CFTC stays KalshiEX rule change after Michigan court order
The CFTC said it stayed an emergency rule change proposed by KalshiEX and ordered the company to fulfill open trades after a Michigan state court order sought to cancel certain executed trades involving Michigan residents.
The CFTC said it stayed an emergency KalshiEX rule change and ordered the company to carry out open trades after a Michigan state court order sought to cancel certain executed trades involving Michigan residents.
The Commodity Futures Trading Commission said in a July 14 press release that it used emergency authority to halt the rule change and direct KalshiEX, LLC to fulfill open trades under its normal practices. The agency said the action followed a Michigan state court order that called for the cancellation of certain trades that had already been executed.
The CFTC said the Commodity Exchange Act requires a uniform national market for derivatives transactions, with impartial access to CFTC-regulated markets and transparent, non-discriminatory access criteria for registered entities.
The commission said it also is responsible for maintaining public confidence by ensuring market resilience and predictability, including in execution and clearing. In the release, Chairman Michael S. Selig said a state cannot force a designated contract market, or DCM, to violate its obligations.
Selig also said federal law does not allow a DCM to discriminate against a state’s residents. He said canceling already executed trades is unprecedented, could have a cascading effect on the market and undermines certainty in contracting.
The CFTC said Michigan is the first state to attempt to interfere directly with executed derivatives transactions. It also said states have pursued enforcement actions against CFTC-regulated DCMs in state and federal courts across the country.
To protect its jurisdiction, the agency said it has filed lawsuits against Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island and Wisconsin. It also said it has filed amicus briefs in the U.S. Court of Appeals for the Sixth and Ninth Circuits and the Supreme Judicial Court of Massachusetts.
The release did not say how long the stay will remain in place or whether further court action is expected in the Michigan dispute. The CFTC’s statement said it will not allow states or state courts to pressure registered entities into violating the Commodity Exchange Act and CFTC regulations.
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Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.
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