Comment Text:
My name is Seth Weinstein, I’m a private angel investor with a portfolio of more than 50 seed-stage startups, including one of my investments, Kalshi. I'd like to present a case for approving Kalshi's proposed event contracts, which I firmly believe promotes the public interest.
Let me start by addressing the hedging function of these contracts. As an experienced investor, I've encountered numerous businesses facing risks due to changes in federal policies. Similar to dealing with physical risks, these companies require effective hedging strategies to protect their interests. The Congressional control event contracts provided by Kalshi offer a valuable hedging tool for these businesses, allowing them to navigate uncertain policy environments with more confidence.
There are issues related to the predictability of the economic consequences tied to Congressional control. Some might question whether such consequences can be anticipated enough for hedging purposes. However, having analyzed policy documents and proposals from Congressional parties, I can confidently say that the impacts are sufficiently predictable. Parties often outline their priorities, giving us insights into potential policy shifts, which informed investors can leverage for effective hedging.
Regarding unique economic risks, it's true that some industries or firms face specific challenges that can't be fully hedged with existing derivative products. That's why imposing a uniqueness test, as suggested by the CFTC, would hinder competition and innovation. It's essential to allow diverse hedging approaches to cater to different needs and risk profiles.
In assessing the economic utility of the contract, I firmly believe that the market, not regulatory bodies, should determine its design and payout. The market's natural forces encourage iterative improvements, making contracts more effective over time. Binary contracts have proven useful for hedging nonbinary economic events, providing a flexible approach for risk management.
Lastly, there are issues related to the price-basing function of these contracts. Having spent most of my career on Wall Street, I appreciate the significance of political control in accurately pricing commodities and financial assets. Markets are forward-looking and take into account expectations of future supply and demand. Kalshi's Congressional control event contracts will enhance price discovery, providing a more accurate and market-driven pricing reference.
In conclusion, I strongly advocate for accepting Kalshi's Congressional control event contract. It not only serves vital hedging functions for businesses facing policy risks but also contributes to transparent and accurate price discovery in the market. Embracing these contracts will promote innovation, competition, and ultimately benefit the public interest.
