Key Takeaways
- • CFTC Chairman Michael Selig said on Tuesday that perpetual futures on individual U.S. stocks, which he called Equity Perps, can now trade on CFTC-registered exchanges, marking the first such listing on registered U.S. venues.
- • The contracts were deemed approved under CFTC Regulation 40.3 as security futures products under the Commodity Futures Modernization Act of 2000, so they fall under both the CFTC and the SEC.
- • Exchanges must be CFTC-designated contract markets and also notice-registered with the SEC as national securities exchanges for security futures.
- • Kalshi launched several contracts the same day, per Bloomberg, while an industry group has already sued to challenge the decision.
- • For hedge funds, the product offers a new listed route to levered, around-the-clock single-stock exposure that competes with swaps and options; institutional volume will depend on margin terms, clearing, and the outcome of legal challenges.
Summary
Commodity Futures Trading Commission Chairman Michael Selig said on Tuesday that perpetual futures contracts on individual U.S. stocks can now trade on CFTC-registered exchanges. Selig called the instruments Equity Perps. According to the source, the contracts were deemed approved under CFTC Regulation 40.3 as security futures products under the Commodity Futures Modernization Act of 2000.
Because the contracts are classified as security futures, they sit under the oversight of both regulators. An exchange offering them must be a CFTC-designated contract market and must also be notice-registered with the Securities and Exchange Commission as a national securities exchange for security futures. The products are subject to both the Commodity Exchange Act and the federal securities laws.
Perpetual futures have no expiry date, allowing traders to hold positions without rolling them, and they often carry high leverage. The instrument became dominant on offshore crypto venues. Earlier this year the CFTC approved the first bitcoin perpetual on a regulated U.S. exchange, and Selig presented the equity step as part of an effort to bring such products onshore rather than leave U.S. traders to unregulated venues.
Bloomberg reported that Kalshi went live with several contracts the same day, and an industry group has already filed suit to challenge the decision. Reuters noted that CME sued the CFTC in June over its earlier approval of crypto perpetuals at Kalshi and Coinbase, arguing the agency exceeded its authority. The CFTC rejected that argument.
For hedge funds, the change creates a new listed channel for levered single-stock exposure that trades around the clock, potentially competing with swaps and options. The degree of institutional adoption will depend on margin terms, clearing arrangements, and whether the legal challenges succeed.
Because the contracts are classified as security futures, they sit under the oversight of both regulators. An exchange offering them must be a CFTC-designated contract market and must also be notice-registered with the Securities and Exchange Commission as a national securities exchange for security futures. The products are subject to both the Commodity Exchange Act and the federal securities laws.
Perpetual futures have no expiry date, allowing traders to hold positions without rolling them, and they often carry high leverage. The instrument became dominant on offshore crypto venues. Earlier this year the CFTC approved the first bitcoin perpetual on a regulated U.S. exchange, and Selig presented the equity step as part of an effort to bring such products onshore rather than leave U.S. traders to unregulated venues.
Bloomberg reported that Kalshi went live with several contracts the same day, and an industry group has already filed suit to challenge the decision. Reuters noted that CME sued the CFTC in June over its earlier approval of crypto perpetuals at Kalshi and Coinbase, arguing the agency exceeded its authority. The CFTC rejected that argument.
For hedge funds, the change creates a new listed channel for levered single-stock exposure that trades around the clock, potentially competing with swaps and options. The degree of institutional adoption will depend on margin terms, clearing arrangements, and whether the legal challenges succeed.
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