CFTC Regulation 40.2(d) Class Certification Regarding the Initial Listing of the “Will <party> hold <above/below/exactly/at least/at most/between> <count> seats in <chamber> after <election>?” Contracts

KalshiEX LLC · received by the CFTC 29 October 2026 · the filing (PDF)

Summary

Warrant Check read 7 operative provisions in this filing. Across them, 13 of 42 checks are present, 2 partial and 22 absent. 2 provisions have 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.

13 present2 partial22 absent5 not assessed

Staff-letter lens

The payout rule here is “Main Payout Criterion / Settlement”: the rule that says what makes the contract pay Yes or No. The other 6 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 6 addressed
Settlement method described	Addressed	1 of 6 addressed
Covers every case it applies to	Addressed	1 of 6 addressed
Timing set	Addressed	2 of 6 addressed
Terms in the public filing	In the filing	5 of 6 in the filing

How the lens works and what it does not read

What the wording addresses

Main Payout Criterion / Settlement — every check present.
“<party> holds <above/below/exactly/at least/at most/between> <count> seats in <chamber>”
Source Agency conflict hierarchy — every check present.
“the hierarchy set out in Source Agency above will govern”
Correction/material-error determination: Relevant Timeline.
“the Exchange determines, in its sole discretion, that the correction remedies”

What the wording leaves open

Non-convening fallback settlement “resolve to the last fair price, as determined by the Exchange”
- Independent Verification — Absent: 'Last fair price' is a figure 'determined by the Exchange in its sole discretion' - the party's own say-so, not receivable third-party evidence.
- Suitable Method — Absent: Unconstrained sole discretion is not a procedure capable of establishing a specific price with any checkable certainty.
- Defined Benchmark — Absent: No threshold, formula, or reference point is named for what constitutes a 'fair' price.
- Comprehensive Coverage — Absent: No defined population or data set from which the 'last fair price' is drawn.
- Relevant Timeline — Absent: No specified point or window in time the 'last fair price' is anchored to.
What would close it: Define an objective, time-anchored methodology (e.g., last traded price at a specified timestamp verified by an independent record) for the fallback price.
Correction/material-error determination “the Exchange determines, in its sole discretion, that the correction remedies”
- Independent Verification — Absent: Determination rests on the Exchange's own 'sole discretion,' not a third-party or objective verification.
- Suitable Method — Absent: Unconstrained discretion cannot reliably establish whether an error is 'material' at any defined level of certainty.
- Defined Benchmark — Absent: No definition or threshold is given for what makes an error 'material.'
- Comprehensive Coverage — Absent: No defined scope of what records/values are compared to assess materiality.
What would close it: Define objective materiality criteria (e.g., numeric seat-count discrepancy) rather than unstructured Exchange discretion.
No-data fallback settlement “If no reliable data is available by the Expiration Date”
- Independent Verification — Absent: 'Reliable' and 'last fair price' are Exchange-determined, not third-party-verifiable facts.
- Suitable Method — Absent: No defined procedure exists to check data 'reliability' or set a fallback price with asserted certainty.
- Defined Benchmark — Absent: No named threshold for 'reliable data' or for the fallback price.
- Comprehensive Coverage — Absent: No defined data population checked for absence of 'reliable data.'
- Relevant Timeline — Partial: Bounded by the Expiration Date but no further temporal specification of what 'last fair price' covers.
What would close it: Specify objective criteria for data reliability and a verifiable fallback valuation method.
Death/violence contingency settlement “Kalshi may, in its sole discretion, settle the Contract”
- Independent Verification — Absent: Determination is Kalshi's own sole discretion, expressly insulated from review - not third-party-receivable evidence.
- Suitable Method — Absent: Sole discretion, including reliance on an 'approximate time,' cannot establish the claim at any checkable level of certainty.
- Defined Benchmark — Absent: No defined threshold for 'materially affected' trading or 'fair settlement.'
- Comprehensive Coverage — Absent: No defined population of trades or data examined to assess material effect.
- Relevant Timeline — Partial: References 'last traded price prior to' the event/circumstances but allows an 'approximate time,' loosening the temporal anchor.
What would close it: Define objective, externally verifiable criteria (e.g., independent confirmation of the event and a fixed timestamp) for this contingency.
Market Outcome Review Process / Contingencies “Kalshi has the right to determine payouts pursuant to Rule 7.1”
- Independent Verification — Absent: Trigger and process depend on Kalshi's own discretion ('may, at its sole discretion, initiate'); underlying Rule 7.1 content is not supplied.
- Suitable Method — Absent: Cannot assess capability; the governing procedure (Rule 7.1) is not in the supplied text.
- Defined Benchmark — Absent: No standard is visible in the supplied text; it is deferred entirely to an unincluded Rule 7.1.
- Comprehensive Coverage — Absent: Scope of Rule 7.1's review process is unknown from supplied text.
- Relevant Timeline — Absent: Timing of the review process is unknown from supplied text.
- Relies on material referred to but not in the public filing.
What would close it: Include the text of Rule 7.1 (Market Outcome Review Process) so its evidentiary procedure can be assessed.

Every provision read

Main Payout Criterion / Settlement

“<party> holds <above/below/exactly/at least/at most/between> <count> seats in <chamber>”

Determination: the specified party holds the specified seat-count comparison in the specified chamber as of the Measurement Time · Consequence: binary $1.00 settlement paid to Yes-side or No-side holders

Present Independent Verification. Evidence is the official membership record of the Clerk of the House / Secretary of the Senate, a named, receivable third-party government document.

Present Suitable Method. An official chamber roll can establish an exact seat count/party affiliation at the precision the claim asserts (above/below/exactly/at least/at most/between a count).

Present Defined Benchmark. Precise numeric threshold and comparison operator (above/below/exactly/at least/at most/between <count>) is named.

Present Conclusive Link. Meeting the stated seat-count comparison in the official record directly constitutes the Payout Criterion as defined.

Present Comprehensive Coverage. Coverage is every voting seat in the specified chamber, matching the claim about the whole chamber's composition.

Present Relevant Timeline. Evidence is taken 'as of the Measurement Time,' matching the claim's stated temporal reference exactly.

Non-convening fallback settlement

“resolve to the last fair price, as determined by the Exchange”

Determination: that the chamber has not first convened before the Expiration Date · Consequence: the market resolves to a 'last fair price' set by the Exchange, overriding the seat-count-based payout

Absent Independent Verification. 'Last fair price' is a figure 'determined by the Exchange in its sole discretion' - the party's own say-so, not receivable third-party evidence.

Absent Suitable Method. Unconstrained sole discretion is not a procedure capable of establishing a specific price with any checkable certainty.

Absent Defined Benchmark. No threshold, formula, or reference point is named for what constitutes a 'fair' price.

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 or data set from which the 'last fair price' is drawn.

Absent Relevant Timeline. No specified point or window in time the 'last fair price' is anchored to.

Source Agency conflict hierarchy

“the hierarchy set out in Source Agency above will govern”

Determination: that Source Agencies conflict as to who held a seat or a member's party/caucus affiliation · Consequence: the higher-ranked Source Agency's value is used to determine the Expiration Value

Present Independent Verification. Named concrete sources (Clerk, Secretary of the Senate, AP, Bloomberg, etc.), receivable publications.

Present Suitable Method. A fixed hierarchy topped by the official government record can resolve a conflict between sources at the precision required.

Present Defined Benchmark. An explicit ranked order of named sources is the standard applied.

Present Conclusive Link. Applying the top-ranked official source's value does establish who held the seat/affiliation.

Present Comprehensive Coverage. Hierarchy applies to the same seat/affiliation population the claim concerns.

Present Relevant Timeline. Conflict resolution is anchored 'at the Measurement Time,' matching the claim's period.

Correction/material-error determination

“the Exchange determines, in its sole discretion, that the correction remedies”

Determination: that a subsequent correction to a published value remedies a material error in the initial value · Consequence: the corrected value governs settlement instead of the first-published value (or is disregarded)

Absent Independent Verification. Determination rests on the Exchange's own 'sole discretion,' not a third-party or objective verification.

Absent Suitable Method. Unconstrained discretion cannot reliably establish whether an error is 'material' at any defined level of certainty.

Absent Defined Benchmark. No definition or threshold is given for what makes an error 'material.'

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 scope of what records/values are compared to assess materiality.

Present Relevant Timeline. The determination window is bounded ('prior to Expiration'), matching the obligation's relevant period.

No-data fallback settlement

“If no reliable data is available by the Expiration Date”

Determination: that no reliable data for the Underlying has been published by any Source Agency by the Expiration Date · Consequence: market resolves to 'last fair price' (Exchange discretion) or, if listed, the 'No data' strike resolves Yes and others No

Absent Independent Verification. 'Reliable' and 'last fair price' are Exchange-determined, not third-party-verifiable facts.

Absent Suitable Method. No defined procedure exists to check data 'reliability' or set a fallback price with asserted certainty.

Absent Defined Benchmark. No named threshold for 'reliable data' or for the fallback price.

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 data population checked for absence of 'reliable data.'

Partial Relevant Timeline. Bounded by the Expiration Date but no further temporal specification of what 'last fair price' covers.

Death/violence contingency settlement

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

Determination: that a relevant person died or an act of violence/terrorism affected the event, and that trading was materially affected · Consequence: settlement at a Kalshi/ORC-chosen price, with determinations 'final and not subject to review'

Absent Independent Verification. Determination is Kalshi's own sole discretion, expressly insulated from review - not third-party-receivable evidence.

Absent Suitable Method. Sole discretion, including reliance on an 'approximate time,' cannot establish the claim at any checkable level of certainty.

Absent Defined Benchmark. No defined threshold for 'materially affected' trading or 'fair settlement.'

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 or data examined to assess material effect.

Partial Relevant Timeline. References 'last traded price prior to' the event/circumstances but allows an 'approximate time,' loosening the temporal anchor.

Market Outcome Review Process / Contingencies

“Kalshi has the right to determine payouts pursuant to Rule 7.1”

Determination: that the Expiration Value cannot be determined on the Expiration Date · Consequence: Kalshi determines payouts under Rule 7.1 of the Rulebook

Absent Independent Verification. Trigger and process depend on Kalshi's own discretion ('may, at its sole discretion, initiate'); underlying Rule 7.1 content is not supplied.

Absent Suitable Method. Cannot assess capability; the governing procedure (Rule 7.1) is not in the supplied text.

Absent Defined Benchmark. No standard is visible in the supplied text; it is deferred entirely to an unincluded 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. Scope of Rule 7.1's review process is unknown from supplied text.

Absent Relevant Timeline. Timing of the review process is unknown from supplied text.

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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