Comment Text:
My name is Michael Marcus, and I am a growth equity investor at Sageview Capital. I am
writing this public comment to support Kalshi’s efforts to gain CFTC approval for their political
control contracts. Please note that my view does not reflect my firm's view in any form and this is my individual view.
Congressional control impacts me in many ways. For instance, the myriad fights over the debt
ceiling and the corresponding “fiscal cliff” that characterized the split Congress of 2011-13
underscores the dangers that political control can have to anyone in the financial space. The
uncertainty as to whether the US would meet its debt repayment obligations heightened worries
in the financial sector. The stock market fell (it would take another year to get back to where it
was pre-debt ceiling crisis), volatility spiked, and interest rates rose as risk premia across the
economy soared. As one U.S. Department of the Treasury report found, “In the late summer of
2011, the 30-year conventional fixed-rate mortgage spread jumped by as much as 70 basis points and the wider spreads lasted into 2012. For an average mortgage of $235,000 at that time, 70 basis points more on a mortgage rate would increase monthly payments by about $100 per
month.” (SOURCE BELOW)
Today, electoral hedging is a privilege afforded to those with access to over-the-counter
derivatives desks. In other words, only the rich have access. But like millions of other
Americans, I am a citizen who pays taxes, holds a mortgage, and has retirement savings linked to the value of the stock market. As a result, my financial health is inextricably linked to political
control, and this market would enable me to hedge those risks. Just like regular citizens hedge
their hurricane risk with hurricane insurance, their fire risk with fire insurance, and their flood
risk with flood insurance, so should we be able to hedge our political risk with political control
event contracts.
To me–like millions of my fellow civic-minded citizens–elections are not a game. These markets
not a tool to gamble on or to play with. They are a means for me to improve my financial
security by reducing my risk exposure to events outside of my control. I hope the CFTC
recognizes that fact, and permits these contracts to proceed.
SOURCE:https://home.treasury.gov/system/files/276/POTENTIAL-MACROECONOMIC-IMPACT-OF-DEBT-CEILING-BRINKMANSHIP.pdf
