CFTC Clears Perpetual Futures on Individual Stocks, Drawing Lawsuits From Exchanges

The U.S. Commodity Futures Trading Commission's decision to allow trading in perpetual futures tied to individual stocks is drawing pushback from the financial industry.

Bloomberg reported on November 3 that CFTC Commissioner Caroline Pham said stock-based perpetual futures contracts would be classified as security futures and allowed to trade. The products would fall under the oversight of both the CFTC and the Securities and Exchange Commission.

Perpetual futures, unlike standard futures contracts, have no expiration date. They allow traders to use leverage to bet on moves in the underlying asset. The products have gained popularity in overseas markets because they can trade even when stock markets are closed, though concerns about volatility and investor protection have persisted.

Pham said the move could give U.S. investors new tools for risk management and price discovery. The CFTC is widening the range of permitted products to include stock-linked instruments after approving perpetual futures tied to digital assets earlier this year.

Existing exchanges, however, challenged both the approval process and the regulatory framework. The Capital Markets Alliance, whose members include Cboe Global Markets and Citadel Securities, filed suit in federal court in New York seeking to halt trading, arguing that the CFTC failed to comply with the Administrative Procedure Act.

Craig Donohue, chief executive officer of Cboe, raised concerns that stock-linked derivatives could trade on CFTC-regulated platforms without being subject to appropriate securities regulation and investor protections. CME Group had previously sued the CFTC as well, arguing that perpetual futures should be classified as swaps rather than futures.

Companies seeking to enter the market welcomed the decision. Prediction-market platform Kalshi applied in September to list perpetual futures on individual stocks, while Coinbase and Bitnomial are also preparing related products. Andy Ross, Kalshi's head of institutional business, criticized the lawsuit as an effort by incumbent firms to block broader competition.

The debate has also spread to Washington over investor protection. Senator Katie Britt, a Republican, called for joint oversight by the SEC and CFTC, while Democratic Senator Elizabeth Warren warned that perpetual stock futures could increase volatility in financial markets.