CFTC Expands Clearing of Fully-Collateralized Contracts

In a supplemental no-action letter, the CFTC allowed a trading platform and its affiliated clearinghouse to clear additional types of fully collateralized contracts.

The supplemental relief builds upon a prior no-action letter that allowed trading platform, KalshiEX LLC., to clear trading of fully-collateralized binary option contracts through its affiliated clearinghouse, Kalshi Klear LLC. (See related coverage.)

Key provisions of the supplemental no-action relief include:

• Expanded Scope of Contracts. The relief extends to contracts beyond binary payout structures, including those with variable payouts based on price movement at expiration.

• Third-Party Clearing. Participants are now allowed to clear Kalshi contracts through third-party clearing members, following the CFTC's amendment removing prior intermediation restrictions.

• Reporting and Recordkeeping Exemptions. Kalshi and Kalshi Klear are exempt from certain swap data reporting and recordkeeping requirements, provided they comply with other regulatory obligations, including maintaining records.

• Transaction Transparency. Kalshi must publish trade data promptly after execution, including timestamps, contract details, quantity and price.

• Collateralization. All Kalshi contracts must be fully collateralized in accordance with CFTC regulations.

The CFTC stated that the no-action relief remains in effect until modified or terminated.