Key points
- The CFTC approved perpetual futures tied to individual equities under Regulation 40.3.
- Exchanges seeking to list them must also file notice with the SEC.
- The Capital Markets Alliance sued hours after the announcement, disputing the CFTC’s authority.
CFTC approval brings equity perpetuals into U.S. regulatory debate
The Commodity Futures Trading Commission has approved perpetual futures tied to individual U.S. equity securities, a product category often called equity perps. In a November 3 statement, Chairman Michael Selig said the contracts were approved under Regulation 40.3. The decision makes the instrument available for listing on exchanges registered with the CFTC, although the announcement does not establish that particular contracts have already begun trading.
The commission classifies the contracts as security futures products under the Commodity Futures Modernization Act of 2000. That classification places them under both the Commodity Exchange Act and federal securities laws, according to the announcement. The legal framework matters because the products combine a perpetual-futures format with exposure to individual stocks, bringing the CFTC’s approval into an area where securities regulation is also relevant.
Selig presented the decision as a way for U.S. traders to access products popular in overseas markets without relying on offshore venues. He also described perpetuals as instruments for risk management and price discovery. Those stated benefits explain the regulator’s case for permitting the products, but the announcement does not detail how individual exchanges will structure their offerings or what safeguards each contract will use.
How the commission describes the new products
The approval does not leave oversight solely with the CFTC. Exchanges seeking to list single-stock perpetuals must also file a notice with the Securities and Exchange Commission to trade security futures, Selig said. That requirement gives both agencies a role in the process and makes coordination between them central to how any listings proceed. The statement does not specify a timetable for individual exchange filings.
Selig connected the approach to a memorandum of understanding signed by the CFTC and SEC earlier in the year, which was intended to improve coordination. The arrangement is relevant because the newly approved products fall under both commodities and securities laws. The announcement signals that the regulators expect to work across their respective responsibilities, but the lawsuit now raises a separate question over whether the CFTC can approve the products in the first place.
The CFTC also framed equity perps as an extension of its earlier action on Bitcoin perpetuals. Selig said the commission had approved the first “true Bitcoin perpetual futures contract” on a CFTC-regulated exchange earlier in the year, and described the equity decision as taking the instrument beyond digital commodities and into traditional securities. That comparison places the new approval within the agency’s broader effort to recognize perpetual contracts in U.S. markets.
A lawsuit challenges the commission’s authority
Hours after the CFTC’s statement, the Capital Markets Alliance filed a lawsuit challenging the decision. The group argues that the commission acted contrary to laws passed by Congress and lacked authority to approve the products. Its challenge turns the announcement into more than a regulatory green light: the scope of the CFTC’s power, and the legal basis for listings, are now subjects of a court fight.
The alliance says the decision has “invited a parallel synthetic market in US stocks” that could grow outside what it considers the SEC’s exclusive jurisdiction. That is the group’s characterization, not a settled finding about the products or the regulators’ respective powers. The dispute therefore centers both on statutory authority and on whether the proposed contracts belong within the CFTC’s remit or should be treated as exclusively an SEC matter.
A CFTC spokesperson, in comments reported by Reuters, called the lawsuit “troubling” interference with markets regulated by the agency. The spokesperson also argued that U.S. markets should be governed by law rather than litigation campaigns intended to “block innovation.” The response makes clear that the commission rejects the challenge’s framing, but it does not resolve the legal questions raised by the alliance or establish how a court will rule.
The dispute echoes an earlier fight over Bitcoin perpetuals
The immediate practical uncertainty is whether the lawsuit will affect the path from regulatory approval to exchange listings. The announcement sets out a requirement for exchanges to file notice with the SEC, while the alliance disputes the CFTC’s underlying authority. The supplied information does not say whether the case seeks an immediate halt, whether any exchange has filed a notice, or when a court might consider the claims.
The challenge also revives a dispute over the classification and oversight of perpetual contracts. In June, CME Group said it would sue the CFTC over its approval of Bitcoin perpetuals. CME Chief Executive Terrence Duffy argued that those contracts should be classified as swaps under the Dodd-Frank Act rather than futures. The earlier disagreement shows that the legal treatment of the instrument has already drawn objections from another market participant.
Duffy also argued that providers of Bitcoin perpetuals had to go through CME because it held exclusive benchmark licenses. The source does not establish that the same licensing argument applies to equity perps, so the two disputes should not be treated as identical. For now, the equity approval is challenged on the CFTC’s authority and the boundary with SEC jurisdiction; the litigation’s outcome and the timing of any listings remain unresolved.
Source: CryptoPotato
