CFTC Issues Supplemental No-Action Letter for Kalshi on Swap Reporting and Third-Party Clearing

The Commodity Futures Trading Commission (CFTC) announced that its Division of Market Oversight and Division of Clearing and Risk have taken a supplemental no-action position regarding swap data reporting and recordkeeping regulations. The regulatory relief comes in response to a request from KalshiEX LLC, a designated contract market, and Kalshi Klear LLC, a derivatives clearing organization. The entities requested modifications to CFTC Letter No. 24-15 to cover fully-collateralized variable payout contracts and to eliminate a previous condition that prohibited participants from utilizing third-party clearing. Under the updated position, staff from both CFTC divisions will not recommend that the Commission initiate enforcement action against KalshiEX LLC, Kalshi Klear LLC, or their participants for failure to comply with specific swap-related recordkeeping requirements or failure to report transaction data to swap data repositories. This relief applies to binary option transactions and variable payout contract transactions executed on or subject to the rules of KalshiEX LLC and cleared through Kalshi Klear LLC, subject to the conditions set out in the letter. Additionally, the supplemental letter formally removes the restriction from CFTC Letter No. 24-15 that barred Kalshi participants from clearing their contracts through third-party clearing members.