Comment Text:
Dear CFTC Commissioners:
I am writing today in support of the KalshiEX Congressional Control Contracts. My knowledge as an industry professional arises from my previous role in designing most of the prediction contracts that were certified and listed by the North American Derivatives Exchange (Nadex) over the previous 6 years. I strongly believe that there is legitimate public interest in these contracts as they allow market participants to more effectively hedge risk, provide for optimal information aggregation, increase participation and knowledge in the political process, and keep users in a time-tested regulatory environment.
The commission has approved and overseen derivative products that allow participants to directly hedge risk in all sorts of economic activity. However, the commission has previously stopped short of allowing these same tools for use in hedging financial risk arising from political elections. Because of the complexity and scale of the American financial markets, the solutions to protect against risk arising from congressional races are currently either imperfect or nonexistent. Political prediction contracts such as the ones proposed by Kalshi are an invaluable tool to solve this problem.
There is a shared public interest for Americans to have up-to-date information on the public sentiment of political elections. Currently this need is met by polling and modeling institutions; however, studies have shown time and again that data taken from political election markets like IEM or PredictIt are much more accurate in measuring the true sentiment of the people and predicting the outcome of elections. Preventing the efficient price discovery of public markets from applying to political election markets is certainly against the public interest of all Americans.
The American regulatory framework provides greater protection for its participants than any other market system in the world. We have seen in the modern world that pushing markets outside of this framework no longer stops Americans from accessing these markets; rather it only makes these markets more opaque and dangerous for participants. As these congressional control contracts provide for a legitimate public and economic interest, it is imperative that the CFTC allows and monitors these contracts rather than push these markets into jurisdictions that have little to no protection for American consumers.
Thank you for your consideration,
Adam McAden
