In a decisive step to uphold federal regulatory standards, the Commodity Futures Trading Commission stayed an emergency rule that KalshiEX LLC filed on July 12, 2026. Issued today, July 14, the order requires the designated contract market to complete open event contracts involving Michigan residents through its usual processes instead of forcing liquidation.
This intervention follows a Michigan state court temporary restraining order from June 29, 2026. Regulators moved quickly to safeguard the integrity of already-executed trades and maintain orderly market operations. This order forces existing contracts held by Michiganders to be handled to natural resolution.
CFTC Issues Order Staying Emergency Rule
KalshiEX submitted its notice under Commission Regulation 40.6(a)(6)(i) seeking approval for forced liquidation of certain previously executed contracts tied to Michigan residents. The Commission reviewed the filing and immediately stayed the proposed rule under Regulation 40.6(c)(1).
At the same time, officials invoked Section 8a(9) of the Commodity Exchange Act to direct KalshiEX to execute those trades in accordance with established practices. This approach prevents abrupt changes or forced exits that could undermine ongoing contracts in their markets.
The order blocks any Michigan state-driven requirement for liquidation while preserving standard settlement timelines. Traders now hold clear expectations that their positions will resolve normally rather than be suddenly unwound by fiat of a district court-approved TRO.
With this, the CFTC is partially asserting its primacy over these state regulatory orders, stating that it can’t issue prohibitions that force premature conclusions on ongoing contracts. In short, we’ll figure this out through an extended, likely lengthy process in the courts. In the meantime, we will not let you jump in and fully disrupt these platforms that we rightfully regulate.
Chairman Highlights Risks to Market Certainty
Chairman Michael S. Selig explained the rationale behind the CFTC decision. He noted that a state cannot force a designated contract market to violate its obligations and that federal law bars discrimination against residents of any state. Canceling already-executed trades marks an unprecedented move that risks broader disruptions throughout the marketplace. Such actions would erode the contracting certainty essential for smooth operations.
Consequently, the Commission refuses to let state courts or officials pressure registered entities into breaching the Commodity Exchange Act or CFTC rules. This stance upholds a promise that traders rely on when entering positions, regardless of the ongoing battle between states and the federal government in this broader matter.
In addition, the order promotes consistent treatment across all traders regardless of residency. Such consistency builds lasting confidence in the reliability of CFTC-regulated venues and, again, serves as a clarion call from the CFTC that it has the final say in these markets.
Michigan is the first state to attempt direct interference with existing, executed derivatives transactions. The CFTC has addressed similar challenges elsewhere by filing lawsuits against several other states and submitting amicus briefs in appellate matters. These efforts demonstrate the CFTC’s unwavering commitment to defending the jurisdiction Congress assigned solely to it, as it has repeatedly stated in public comments.
References
1. CFTC Press Release: CFTC Stays KalshiEX Rule Change and Exercises Emergency Authority to Order Fulfillment of Pending Trades (July 14, 2026)
2. Michigan Attorney General Press Release: AG Nessel Secures Order Temporarily Halting Unlawful Kalshi Michigan Operations (June 29, 2026)
3. The Block: CFTC orders Kalshi to honor Michigan trades, escalating clash with state regulators
4. Detroit News: Kalshi ordered to temporarily halt sports bets in Michigan (June 29, 2026)
5. CFTC Order Text Provided in Query (July 12-14, 2026 Filing and Response)
6. X Trending Topic Summary on CFTC Kalshi Michigan Order
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