Comment on CFTC-2026-1189, CFTC-2026-1189-0001, Chuan, Sun

June 29, 2026 Re: Prediction Markets; Public Interest Determinations, RIN 3038-AF65 (Proposed Amendments to 17 CFR Part 40, including Rule 40.11 and Appendix F) Dear Mr. Kirkpatrick, I respectfully submit this comment on the Commission's proposed amendments to Rule 40.11 and proposed Appendix F to Part 40. I support the proposal's event-focused structure and its move toward clear and predictable public interest determinations. I offer three comments. The first addresses the threshold question of when a contract "involves" an Enumerated Activity. The other two address the public interest factors. 1. The event-focused "involves" standard is correct, and the Commission should confirm that it is neutral as to contract structure. Proposed Section 40.11(a)(3) provides that a contract involves an Enumerated Activity if its settlement is determined by an occurrence, extent of an occurrence, or contingency in the activity. I support this reading. It follows the text of the Special Rule, it gives a market participant a test it can apply before listing, and it correctly locates the inquiry in the underlying event rather than in the act of trading. I agree with the Commission that the Nadex Order and the Kalshi Order erred insofar as they asked whether a contract, viewed as a whole, resembled or equated to an Enumerated Activity rather than whether its settlement-determining occurrence arose within one. I ask the Commission to state one corollary in the final rule. Because the standard turns on the underlying occurrence, the form of a contract does not change the analysis. A contract is subject to the Special Rule only when one of its settlement-determining occurrences arises within an Enumerated Activity. A novel or unfamiliar payoff structure built on non-enumerated economic underlyings should not, by that structure alone, be read to bring a contract within the Special Rule. Saying so plainly keeps the inquiry where the proposal correctly places it and prevents the framework from being read to disfavor new contract designs that serve economic purposes. 2. Under the market integrity factor, the Commission should credit pre-specified, deterministic, and reproducible resolution. Proposed Section 40.11(a)(5) and Appendix F direct the Commission to weigh threats to market integrity, including manipulation, settlement integrity, and information leakage. The record on this rulemaking indicates that contested settlements cluster around how a contract is written rather than what it is about. Commenters working from coded settlement-dispute data have identified undefined operative terms, dependence on a source that may never report, ambiguity between event time and disclosure time, revision-prone figures with no controlling-print rule, and discretionary adjudication as the recurring failure modes. I encourage the Commission to give the market integrity factor the following content. A contract should weigh in favor of settlement integrity when, before listing, its rulebook names a single primary resolution source, defines each operative term, fixes a settlement timezone and clock, states boundary, rounding, and controlling-print rules for any numeric threshold, and specifies tie, cancellation, and dispute handling. Each of these is verifiable on the face of the rules text by the Commission, the listing market, and the public alike. This approach also answers a concern raised in the record about contracts on outcomes that are already determined but not yet public, because a fixed source and clock define in advance what governs settlement and when. A framework that rewards deterministic and pre-specified resolution steers contract design toward integrity, and it does so without prescribing which contracts may list. 3. The Commission should recognize the price discovery and hedging utility of economically purposed event contracts in applying the Appendix F factors. Proposed Section 40.11(a)(5) and Appendix F list price discovery and information aggregation utility among the public interest factors. I ask the Commission to confirm that a contract satisfies this factor when it lets a participant with a genuine economic exposure express or hedge that exposure directly. Recognizing this utility gives effect to the responsible innovation the Commission has identified as a goal, and it does so within the economic and non-enumerated subject matter that the Special Rule was not written to reach. I also support the Commission's interest in using its authority under CEA Section 4(c) to provide a path for defined categories of well-designed, economically purposed event contracts. A category approach would give firms building such contracts a workable route to market and would conserve Commission resources for the contracts that genuinely warrant individual review. I appreciate the opportunity to comment and would be glad to provide further detail to the Commission or staff. Respectfully submitted, Chuan Sun