The Commodity Futures Trading Commission (CFTC) has issued guidance classifying perpetual futures on individual stocks as security futures products, a move that would permit their trading on CFTC-registered exchanges under joint CFTC and Securities and Exchange Commission (SEC) oversight. This development, announced Tuesday, was met with immediate legal action as the Capital Markets Alliance filed a lawsuit in the Southern District of New York seeking to overturn the policy.
Perpetual futures are leveraged bets on prices that do not expire and require margin and funding rate payments. U.S. law previously lacked a clear classification for these instruments on individual stocks, leading traders to use offshore or on-chain platforms. The CFTC’s statement indicates that Americans can now trade these products domestically.
Under the Commodity Futures Modernization Act of 2000, equity perpetual futures are now categorized as security futures products, placing them under the regulatory purview of both the CFTC and the SEC. Currently, seven entities hold the necessary registrations: Cboe, CME, Coinbase, Kalshi, Bitnomial, Nadex, and ICE Futures U.S.
Kalshi is reportedly close to launching, with a filing that covers between 56 and 58 individual stock names and an expected launch within days. Coinbase has also filed to list perpetual futures contracts on Apple, Tesla, and Nvidia. Platforms like Hyperliquid and Lighter, prominent in the crypto perpetuals market, are also potential recipients of future CFTC approvals.
The lawsuit filed by the Capital Markets Alliance, which lists Cboe, Citadel Securities, and the Healthy Markets Association among its members, aims to halt this new policy. The American Securities Association has also raised objections.
A CFTC spokesman called the suit “troubling.” This situation echoes a past instance where the CME sued over a CFTC approval for crypto perpetuals, arguing they should be classified as swaps rather than futures.
The outcome of the Capital Markets Alliance lawsuit remains uncertain, as do the timelines for potential CFTC approvals for platforms like Hyperliquid and Lighter. The exact number of names covered by Kalshi’s filing is also within the range of 56 to 58.
Why This Matters
The CFTC has issued guidance classifying perpetual futures on individual stocks as security futures products, making them tradable on CFTC-registered exchanges under joint CFTC and SEC oversight. The Capital Markets Alliance has filed a lawsuit in the Southern District of New York seeking to overturn this policy, the outcome of which remains uncertain.
Broader Context
Morning Minute is a daily newsletter written by Tyler Warner. The analysis and opinions expressed are his own and do not necessarily reflect those of Decrypt.
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