The Commodity Futures Trading Commission (CFTC) of the United States announced on November 3rd local time that individual stock sustainable futures contracts have been officially approved for listing on regulated exchanges in the United States. This means that American investors will be able to continue trading U.S. stock-related contracts after the stock market closes in the future, and they will also be able to use leverage.
A perpetual contract ( Perpetuals, abbreviated as “Perps”) is a type of leveraged derivative contract that has no expiration date. Compared to traditional futures, it has two main characteristics: first, it can be traded around the clock, including during the periods when stock markets are closed; second, it incorporates a leverage mechanism that allows traders to control larger positions with a smaller amount of capital.
These two features have enabled perpetual contracts to accumulate a vast user base overseas, especially in the cryptocurrency market. This time, CFTC is officially introducing this tool into the regulated markets of the United States and extending it to the traditional stock sector as well.
Chairman Michael Selig ( Michael Selig ) stated in his declaration: "This move marks an important step towards allowing participants in the US market to take advantage of the benefits of sustainable futures – it is these benefits that have made sustainable futures a widely popular tool for risk management and price discovery."
Selig also stated that he hopes to bring such innovative products into regulated markets, “to ensure that American investors and traders can use these products under the protection of a mature regulatory framework in CFTC, rather than being forced to turn to offshore platforms that often lack regulation.”
The prediction market platform Kalshi applied to CFTC for the listing of perpetual contracts on individual stocks as early as September this year, and the regulatory review concluded on November 2nd. On the day of approval, Kalshi launched the first batch of four perpetual contracts, with underlying assets being Amgen (Amgen), McDonald's (McDonald's), Qualcomm (Qualcomm), and Costco (Costco).
Kalshi Spokesperson Jack Sach ( Jack Such ) stated: "We are introducing perpetual contracts for individual stocks in the United States because we believe they can make stock trading simpler, cheaper, and more efficient. Offshore traders really enjoy perpetual contracts for individual stocks, and we are delighted to offer this option to Americans."
Apart from Kalshi, exchanges such as Coinbase Global and Bitnomial have also announced plans to launch related contracts.
According to the decision of CFTC, individual stock perpetual futures contracts are classified as "securities and futures products" and are governed by the Commodity Futures Modernization Act of 2000 ( CFMA ). They are also subject to dual regulation by CFTC and SEC.
In his statement, Selig pointed out that in the past, due to a lack of coordination between the two regulatory agencies, innovative products such as securities and futures had long been in what Chairman Paul Atkins (mentioned in Paul Atkins) described as a "no-man's land" of regulation. Earlier this year, CFTC and SEC signed a Memorandum of Understanding (MOU), which laid the foundation for coordinated cooperation between the two agencies. The approval of these individual stock perpetual contracts is precisely built upon this framework.
It is worth mentioning that CFTC approved the launch of the first Bitcoin perpetual futures contract on Kalshi in May this year, and this individual stock perpetual contract is a continuation of this regulatory opening path.
After the announcement of the news, the stock prices of the Chicago Options Exchange ( Cboe ), CME Group ( CME ), and Intercontinental Exchange ( ICE ) all declined on that day.
Represented by institutions such as Cboe and Castle Securities (Citadel Securities), the industry organization Capital Market Alliance (Capital Markets Alliance, CMA), filed a lawsuit with the United States District Court for the Southern District of New York on the same day that CFTC announced its decision, requesting the revocation of the approval granted by CFTC. CMA believes that the relevant products are "security-based swap contracts" and should fall under the exclusive jurisdiction of SEC, and that CFTC did not follow the Administrative Procedure Act during the approval process.
Cboe CEO Craig Donahue stated in a statement: "Individual stock sustainability derivatives are the latest example of a concerning trend – securities products are being launched on the CFTC platform, outside of the appropriate regulatory framework and customer protection mechanisms established by Congress."
In response to this, Andy Ross ( Andy Ross ), the person in charge of business at Kalshi, stated at the annual meeting of the Chicago Futures Industry Association ( FIA ): "Monopolists always choose to sue when faced with competition."
In addition, Elizabeth Warren ( Elizabeth Warren ), the Democratic chair of the Senate Banking Committee, issued a statement within minutes after the decision was announced on CFTC, stating that U.S. stock perpetual contracts "could inject serious volatility into the market."
