) Has Kalshi determinedl(bl(4l 

rb)(4) 

11) Please provide a current copy ofyour Risk Log from each business unit. .... fb_l(4_l______, 

fb)(4) I 

12) Please provide a copy ofSecurity Incident Response Plan ("SIRP"). 

13) Please provide results ofthe most recent exercise of the SIRP. 
From: Laye Jonathan 

To: "Jarek Mansour"; Lee. Jasmine 

Cc: Sam Vergara: Jeffrey sandman: Luana Lopes Lara 

Subject: Fourth Round of Questions 

Date: Monday, March 16, 2020 12:27:00 PM 

Attachments: imaae006.ona 

Tarek 

Please find our fourth round of quest ions. Please provide responses by the end of t he mont h at t he 

latest. 

Best 

Jonathan 

Jonathan M. Lave 

Associate Director, Market Review 

Division of Market Oversight 

[ii Commodity Futures Trading Commission 

202-418-5983 

jlave@cftc.gov 
Kalshi Fourth Round ofQuestions 

1) Please identify all vendors that will be providinglCb)(

4) Ias well as ! .... Cb_)C4_) _ _. 

~b)(

4

) Iprepared in conjunction with Kalshi's due diligence activities. 

2) Has Kalshi based its information security program on a particular industry framework 

(e.g., ISO, NIST, COBIT, etc.)? 

3) Please provide additional information concerning Kalshi's approach to maintaining an 

accurate inventory ofphysical assets, including the frequency at which informal or 

formal audits will be performed. 

4) Please provide any policies and procedures concerning the issuance ofphysical assets to 

employees, including any joiner/leaver workflows, to the extent applicable. 

5) Please provide a copy ofthe risk analysis performed to determine the frequency of 

penetration testing. 

6) Please provide an update on when Kalshi expects to begin vulnerability scanning and 

penetration testing. 

7) Please provide an update on when Kalshi expects to perform capacity and performance 

testing. 

8) Please describe the physical security and environmental controls for Kalshi's physical 

office space. 

4 9) Please provide a copy ofyour service agreement with.... fb_)C_l _...., 

10) Please provide a copy of your service agreement with b)c4 ....__ l _ __. 

11) Please describe the extent to which Kalshi will rely onICb)(4) l's telecommunications 

infrastructure and other utilities. Are there redundancies for these services, in the event 

of a disruption? 

12) Please provide your pandemic plan. 

13) Please provide the results of any BC-DR testing you have completed. 
From: 

To: 

Cc: 

Subj ect: 

Date: 

Attachments: 

Jarek Mansour 

Lave, Jonathan 

Luana Lopes Lara: Jeffrey Bandman: Sam Vergara: Lee. Jasmjne: Gregory. Lois J. 

[EXTERNAL] RE: Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Monday, March 23, 2020 1:41:25 PM 

imaae00l.ona 

imaae002.ona 

imaae003.ona 

imaae004.ona 

imaaeoos.ona 

Exhibit 1-2 - KalshiEX LLC Ooeratina Costs vl.1.odf 

Jonathan and Lois, 

Great to chat last time and thanks for the feedback. Attached is an updated Exhibit 1-2 

showingl(b)(4) I 

Thank you, 

Tarek 

Sent via Superhuman 

On Wed, Mar 11, 2020 at 7:06 AM, Jonathan Lave <JLave@cftc.gov> wrote: 

Tarek 

Thank you for the respsonses. 

Lois Gregory, who is ccd on this email, is reviewing your financial documents. She would like to 

discuss whether Kalshi meet the net asset test. Please let us know w hen you might be free t o 

have this conversation. 

Jonathan 

From: Tarek Mansour [mailto:tarek@kalshj.com] 

Sent: Tuesday, March 10, 2020 6:27 PM 

To: Lee, Jasmine 

Cc: Lave, Jonathan; Luana Lopes Lara; Jeffrey Bandman; Sam Vergara 

Subject: [EXTERNAL] Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Jonathan and Jasmine, 
Thank you again for the questions provided with respect to KalshiEX LLC's DCM 

application. Attached find answers to the questions provided and amendments we have made 

to the relevant exhibits as requested as "Submission - Kalshi DCM Application Second 

Round ofQuestions and Answers 3-10-20". As always, we welcome any feedback and 

thoughts that you have with respect to this round ofanswers. 

We are submitting simultaneously a petition for confidential treatment ofthe application 

materials to the Assistant Secretary ofthe Commission for Freedom ofInformation pursuant 

to Section 145.9(d) ofthe Commission's regulations promulgated under the Act, a copy of 

which is enclosed with this letter. 

Ifyou have any questions regarding this submission, please don't hesitate to contact me 

at tarek@kalshi.com or 61 7-909-t 097. 

Sincerely, 

Tarek Mansour 

Chief Executive Officer 

Sent via Superhuman 

On Tue, Feb 25, 2020 at 11:31 AM, Jasmine Lee <JLee@cftc.gov> wrote: 

Hello Tarek, 

Please find attached the 2nd Round of questions related to the Kalshi DCM application 

review, compiled by staff. 

In the interest ofkeeping things moving along with the review, please provide Kalshi 's 

response by March 10. 
Also, please let us know when you expect to be ready to demonstrate your CLOB and 

surveillance functionalities. For your reference, we sent the demo list via e-mail on January 

9. 

Kind Regards, 

Jasmine Lee 

Special Counsel, Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5226 

JLee@cftc.gov 
From: Jarek Mansour 

To: Gregoiy. Lois J. 

Cc: Lave. Jonathan: Lee. Jasmine 

Subject: [EXTERNAL] RE: RE: RE: Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Date: Tuesday, March 24, 2020 12:09:09 PM 

Attachments: imaae002.ona 

imaae001.ona 

imaaeoos.ona 

imaae003.ona 

imaae004.png 

LLC Bank Funds Screenshot.ona 

Apologies, sent the wrong attachment. The screenshot is (correctly) attached here. 

Sent via Superhuman 

On Tue, Mar 24, 2020 at 9:03 AM, Tarek Mansour <tarek@ka!shj com> wrote: 

Lois, 

I have attached a screenshot of our bank account showing the balance. Is this what is 

expected? I can ask our banking provider if this is not what is intended. 

Thank you! 

Tarek 

Sent via Superhuman 

On Tue, Mar 24, 2020 at 8:52 AM, Lois J. Gregory <Igregory@cftc.gov> wrote: 

HI Tarek. Thanks for sending the letter but we always get a an actual screenshot of a computer 

database of the bank t hat shows the actual funds on deposit. Is that possible here? Thank you, 

Lois Gregory 

From: Tarek Mansour [mailto:tarek@kalshi.com] 

Sent: Monday, March 23, 2020 4:29 PM 

To: Gregory, Lois J. 

Cc: Lave, Jonathan; Sam Vergara; Jeffrey Sandman; Luana Lopes Lara 

Subject: [EXTERNAL] RE: RE: Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Lois, 

Definitely! Please find attached a Statement of Funds and a Bank Letter reflecting the 
amount in the savings account. 

Thank you, 

Tarek 

Sent via Superhuman 

On Mon, Mar 23, 2020 at 10:59 AM, Lois J.Gregory <lgregory@cftc.gov> wrote: 

Tarek - We need a bank screen shot supporting t he amount in the savings account. We ask this 

of all appl icants. Thank you. Lois Gregory 

From: Tarek Mansour [mailto:tarek@kalshi.com] 

Sent: Monday, March 23, 2020 1:40 PM 

To: Lave, Jonathan 

Cc: Luana Lopes Lara; Jeffrey Sandman; Sam Vergara; Lee, Jasmine; Gregory, Lois J. 

Subject: [EXTERNAL] RE: Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Jonathan and Lois, 

Great to chat last time and thanks for the feedback. Attached is an updated Exhibit 1-2 

showing~b)(4) I 

Thank you, 

Tarek 
Sent via Superhuman 

On Wed, Mar 11, 2020 at 7:06 AM, Jonathan Lave <JLave@cftc.gov> wrote: 

Tarek 

Thank you for t he respsonses. 

Lois Gregory, who is ccd on this email, is reviewing your financial documents. She would like to 

discuss whether Ka lshi meet t he net asset test . Please let us know when you might be free to 

have t his conversat ion. 

Jonathan 

From: Tarek Mansour[mailto:tarek@kalshi,com] 

Sent: Tuesday, March 10, 2020 6:27 PM 

To: Lee, Jasmine 

Cc: Lave, Jonathan; Luana Lopes Lara; Jeffrey Sandman; Sam Vergara 

Subject: [EXTERNAL] Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Jonathan and Jasmine, 

Thank you again for the questions provided with respect to KalshiEX LLC's DCM 

application. Attached find answers to the questions provided and amendments we have 

made to the relevant exhibits as requested as "Submission - Kalshi DCM Application 

Second Round ofQuestions and Answers 3-10-20". As always, we welcome any feedback 

and thoughts that you have with respect to this round of answers. 

We are submitting simultaneously a petition for confidential treatment ofthe application 

materials to the Assistant Secretary ofthe Commission for Freedom of Information 

pursuant to Section 145.9(d) of the Commission's regulations promulgated under the Act, 

a copy ofwhich is enclosed with this letter. 
If you have any questions regarding this submission, please don't hesitate to contact me 

at tarek@kalshi.com or 6 17-909-1 097. 

Sincerely, 

Tarek Mansour 

ChiefExecutive Officer 

Sent via Superhuman 

On Tue, Feb 25, 2020 at 11 :31 AM, Jasmine Lee <JLee@cftc.gov> wrote: 

Hello Tarek, 

Please find attached the 2nd Round of questions related to the Kalshi DCM application 

review, compiled by staff. 

In the interest of keeping things moving along with the review, please provide Kalshi's 

response by March 10. 

Also, please let us know when you expect to be ready to demonstrate your CLOB and 

surveillance functionalities. For your reference, we sent the demo list via e-mail on 

January 9. 

Kind Regards, 

Jasmine Lee 

Special Counsel, Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5226 
B JLee@cftc.gov 
From: 

To: 

Cc: 

Subject: 

Date: 

Attachments: 

Jarek Mansour 

Gregoiy. Lois J. 

Laye. Jonathan: Sam Yergara: Jeffrey Bandman: Luana Lopes Lara 

[EXTERNAL] RE: RE: Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Monday, March 23, 2020 4:32:25 PM 

imaae00l.ona 

imaae002.ona 

imaae003.ona 

imaae004.ona 

imaae005.png 

Statement of Funds - KalshiEx.odf 

Bank Letter - KalsbiEx.odf 

Lois, 

Definitely! Please find attached a Statement ofFunds and a Bank Letter reflecting the amount 

in the savings account. 

Thank. you, 

Tarek 

Sent via Superhuman 

On Mon, Mar 23, 2020 at 10:59 AM, Lois J. Gregory <lgregory@cftc.gov> wrote: 

Tarek - We need a bank screen shot supporting the amount in the savings account. We ask this of 

all applicants. Thank you. Lois Gregory 

From: Tarek Mansour [mailto:tarek@kalshi.com] 

Sent: Monday, March 23, 2020 1:40 PM 

To: Lave, Jonathan 

Cc: Luana Lopes Lara; Jeffrey Bandman; Sam Vergara; Lee, Jasmine; Gregory, Lois J. 

Subject: [EXTERNAL] RE: Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Jonathan and Lois, 

Great to chat last time and thanks for the feedback. Attached is an updated Exhibit I-2 

showingfbl(4) I 

Thank you, 
Tarek 

Sent via Superhuman 

On Wed, Mar 11, 2020 at 7:06 AM, Jonathan Lave <JLave@cftc gov> wrote: 

Tarek 

Thank you for the respsonses. 

Lois Gregory, who is ccd on this email, is reviewing your financial documents. She would like to 

discuss whether Kalshi meet the net asset test. Please let us know when you might be free to 

have this conversation. 

Jonathan 

From: Tarek Mansour [mailto:tarek@kalshi,com] 

Sent: Tuesday, March 10, 2020 6:27 PM 

To: Lee, Jasmine 

Cc: Lave, Jonathan; Luana Lopes Lara; Jeffrey Sandman; Sam Vergara 

Subject: [EXTERNAL] Re: Kalshi DCM Application - 2nd Round questions 2.25.20 

Jonathan and Jasmine, 

Thank you again for the questions provided with respect to KalshiEX LLC's DCM 

application. Attached find answers to the questions provided and amendments we have made 

to the relevant exhibits as requested as "Submission - Kalshi DCM Application Second 

Round ofQuestions and Answers 3-10-20". As always, we welcome any feedback and 

thoughts that you have with respect to this round ofanswers. 

We are submitting simultaneously a petition for confidential treatment ofthe application 
materials to the Assistant Secretary ofthe Commission for Freedom ofInformation pursuant 

to Section 145.9(d) ofthe Commission's regulations promulgated under the Act, a copy of 

which is enclosed with this letter. 

Ifyou have any questions regarding this submission, please don't hesitate to contact me 

at tarek@kalshi.com or 617-909-1097. 

Sincerely, 

Tarek Mansour 

ChiefExecutive Officer 

Sent via Superhuman 

On Tue, Feb 25, 2020 at 11:31 AM, Jasmine Lee <JLee@cftc.gov> wrote: 

Hello Tarek, 

Please find attached the 2nd Round of questions related to the Kalshi DCM application 

review, compiled by staff. 

In the interest ofkeeping things moving along with the review, please provide Kalshi's 

response by March 10. 

Also, please let us know when you expect to be ready to demonstrate your CLOB and 

surveillance functionalities. For your reference, we sent the demo list via e-mail on January 

9. 

Kind Regards, 

Jasmine Lee 

Special Counsel, Division of Market Oversight 
Commodity Futures Trading Commission 

202-418-5226 

JLee@cftc.gov 
From: Lave Jonathan 

To: "Tarek Mansour" 

Cc: "Sam Vergara"; "Jeffrey Baodmao11 11

; Luaoa Lopes Lara"; Lee, Jasmine

Subject: RE: Kalshi DCM Application - 5th Round of Questions 

Date: Monday, March 30, 2020 9:09:00 AM 

Attachments: Kalshi Fifth Round of Ouestions.docx 

imaaeoo1 ona 

Please respond to the attached document. I inadvertently sent you an earlier draft. 

From: Lave, Jonathan 

Sent: Monday, March 30, 2020 9:04 AM 

To: 'Tarek Mansour' 

Cc: Sam Vergara; Jeffrey Sandman; Luana Lopes Lara; Lee, Jasmine 

Subject: Re: Kalshi DCM Application - 5th Round of Questions 

All: 

Please find the fifth round of questions. Please contact Jasmine or me if you have any questions/ 

concerns. 

Jonathan 

Jonathan M. Lave 

Associate Director, Market Review 

Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5983 

jlave@cftc,gov 
Kalshi Fifth Round ofQuestions 

1) Please review the Covid-19 no-action letters recently issued by CFTC staffand determine 

ifany would be applicable to Kalshi. Ifso, please revise the appropriate documents and 

cite to the letters in the revised provisions. 

2) Commission Regulation 38.157: l<b)(4) I 

b)(4) 

3) Commission Regulation 38.157: Rule 5.10 provides that prices may be adjusted. Please 

explain the mechanics of a price adjustment. In addition, the rule should provide greater 

detail as to how Kalshi would determine the correct price. Finally, please determine 

whether CFTC Letter No. 20-01 is applicable and if so, revise the rules accordingly and 

cite to the letter. 

4) Commission Regulation 38.710: Rules 9.5 and 9.6 do not satisfy all ofthe requirements 

ofCommission regulation 38.710. Please revise. 
From: Jarek Mansour 

To: Lave, Jonathan 

Cc: Sam Vergara: Jeffrey sandman: Luana Lopes Lara: Lee. Jasmjne 

Subject: [EXTERNAL] Re: Fourth Round of Questions 

Date: Tuesday, March 31, 2020 7:47:51 PM 

Attachments: imaae00l.ona 

FOIA - Confidentialitv Reauest com.odf 

submission - Kalshi PCM APPiication Fourth Round of Questions 3-31-20.zjo 

Jonathan, 

Hope all is well. Attached please find answers to the questions provided and relevant exhibits 

as "Submission - Kalshi DCM Application Fourth Round ofQuestions and Answers 3-31-20". 

As always, we welcome any feedback and thoughts that you have with respect to this round of 

answers. 

We are submitting simultaneously a petition for confidential treatment ofthe application 

materials to the Assistant Secretary ofthe Commission for Freedom ofInformation pursuant 

to Section 145.9(d) ofthe Commission's regulations promulgated under the Act, a copy of 

which is enclosed with this letter. 

Ifyou have any questions regarding this submission, please don't hesitate to contact me 

at tarek@kalshi.com or 617-909-1097. 

Sincerely, 

Tarek Mansour 

Chief Executive Officer 

Sent via Superhuman 

On Mon, Mar 16, 2020 at 9:30 AM, Jonathan Lave <JLave@cftc.gov> wrote: 

Tarek 

Please find our fourth round of questions. Please provide responses by the end of the month at 

the latest. 

Best 

Jonathan 
[i] 

Jonathan M. Lave 

Associate Director, Market Review 

Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5983 

jlave@cftc.gov 
From: Sam Vergara 

To: Lave, Jonathan 

Cc: Jarek Mansour: Jeffrey sandman: Luana Lopes Lara: Lee. Jasmine 

Subj ect: [EXTERNAL] Re: Kalshi DCM Application - 5th Round of Questions 

Date: Thursday, April 9, 2020 7:52:21 PM 

Attachments: imaae00l.ona 

Submission - Kalshi DCM Aoolication fifth Round of Questions 4-9-20 zio 

Hi Jonathan and Jasmine, 

Please find attached Kalshi's responses to the fifth round of questions along with an updated copy of the 

Rulebook. Please also find an updated copy of our Compliance Manual which ~b)(4) I 

b)(4) 

Thanks again for all of your assistance and please do not hesitate to let us know if you require further 

information. 

Kind regards, 

Samuel Vergara 

Chief Compliance Officer 

KalshiEx LLC 

On Mon, Mar 30, 2020 at 8: 10 AM Lave, Jonathan <JLave@cftc.gov> wrote: 

Please respond to the attached document. I inadvertently sent you an earlier draft. 

From: Lave, Jonathan 

Sent: Monday, March 30, 2020 9:04 AM 

To: 'Tarek Mansour' 

Cc: Sam Vergara; Jeffrey Sandman; Luana Lopes Lara; Lee, Jasmine 

Subject: Re: Kalshi DCM Application - 5th Round of Questions 

All: 

Please find the fifth round of questions. Please contact Jasmine or me if you have any questions/ 

concerns. 

Jonat han 
[i] 

Jonathan M. Lave 

Associate Director, Market Review 

Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5983 

jlave@cftc.gov 
From: Laye Jonathan 

To: "Tarek Mansour" 

Cc: Sam Vergara: Jeffrey sandman: Luana Lopes Lara: Lee. Jasmjne 

Subject: Sixth Round of Questions 

Date: Tuesday, June 16, 2020 9:06:00 AM 

Attachments: Kalshi 6th Round of Ouestions.docx 

imaaeoo1 ona 

All, 

Staff is reviewing our notes and have ident ified some outstanding issues. Please try to respond by 

t he end of the month. 

Thank you 

Jonath an 

Jonathan M. Lave 

Associate Director, Market Review 

Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5983 

jlave@cftc.gov 
I 

Sixth Round ofQuestions 

1. § 38.553: 

• Section 13.1 ofthe compliance manual requires (b)(

4) 

b)(4) 

b)(4) § 38.553(a) states that a DCM must conduct at least annual 

reviews ofall members and persons and firms subject to the DCM's recordkeeping rules, 

w~ 

fb)(4) 

• § 38.553(b) requires a DCM to have an audit trail enforcement program to identify 

members and persons and firms subject to DCM recordkeeping rules that have failed to 

maintain high levels of compliance with such requirements. Kalshi should have a 

monthly program to review usage patterns or missing/inaccurate critical audit trail fields 

on a regular basis. 

2. § 38.600: Please add provision in the rulebook that Members must also be members ofthe 

DCO that clears trades executed on Kalshi or pursuant to Kalshi rules. 

3. § 38.702: Please add to rule 2.7 that a disciplinary panel "must not include any members 

of the DCM's compliance staffor any person involved in adjudicating any other stage ofthe 

same proceeding." 

4. § 38.707: 

• Please add to rule 9.2(g)(3) that Kalshi shall make reasonable efforts to secure the 

presence of all other persons called as witnesses whose testimony would be relevant 

• Please add to rule ~b)(4) 

b)(4) 

5. § 38.951: Please add to the rulebook that Kalshi will keep maintain records, including 

trade records and investigatory and disciplinary files, in accordance with the requirements of 

§ 1.31 

6. § 38.1100: Please note that Kalshi will need to submit documents that demonstrate its 

ability to comply with financial resource requirements once the stay is lifted. 

1 
7. § 38.1200: Please add a provision in the compliance manual that~b)(4) 

(b)(4) 

2 
From: Laye Jonathan 

To: "Sam Vergara": Turek Mansour; Luana Lopes Lara; Jeffrey Bandman 

Cc: Lee. Jasmine 

Subject: Follow up on 38.553(b) compliance 

Date: Monday, June 29, 2020 10:03:00 AM 

Attachments: imaae00l.ona 

All 

I hope you had a nice weekend. 

Staff has reviewed your response to 38.553. In your compliance manual, fb)(4) 

Thanks much 

Jonathan 

From: Sam Vergara [mailto:svergara@kalshi.com] 

Sent: Thursday, June 18, 2020 7:23 PM 

To: Lee, Jasmine 

Cc: Tarek Mansour; Luana Lopes Lara; Jeffrey Bandman; Lave, Jonathan 

Subject: [EXTERNAL] Re: Re: Sixth Round of Questions 

Jonathan and Jasmine, 

Thank you again for the initial and follow-up inquiries. Please find attached Kalshi's formal 

response for your review as well as all amended exhibits. For simplicity, any follow-up 

requests have been included as additional items on the response list. You will also find that 

references tofb)(4) Ihave been amended to now reflect !(b)(4) l 

Please note that Kalshi requests continued dialogue with Commission staffover the reasonable 

application of§ 38.553 and looks forward to scheduling those discussions at the Commission's 

convenience. Likewise, ifI can be offurther assistance in resolving any remaining questions 

or comments, please don't hesitate to let me know. 

Kind regards, 

Sam Vergara 

Chief Compliance Officer 

KalshiEX LLC 

On Wed, Jun 17, 2020 at 4:52 PM Lee, Jasmine <JLee@cftc gov> wrote: 

Hi Sam, 
Thankyou for the quick e-mail response and for your note as well. We will use your Kalshi e-ma il 

address going forwa rd. 

As you are updating the rulebook in response to staff's requests, as attached to Jonathan's e-mail 

below, this is just a gentle reminder to update all rulebook sections and subsections that had 

referred to fbl(4) I. 

Also, in this next round of ru lebook edits, would you please add a provision similar to the below? 

Staff has noted to us that this is a fairly common provision in DCM rulebooks. 

The DCO Rules shall prevail in the event of any conflict or inconsistency between the 

Exchange Rules and the DCO Rules with respect to any Clearing Member's responsibilities 

or obligations under the DCO Rules. All Clearing Members are bound by the DCO Rules. 

Than kyou. 

Kind Rega rds, 

Jasmine 

Jasmine Lee 

Special Counsel, Market Review 

Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5226 

jlee@cftc.gov 

From: Sam Vergara [mailto:svergara@kalshj.com] 

Sent: Wednesday, June 17, 2020 11:05 AM 

To: Lee, Jasmine 

Cc: Tarek Mansour; Luana Lopes Lara; Jeffrey Sandman; Lave, Jonathan 

Subject: [EXTERNAL] Re: Sixth Round of Questions 

Hi Jasmine, 

Thank you for the email. As a quick response, I can indeed confirml(bl(

4

l 

fbl(4l 1- We will accordingly include the amendment with the remaining 

responses and provide it to you for review shortly. 

On a related note - I apologize for any confusion, but please feel free to use my Kalshi email 

address for future correspondence as I have transitioned to Kalshi full-time and am no 

longer employed with Bovill. 

Kind regards, 

I 
Samuel Vergara 

ChiefCompliance Officer 

KalshiEx LLC 

From: Lee, Jasmine <JLee@cftc.gov> 

Date: Wed, Jun 17, 2020 at 3:47 AM 

Subject: RE: Sixth Round ofQuestions 

To: Lave, Jonathan <JLave@cftc gov>, Tarek Mansour <tarek@ka!shj com> 

Cc: Sam Vergara <svergara@bovill.com>, Jeffrey Bandman 

<jeff@bandmanadvisors.com>, Luana Lopes Lara <luana@kalshi.com> 

All, 

Quick follow-up question from staff, in addition to the below e-mai l. Please respond as soon as 

possible. 

Ru le 5.5 Handling of Customer Orders, strongly implies that customer orders are confidential 

(i.e.fb)(4) I) but does not state t his outright. Please confirm 

l(b)(4) Iif t hat is the case. If t his is t he case, please update 

t he rulebook to reflect t his. 

Thank you and Kind Regards, 

Jasmine Lee 

Special Counsel, Market Review 

Error! Filename not 

specified. 

Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5226 

jlee@cftc.gov 

From: Lave, Jonathan 

Sent: Tuesday, June 16, 2020 9:07 AM 

To: Tarek Mansour 

Cc: Sam Vergara; Jeffrey Sandman; Luana Lopes Lara; Lee, Jasmine 

Subject: Sixth Round of Questions 

All, 

Staff is reviewing our notes and have identified some outstanding issues. Please try to respond 
by the end of the month. 

Thank you 

Jonathan 

Jonathan M. Lave 

Associate Director, Market Review 

Error! Filename not 

specified. 

Division of Market Oversight 

Commodity Futures Trading Commission 

202-418-5983 

jlave@cftc.gov