CFTC orders KalshiEX to keep operating during New York court fight
The CFTC said it directed KalshiEX to keep operating under federal market rules after New York Attorney General Letitia James filed a complaint seeking broad relief against the exchange.
The Commodity Futures Trading Commission said Monday that it used emergency authority after KalshiEX, LLC notified the agency of a market emergency, ordering the exchange to keep operating under the Commodity Exchange Act’s Core Principles.
The move comes as New York Attorney General Letitia James pursues a state-court case against the exchange. The CFTC said the complaint was filed July 31 and that New York is seeking a temporary restraining order that would bar KalshiEX from offering all event contracts nationwide, along with more than $36 billion in damages.
Why it matters
The CFTC said the order is meant to preserve orderly markets while the dispute plays out. In its release, the agency said the Commodity Exchange Act is designed to provide a uniform national market in derivatives transactions, support market resilience and orderliness, and protect price discovery in centralized derivatives markets.
The case also highlights a broader fight over who can regulate event contracts. The CFTC said states have tried enforcement actions against CFTC-regulated designated contract markets in state and federal courts.
Context and background
KalshiEX notified the commission after the New York lawsuit was filed, according to the CFTC release. The agency did not provide further details on the emergency itself, but said the exchange must continue operating in line with federal core principles.
The release also listed Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin as states against which the CFTC has filed lawsuits. It said the commission has also filed amicus briefs in the U.S. Court of Appeals for the Sixth and Ninth Circuits and the Supreme Judicial Court of Massachusetts.
What officials said
CFTC Chairman Michael S. Selig said New York is trying to regulate event contract derivatives under state gaming laws and that Congress did not intend for derivatives exchanges to face a patchwork of such laws.
Selig said the exchanges are financial markets offering financial instruments across state lines, with trades matched between residents of different states and submitted to a clearinghouse that backstops customer transactions nationwide.
What happens next
The CFTC said its emergency order remains tied to the federal core principles that govern designated contract markets. The New York case, including the request for temporary restraining order relief, continues in state court.
Sources
Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.
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