CFTC clears equity perpetual futures as security futures; Kalshi launches, rivals sue

What the CFTC approved and why perps stand out

The Commodity Futures Trading Commission opened the door for trading a type of perpetual derivative linked to equities and said these contracts will be handled as security futures subject to CFTC and SEC oversight. Chairman Michael Selig framed the step as a way for U.S. participants, in line with the law, to access the risk management and price discovery features that have made perpetual futures popular.

Perpetuals, or perps, are leveraged contracts with no end date. They can trade around the clock, even when stock markets are shut, a structure that has driven big uptake abroad but also sparked warnings about risks to less experienced traders. The agency has been pushing to bring perps into U.S. markets and earlier this year signed off on the first crypto versions.

Launch day and who is listing next

Prediction market Kalshi sought permission in September to list single stock perps, with those contracts under review until Nov. 2. Later on Tuesday, the company began offering its first batch tied to Amgen Inc., McDonald's Corp., Qualcomm Inc. and Costco Wholesale Corp. Kalshi spokesperson Jack Such said, "We're bringing single-stock perps to the US because we believe they can make trading stock prices simpler, cheaper, and more efficient. Offshore traders love single stock perps, and we're excited to bring that option onshore for Americans."

Other venues are lining up. Coinbase Global Inc., Bitnomial Inc. and additional exchanges are preparing to list the contracts.

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Legal pushback and industry reaction

The rollout did not land quietly. The Capital Markets Alliance, which counts Cboe, Citadel Securities and other U.S. exchanges, trading firms and investor advocates among its members, filed a motion in a New York federal court seeking to halt trading, asserting the approval violated the Administrative Procedure Act. Cboe Global Markets Inc. CEO Craig Donohue warned that "Single-stock perpetual derivatives are the latest example of a troubling trend in which securities products are being offered on CFTC platforms - outside the appropriate regulatory framework and customer protection regime established by Congress." The CFTC did not immediately comment after the lawsuit was filed.

Kalshi's head of institutional business, Andy Ross, pushed back at the Futures Industry Association Expo in Chicago, saying, "Monopolies like to sue when they get competition." Meanwhile, CME Group Inc. has its own case against the agency. Earlier this year, the biggest derivatives marketplace brought suit, arguing the contracts ought to be treated as swaps and not as futures. At the Futures industry conference, CME President and CFO Lynne Fitzpatrick said the products "introduce more risk" and could cause contagion even at firms that do not list them, such as CME. Shares of Cboe, CME and Intercontinental Exchange Inc. slipped after Tuesday's announcement.

Politics, scrutiny and your playbook

There is also a political lens. The CFTC's actions could face heavy scrutiny if Democrats regain control of Congress. In the past few weeks, members from both parties have expressed concern. In a letter dated Oct. 29, Katie Britt, a Republican on the Senate Banking Committee, pressed the SEC and the CFTC to work together so that the products provide sufficient protections for investors. Senator Elizabeth Warren, the committee's top Democrat, criticized the move minutes after it was announced, saying U.S. stock perps "could inject serious volatility into our markets."

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