Comment Text:
I question whether the CFTC has satisfied its obligation under CEA section 5c(c)(3). The CFTC's failure to articulate even basic information as to the stay, let alone provide sufficient particular information to allow for meaningful comment is likely fatal to its discharge of the obligation to provide a public comment period. From a legal perspective, while the CEA does not have an explicit specificity requirement, the APA does, and the CFTC is not exempted from the APA. From a governance standpoint, I question how any of the Commissioners or the Chairman could view this as a meaningful exercise. Specifically, Commissioner Pham and Commissioner Mersinger have championed the need for transparency, and it would be hard for the CFTC to be more opaque than it was here. The public has no idea what the Division of Market Oversight thinks might be novel or non-compliant with this rule, and that is a failure of the Division of Market Oversight. There has been a history of the Division of Market Oversight failing to be transparent during the current regime. In fact, the Division of Market Oversight's failure to be transparent landed the CFTC in the current litigation with Predict-It. Commissioner Goldsmith-Romero and Commissioner Johnson have both consistently pointed to the importance of public participation in the Commission's processes. This is certainly true when the Commission has a statutory duty to involve the public, as it does here.
This matter is now before the Commission for consideration. I ask each of the Commissioners: is this a meaningful public comment period? If you were the Chair and you were running the agency, is this the type of transparent and inclusive public comment period you would be proud to have your imprimatur on? I ask the Chairman, is this your idea of "robust public involvement"? Or has the Division of Market Oversight struck again under your watch?
I hope and encourage the Commission to take a good look at the notice soliciting public comment and make a statement about the sufficiency of the notice. If the Commission thinks that this notice was sufficient, the Commission should state its support for it. If the Commission finds it deficient, the Commission owes it to the public to note its findings. The public deserves to know.
This is not just my opinion. Published as a comment on LinkedIn a prominent industry attorney stated:
An odd request for comment from the CFTC on an exchange's (Kalshi's) modification to its rulebook to allow for "pre-execution communications." The CFTC stopped the exchange rule change and asked for public comment. The problem here is there is no explanation of the CFTC's concerns other than conclusory sentences that the exchange might violate the Commodity Exchange Act. Hard for the public to comment if they don't know the issues. It's also worth noting that the Kalshi rule change generally tracks existing rules from other major exchanges, so it's very unclear what the CFTC's problem is with this particular rule change. Again - the public would have benefitted from knowing the issues in order to provide meaningful public comments.
