CFTC Regulation 40.2(a) Notification Regarding the Initial Listing of the “Will the S&P 500 be <above/below/exactly/at least/at most/between> <value> at the close on November 2, 2026?” Contract

KalshiEX LLC · received by the CFTC 27 October 2026 · the filing (PDF)

Summary

Warrant Check read 6 operative provisions in this filing. Across them, 15 of 36 checks are present, 6 partial and 12 absent. 1 provision has every check present. 1 statement the exchange makes to the CFTC about the filing itself (such as that it complies with the Act) is not contract terms and is left out. 1 rule on who may trade is not a settlement term and is left out.

15 present6 partial12 absent3 not assessed

Staff-letter lens

The payout rule here is “Payout Criterion / Market Outcome determination”: the rule that says what makes the contract pay Yes or No. The other 5 rules are fallback rules: what happens if the event is cancelled or delayed, the data goes missing, or the result is challenged.

Topic the staff letters raise	Payout rule	Fallback rules
Settlement source identified	Addressed	1 of 5 addressed
Settlement method described	Addressed	1 of 5 addressed
Covers every case it applies to	Addressed	3 of 5 addressed
Timing set	Partly	3 of 5 addressed
Terms in the public filing	In the filing	3 of 5 in the filing

How the lens works and what it does not read

What the wording addresses

Payout Criterion / Market Outcome determination: Independent Verification, Suitable Method, Defined Benchmark, Conclusive Link, Comprehensive Coverage.
“Expiration Values that the value of the S&P 500 is”
Source Agency hierarchy & dispute resolution: Comprehensive Coverage, Relevant Timeline.
“hierarchy set out in Source Agency above will govern”
No-data clarification — every check present.
“all markets will resolve to No, unless a”
Correction / material error clause: Comprehensive Coverage, Relevant Timeline.
“published value of the S&P 500 contains a material error”

What the wording leaves open

Payout Criterion / Market Outcome determination “Expiration Values that the value of the S&P 500 is”
- Relevant Timeline — Partial: Payout Criterion and Underlying both reference 'the close,' but the separately defined 'Expiration time' field states 10:00 AM ET, creating an internal mismatch as to which time the evidence must cover.
What would close it: Reconcile the stated Expiration time (10:00 AM ET) with the 'official close' definition so the time the evidence covers is unambiguous.
Source Agency hierarchy & dispute resolution “hierarchy set out in Source Agency above will govern”
- Independent Verification — Partial: The hierarchy itself relies on named, concrete third-party publications (pass-level), but 'continuing ambiguity or dispute resolved by Kalshi' rests on Kalshi's own determination with no named evidence.
- Suitable Method — Partial: Ordering can resolve simple source conflicts, but the residual 'continuing dispute' procedure is undefined in the supplied text (depends on absent Rule 7.1).
- Defined Benchmark — Partial: The hierarchy order is a named standard for first-instance conflicts, but no standard is given for unresolved disputes beyond reference to Rule 7.1.
- Conclusive Link — Partial: Following the hierarchy establishes the governing value in ordinary conflicts; entailment for 'continuing' disputes is unclear absent Rule 7.1's content.
- Relies on material referred to but not in the public filing.
What would close it: Include the text of Rule 7.1 describing the procedure, standard, and evidentiary basis for resolving continuing Source Agency disputes.
Correction / material error clause “published value of the S&P 500 contains a material error”
- Independent Verification — Partial: The 'Source Agency corrects' limb rests on third-party published corrections (admissible), but 'Exchange determines...material error' rests on Kalshi's own unverified judgment.
- Suitable Method — Absent: No procedure or methodology is specified for identifying a 'material error'; the claim is stronger than any described method can support.
- Defined Benchmark — Absent: No definition or threshold given for what constitutes a 'material error.'
What would close it: Define an objective standard or threshold (e.g., deviation percentage, independent confirmation) for what counts as a 'material error.'
Death/terrorism contingency settlement “Kalshi may, in its sole discretion, settle the Contract”
- Independent Verification — Absent: Rests entirely on Kalshi's 'sole discretion' and ability to use an 'approximate time'; no named third-party evidence or document is specified.
- Suitable Method — Absent: Discretionary approximation cannot support the precision the clause asserts (identifying the correct pre-event last traded price).
- Defined Benchmark — Absent: No named threshold for 'materially affected,' 'fair settlement,' or the relevant timing window; all left to discretion.
- Comprehensive Coverage — Absent: No defined population of trades/data (e.g., which trades count) is specified beyond discretion.
- Relevant Timeline — Absent: The triggering time is expressly allowed to be 'approximate,' and the relevant pre-circumstance window is undefined.
What would close it: Specify an objective procedure and window (e.g., defined look-back period, independent data source) for identifying the relevant pre-event price.
Contingencies - Market Outcome Review Process (Rule 7.1) “Kalshi has the right to determine payouts pursuant to Rule”
- Independent Verification — Absent: The operative evidence/procedure resides in Rule 7.1, which is referenced but not supplied; as stated the process is Kalshi's own determination.
- Suitable Method — Absent: Cannot be assessed from supplied text whether any procedure exists to establish the triggering claim.
- Defined Benchmark — Absent: No standard is stated in the supplied text; it resides in the absent Rule 7.1.
- Comprehensive Coverage — Absent: Undefined in the supplied text.
- Relevant Timeline — Absent: Undefined beyond noting Settlement Date is delayed 'unless under review.'
- Relies on material referred to but not in the public filing.
What would close it: Include the text of Rule 7.1 specifying the evidentiary procedure, standard, and scope/time limits for Market Outcome Review determinations.

Every provision read

Payout Criterion / Market Outcome determination

“Expiration Values that the value of the S&P 500 is”

Determination: the S&P 500's official closing value on November 2, 2026 satisfies the specified comparison (above/below/exactly/at least/at most/between) relative to <value> · Consequence: Market Outcome is fixed as Yes or No, triggering payout of an absolute amount to long or short position holders

Present Independent Verification. Evidence is the official closing value of the S&P 500 as calculated by S&P Dow Jones Indices and published via named Source Agencies - a concrete, receivable third-party figure.

Present Suitable Method. A single published official close, compared via defined operators (>,<,=,>=,<=), can establish the precise comparison the clause asserts.

Present Defined Benchmark. Standard named: 'official closing value...measured to two (2) decimal places' as designated by S&P Dow Jones Indices.

Present Conclusive Link. Satisfying the comparison against the published two-decimal close directly produces the Yes/No outcome as defined.

Present Comprehensive Coverage. Claim concerns a single index value at a single close; evidence is that same single official close - exact match.

Partial Relevant Timeline. Payout Criterion and Underlying both reference 'the close,' but the separately defined 'Expiration time' field states 10:00 AM ET, creating an internal mismatch as to which time the evidence must cover.

Source Agency hierarchy & dispute resolution

“hierarchy set out in Source Agency above will govern”

Determination: when Source Agencies conflict as to the S&P 500 value, the higher-ranked source's figure is authoritative; unresolved conflicts are determined by Kalshi · Consequence: the hierarchy value governs settlement; continuing disputes are referred to Kalshi under Rule 7.1

Partial Independent Verification. The hierarchy itself relies on named, concrete third-party publications (pass-level), but 'continuing ambiguity or dispute resolved by Kalshi' rests on Kalshi's own determination with no named evidence.

Partial Suitable Method. Ordering can resolve simple source conflicts, but the residual 'continuing dispute' procedure is undefined in the supplied text (depends on absent Rule 7.1).

Partial Defined Benchmark. The hierarchy order is a named standard for first-instance conflicts, but no standard is given for unresolved disputes beyond reference to Rule 7.1.

Partial Conclusive Link. Following the hierarchy establishes the governing value in ordinary conflicts; entailment for 'continuing' disputes is unclear absent Rule 7.1's content.

Present Comprehensive Coverage. Hierarchy covers the full enumerated list of Source Agencies for the single index value in question.

Present Relevant Timeline. Operative at the point near Expiration when a conflict arises, matching the claim's temporal scope.

No-data clarification

“all markets will resolve to No, unless a”

Determination: no Source Agency has published S&P 500 data by the Expiration Date · Consequence: all markets resolve to No, or Yes for a listed 'No data' strike

Present Independent Verification. Absence of publication across the finite, named list of Source Agencies is objectively checkable against their public feeds.

Present Suitable Method. Checking whether any of the enumerated sources published a value is a procedure capable of establishing the 'no data' claim.

Present Defined Benchmark. Standard named: 'no data for the Underlying published by any Source Agency by the Expiration Date.'

Present Conclusive Link. Meeting that absence-standard directly produces the defined no-data resolution.

Present Comprehensive Coverage. Covers all named Source Agencies, matching the population the claim asserts.

Present Relevant Timeline. Bounded expressly 'by the Expiration Date,' matching the claim's temporal scope.

Correction / material error clause

“published value of the S&P 500 contains a material error”

Determination: a Source Agency has corrected a value prior to Expiration, or the Exchange determines a published value contains a material error · Consequence: the corrected value governs, or Expiration is delayed pending correction (falling back to no-data rule if none is published)

Partial Independent Verification. The 'Source Agency corrects' limb rests on third-party published corrections (admissible), but 'Exchange determines...material error' rests on Kalshi's own unverified judgment.

Absent Suitable Method. No procedure or methodology is specified for identifying a 'material error'; the claim is stronger than any described method can support.

Absent Defined Benchmark. No definition or threshold given for what constitutes a 'material error.'

Not assessed Conclusive Link. Not assessed: no Defined Benchmark is named, so whether meeting it would settle the question cannot be judged.

Present Comprehensive Coverage. Applies to the single published value in question, matching the claim's scope.

Present Relevant Timeline. Expressly bounded: corrections 'prior to Expiration' count; post-Expiration corrections are excluded.

Death/terrorism contingency settlement

“Kalshi may, in its sole discretion, settle the Contract”

Determination: a relevant person has died, or an act/attempted act of violence or terrorism has directly affected the event, and what the fair settlement price is · Consequence: Kalshi may settle at the last traded price (or an alternative price it or the Outcome Review Committee determines), final and unreviewable

Absent Independent Verification. Rests entirely on Kalshi's 'sole discretion' and ability to use an 'approximate time'; no named third-party evidence or document is specified.

Absent Suitable Method. Discretionary approximation cannot support the precision the clause asserts (identifying the correct pre-event last traded price).

Absent Defined Benchmark. No named threshold for 'materially affected,' 'fair settlement,' or the relevant timing window; all left to discretion.

Not assessed Conclusive Link. Not assessed: no Defined Benchmark is named, so whether meeting it would settle the question cannot be judged.

Absent Comprehensive Coverage. No defined population of trades/data (e.g., which trades count) is specified beyond discretion.

Absent Relevant Timeline. The triggering time is expressly allowed to be 'approximate,' and the relevant pre-circumstance window is undefined.

Contingencies - Market Outcome Review Process (Rule 7.1)

“Kalshi has the right to determine payouts pursuant to Rule”

Determination: the Expiration Value cannot be determined on the Expiration Date, or the Market Outcome requires review · Consequence: Kalshi has the right to determine payouts under Rule 7.1, delaying the Settlement Date during review

Absent Independent Verification. The operative evidence/procedure resides in Rule 7.1, which is referenced but not supplied; as stated the process is Kalshi's own determination.

Absent Suitable Method. Cannot be assessed from supplied text whether any procedure exists to establish the triggering claim.

Absent Defined Benchmark. No standard is stated in the supplied text; it resides in the absent Rule 7.1.

Not assessed Conclusive Link. Not assessed: no Defined Benchmark is named, so whether meeting it would settle the question cannot be judged.

Absent Comprehensive Coverage. Undefined in the supplied text.

Absent Relevant Timeline. Undefined beyond noting Settlement Date is delayed 'unless under review.'

Read 3 November 2026 with Warrant Check (instrument 1.0). Labels: Present, Partial, Absent describe whether each check is found in the wording as written. Not assessed: Conclusive Link cannot be judged where no Defined Benchmark is named; that follows from the missing benchmark and is not a separate gap.

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