Every board of trade designated by the Commodity Futures Trading Commission holds a power most of the people trading on it have never read about. It can suspend trading in a contract, demand extra margin, and liquidate or transfer positions someone already paid for. That requirement is not controversial and should not be, because a venue that cannot intervene when a market breaks is a worse venue. The question here is narrower and, as of 15 October 2026, largely unanswered: when an exchange reaches for that power, what is the holder of the position entitled to be told? We read the rule, its guidance, and the emergency provisions of four rulebooks on file with the Commission. The power is the same in all four. The answer is not.
The rule that creates this power is sixty three words long
Core Principle 6 sits in the Commodity Exchange Act at 7 U.S.C. section 7(d)(6), which requires a board of trade, in consultation or cooperation with the Commission, to adopt rules providing for emergency authority, including authority to liquidate or transfer open positions, to suspend or curtail trading, and to require special margin. The implementing regulation, 17 CFR section 38.350, restates those sixty three words with the subsections relettered and nothing added. Subpart G of Part 38, titled Emergency Authority, consists of that one section.
So the regulation names three powers and sets no procedure. It does not say who may declare an emergency, how long a declaration lasts, what price a liquidation happens at, or whether the holder hears about it from the exchange or from a balance that changed overnight. That is all left to the rulebook, which is the right design choice and why the rulebooks are worth comparing.
Every disclosure duty in Core Principle 6 points at the regulator
The Commission does expand on Core Principle 6, in the guidance and acceptable practices at Appendix B to Part 38. The guidance is detailed about what a venue may do: impose or modify position and price limits, fix a settlement price, transfer customer contracts and margin, alter a contract's settlement terms. It is equally detailed about reporting, requiring that the exchange "must promptly notify the Commission" of emergency action, document its reasons, and explain how conflicts of interest were minimised.
We counted the words. Across the 614 words the Commission devotes to Core Principle 6 in Appendix B, "public" does not appear once, nor does "announce", nor "disclose". Both references to notification are notification to the Commission, and the single appearance of "customer" is in the list of things the exchange may move. Core Principle 7 is where the Act puts public information duties, so this is not an oversight worth anger, but it has a consequence: a venue that writes its emergency rule by working down the federal checklist finishes with a rule that is complete, compliant, and silent toward the only person whose money is in the position. Directive 02 commits us to stating the terms a trade depends on in plain language on the surface where the trade happens, and emergency powers are the one set of terms the federal floor routes entirely upward.
An emergency is an opinion before it is an event
Appendix B points to the definition of emergency in 17 CFR section 40.1, which is built around judgement rather than fact: an occurrence that, in the opinion of a registered entity's governing board, requires immediate action and threatens fair and orderly trading. Its examples run from manipulation to payment system failure, and item (4) is "any action taken by any governmental body" that may have a direct impact on trading or clearing. That item is why this is a live subject for prediction markets rather than a dusty corner of futures regulation. A state court order aimed at a sports event contract is action by a governmental body with a direct impact on trading, so it walks straight into the definition. We followed that chain to its end in Michigan in our piece on open positions when a state blocks the exchange, and looked at the Commission's own version of the power in the article on who is protected when a regulator declares an emergency. Neither asked this question, which is about rulebook drafting rather than litigation.
The sentence three rulebooks share was written for a different exchange
Start with the oldest text. The rulebook of North American Derivatives Exchange, trading as Nadex, puts emergency authority at Rule 2.4, and the version the exchange filed with the Commission in September 2023 sets out the skeleton the others follow: adoption, risk, a list of eight qualifying emergencies, suspension of trading. In a self certification filed on 21 October 2019, Nadex told the Commission where that list came from: Rule 2.4 "was modeled from the Commission's definition of 'emergency' located in Regulation 40.1(h)".
Nadex Rule 2.4 ends at paragraph (f), one sentence long: whenever Nadex takes emergency action it "will document its decision-making process and reasons for taking emergency action". Paragraph (e) commits to telling the Division of Market Oversight within twenty four hours. No paragraph commits to telling a member anything. The only sentence addressed to the trader is in paragraph (b), and it allocates risk rather than promising information: the chance of an emergency "is one of the risks that market participants should consider when deciding whether to trade on the Market".
That skeleton travelled. The opening sentence of the Nadex rule, through the clause permitting adoption "without giving prior notice to, or securing prior approval from" the Commission, appears word for word in the KalshiEX rulebook, and the risk sentence appears with the nouns swapped in the KalshiEX and Polymarket US rulebooks.
Kalshi inherited the text and added the paragraph nobody required
The rulebook KalshiEX filed with the Commission as version 1.18, the version on the Commission's filings site as of 15 October 2026, numbers the emergency rule 2.8 and makes two substantive additions. The first is a list. Where the Nadex paragraph (d) stops at suspension, Kalshi Rule 2.8(d) enumerates six actions, among them "Cancellation of a Contract and the return of any funds paid to enter Trades on the Contract" and "Changing a Contract's terms and conditions and/or specifications". Cancelling a contract and refunding the stake does not appear in the Nadex text at all. It is an addition by the prediction market generation of exchanges, and for somebody holding a position it is the most consequential line in these rules.
The second addition deserves credit. Kalshi Rule 2.8(f) says that any time the exchange acts on an emergency it "shall publish a notice of such action on its website, notify Members through the API, and notify Members via email". Nothing in Core Principle 6, in Appendix B, or in section 40.1 asks for that. Of the four rulebooks we read, it is the only one that puts a promise to the trader inside the emergency rule itself, and the instinct is right: three channels, one of them machine readable, so an automated participant finds out the way a person does.
It also carries a defect that is instructive rather than damning. Paragraphs (e) and (f) of Rule 2.8 both describe the triggering events as action "pursuant to Rule 2.4(a)" and "pursuant to Rule 2.4(d)", the letters the duty had in the Nadex book, where Rule 2.4 is the emergency rule. In the Kalshi book, Rule 2.4 governs who may sit on the board, and its paragraphs (a) and (d) deal with disciplinary offences and director qualifications. Nobody would read the rule that way, and the point is smaller: the one paragraph that tells a trader they will be emailed is keyed, on its face, to a rule about board eligibility, so a trader who goes looking has to recognise an inherited typo to find their own answer.
Polymarket US repaired the cross reference and left out the notice
The Polymarket US rulebook dated 30 September 2026 works from the same skeleton and chooses differently. It corrects the cross reference, pointing paragraph (g) at Rule 2.8(a) and Rule 2.8(d) where it belongs. It keeps the six action list, cancellation and refund included. And it adds limits the other books lack: a temporary emergency rule runs up to thirty calendar days and terminates if the board disapproves inside that window, and extension needs a two thirds board vote or two officers' written authorisation. A declaration with an expiry date and a named approver beats one that ends when an official decides the emergency has "sufficiently abated", the formula in the Nadex and Kalshi texts.
What the Polymarket US rule does not carry across is the Kalshi notice paragraph. Rule 2.8(g) commits to notifying the Director of the Division of Market Oversight, beforehand where practicable and no later than twenty four hours after, with no equivalent commitment to a participant. The general publication duty at Rule 3.10(e) does cover "any action to implement any Rules" and asks for notice before the effective date, but it also provides that "any failure of the Company to so publish a notice shall not affect the effectiveness of the material in question", and puts the burden of discovery on the trader, who "is required to review the 'Notices' section of the Company website".
ForecastEx wrote its own rule and filed the promise in another chapter
The fourth text owes the other three nothing. The ForecastEx LLC rulebook with a version date of 22 September 2026 numbers emergency authority Rule 409 and shares none of the inherited sentences. Its powers are the broadest of the four: alongside liquidation, transfer, price and position limits and changing a market's resolution time, paragraph (b)(8) permits "Modifying or suspending any provision of this ForecastEx Rulebook". Its catch all rests on "any other circumstance which the CEO determines threatens or may threaten fair and orderly markets", where the other three require the governing board's opinion. A declaration expires after thirty ForecastEx business days.
Rule 409 is also the only one of the four that writes down the scenario the Commission used in 2026, listing at paragraph (c)(9) "Any circumstance where the CFTC directs ForecastEx to use its emergency authority". Having watched the Commission exercise that power twice that summer, we would call that the best single drafting decision in any of these rules.
Rule 409's own notification paragraph, (d), runs one way: under Commission Regulation 40.6, ForecastEx will notify the CFTC. A trader reading Rule 409 start to finish learns nothing about being told. The promise does exist, five chapters earlier, at Rule 311(f) in the public information chapter: "If ForecastEx creates an emergency rule in accordance with Rule 409, ForecastEx will publish a notice of the action on its website and notify Members via email." That is a real commitment, nearly as strong as Kalshi's, filed where somebody auditing disclosure obligations will find it and where somebody asking what happens to their position will not.
A maintenance window gets more warning than a cancelled contract
One comparison does more work here than any argument about principle. Under Polymarket US Rule 2.9, suspending trading for maintenance requires at least twenty four hours of advance notice on the exchange's website, with the anticipated start time and expected duration, and under Rule 2.8(e) even an emergency maintenance window "will be announced on the Company's website". Under Rule 2.8(d), cancellation of a contract and return of the funds paid to enter it requires notice to the Division of Market Oversight and nothing to the person whose contract was cancelled.
Nobody designed that asymmetry. It is what happens when the maintenance rule is written in house and the emergency rule is inherited from a filing template. The federal floor will not close that gap: a half hour outage gets a day's warning on the website, and the unwinding of a position gets a regulatory filing. A second layer sits under it: Kalshi Rule 2.17(e) and Polymarket US Rule 3.10(f) both provide that notice to a futures commission merchant is deemed notice to that broker's customers. That is defensible, since an exchange holds no contact details for a brokerage's users, but it means the venue discharges its duty where most users' chance of hearing begins.
Seventeen more boards of trade are going to have to write this rule
This is not a question about four firms. The Commission's registration tracker for designated contract markets, read on 15 October 2026, records seventeen entries dated in 2026 between 27 January and 21 August, six shown as Designated and eleven as Pending. Each has to adopt rules for emergency authority before it lists a contract, and each will reach for a filed rulebook as a model, because that is how exchange documentation has always been written. Three of the four models available teach that the duty runs to the regulator. Which makes this a standards question rather than a complaint: an emergency rule is paperwork copied in an afternoon and never reopened, so fixing it is cheap now and expensive after the first cancellation on a venue whose rulebook never promised to say so.
Four lines that belong inside the emergency rule, not five chapters away
None of this needs a new federal rule. Core Principle 6 is sound and the exchanges named here comply with it. What the category can do without anyone's permission is write the outward half of the rule next to the inward half, and four things the federal floor does not ask for belong in it.
- Who will be told, and how. Kalshi's three channels, website, API and email, are the benchmark, and the API one matters because an automated participant cannot read a notice page.
- Within what time. All four rulebooks set a deadline for telling the Commission and all four use twenty four hours. None states one for telling a participant.
- How the position was valued. If the action is cancellation and refund, say the stake comes back. If it is liquidation, say at what price and who bears the difference. This is the gap that matters most, and none of the four fills it.
- Where the notice lands for a brokered customer. If notice to the broker discharges the duty, say so on the market card rather than in the notices chapter, and say what the venue does when the broker does not pass it on.
Directive 01 commits us to resolution rules published before a market opens and not revised while money is at risk. The exchange that put the honest version of that on paper is Kalshi, whose rulebook fixes a contract's specifications as of the first day of trading "except as provided in Rule 2.8", the emergency rule. The exception is legitimate and every one of these venues needs it. A category that wants to be trusted with the exception writes down, in the same rule, what it will tell you when it uses it.