[REVISION HISTORY]

CFTC approval and legal challenges to equity perpetuals

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2026-11-04 05:49 UTC → 2026-11-05 00:44 UTC · added ~~removed~~

The Commodity Futures Trading Commission (CFTC) has announced that perpetual futures contracts tied to individual stocks, referred to as “Equity Perps,” can begin trading on regulated U.S. exchanges. CFTC Chairman Michael Selig stated the decision aims to onshore these products, allowing American traders to access leveraged, expiration-free instruments under U.S. regulatory safeguards instead of using offshore, unregulated venues. Under Regulation 40.3, these are deemed security futures products. To facilitate trading, exchanges must be dually registered with both the CFTC and the Securities and Exchange Commission (SEC) as notice-registered national securities ~~exchanges for security futures products. This extends a derivative structure previously used in cryptocurrency markets into traditional equities. The approval follows a Memorandum~~ exchanges. Several platforms have moved toward implementation, with Kalshi launching its first batch of ~~Understanding between the CFTC~~ U.S. stock perpetual contracts covering companies such as Amgen, Costco, McDonald’s, and ~~SEC intended to improve coordination~~ Qualcomm. Other entities, including Coinbase Derivatives and Bitnomial, have previously submitted applications for ~~innovative~~ similar products. The move has faced significant opposition. The reform group Better Markets characterized the instruments as a “gambling product,” expressing concerns that high leverage could cause rapid, total investment losses. The Securities Industry and Financial Markets Association (SIFMA) has also called for a review regarding potential impacts on liquidity, investor protection, and market manipulation. Concurrently, Cboe Global Markets has joined a legal challenge led by the Capital Markets Alliance, which includes Citadel Securities and the Healthy Markets Association. Cboe is contesting the regulatory basis for these products, arguing that securities-related instruments should be subject to established securities market regulations rather than CFTC oversight to ensure necessary protections for market participants. The ~~Capital Markets Alliance has~~ alliance filed a lawsuit in federal court seeking to overturn the approval, arguing these products should be classified as security-based swaps under SEC jurisdiction. While a federal judge denied an emergency request to halt trading, the court noted that the challengers are “likely to succeed” in their argument that the CFTC may have exceeded its legal authority.

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