The short version
- Stock perps can now trade on CFTC-registered US exchanges, Chairman Michael Selig said on November 3, treating them as security futures under joint CFTC and SEC oversight.
- A group backed by Citadel Securities and Cboe sued the same day to block them, arguing they are security-based swaps that federal law keeps away from ordinary retail investors.
- Next: the New York court’s answer on the request to freeze the approval while the case runs. We’ll post it on Base Camp on X when it lands.
Stock perps can now trade on US exchanges, the CFTC said on Tuesday. Wall Street answered the same day, with a lawsuit.
CFTC Chairman Michael Selig said in a statement on November 3 that perpetual futures on individual stocks “can begin trading for the first time on CFTC-registered exchanges.” Within hours the Capital Markets Alliance, a group whose members include Cboe, Citadel Securities and the Healthy Markets Association, sued the agency in federal court in New York to undo it.
Solid Intel flagged the suit late on Tuesday:
INTEL: Citadel Securities and Cboe back a lawsuit against the CFTC to block stock perpetual futures, arguing the contracts fall under the SEC's jurisdiction | per Reuters
What the CFTC Cleared for Stock Perps
Single stock perps are a crypto contract pointed at shares. A perpetual future never expires and is kept close to the spot price by a funding rate that longs and shorts pay each other. Crypto traders know it from BTC and ETH. The new part is the underlying: single US stocks and ETFs.
There was no vote. The contracts were “deemed approved” under Regulation 40.3, which lets an exchange self-certify a product and list it if the CFTC doesn’t object within the review window. Selig’s statement treats them as security futures under the Commodity Futures Modernization Act of 2000, so the CFTC and the SEC share oversight. Only exchanges registered with the CFTC that are also notice-registered with the SEC for security futures can list them.
Kalshi, which filed on September 18, is first in line. Coinbase Derivatives, Bitnomial and Crypto.com’s North American Derivatives Exchange filed similar contracts.
Selig sold it as bringing the trade home. He wants Americans to use these “within the protections of the CFTC’s proven regulatory framework, rather than being forced to turn to offshore, and often unregulated, venues.”
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Why Citadel and Cboe Want Stock Perps Stopped
They say stock perpetual futures are swaps, not futures. The suit, filed in the Southern District of New York, asks the court to vacate the approval, rule that the contracts are security-based swaps and block them while the case runs.
That label is the whole fight. Security-based swaps sit with the SEC, and federal law keeps them away from ordinary retail investors. Call the same product a security future and it can go to anyone with a futures account. The group also argues the CFTC broke the Administrative Procedure Act by not explaining its legal basis or weighing the effect on investors.
Cboe CEO Craig Donohue said in the exchange’s statement that the CFTC’s actions “threaten to erode the regulatory framework that has protected investors” for more than nine decades. He added that if this were “simply a commercial issue”, Cboe could list the products on the CFTC-regulated platforms it already runs.
Some of it is commercial anyway. Citadel Securities makes money routing and filling stock orders, and Cboe runs stock and options exchanges. A cheap, leveraged, round-the-clock stock contract on a futures venue competes with both.
It’s also the second suit of its kind. CME Group sued the CFTC in June over Kalshi’s bitcoin perpetual, and the agency has asked the court to dismiss that case, arguing CME is free to list the same contracts.
SIDE TRAIL: ICE Hyperliquid Deal: NYSE Owner Backs trade.xyz Plan for 24/7 US Perps
What It Means for Crypto Traders
The biggest stock perps market today runs onchain. On Hyperliquid, the trade.xyz markets did about $4.4 billion in volume over the past 24 hours across 142 contracts on stocks, indexes and oil, with Nvidia alone at $247 million and leverage of up to 20x. US traders are mostly shut out of venues like that.
A US version would pull part of that flow onshore under American rules, and give exchanges like Coinbase and Kalshi a product that until now only offshore platforms had. A court freeze would hand the lead straight back to the offshore venues.
HYPE barely reacted. It trades at $82.81 at the time of writing, down 0.3% in 24 hours, with the market still digesting the midterm results.
TRAIL MAP: Futures and Leverage Explained: Perps, Margin and How Liquidation Really Works
What decides it now is the judge in New York: freeze the approval, and US stock perps stall before most exchanges have listed a single one.
Satoshi Flipper has more than 20 years of trading experience, starting in stocks before moving into crypto in 2017, and holds an MBA from the Kellogg School of Management. The edge is reading the economic data: rate decisions, inflation, jobs numbers, earnings and the US markets that move Bitcoin.
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