CFTC clears stock perpetual futures for trading on US exchanges

Stock perpetual futures are derivatives linked to individual stocks. They let traders gain or lose based on a stock’s price without owning the underlying shares. Their defining feature is the absence of an expiration date, making them different from many ordinary futures contracts, which end on a specified date.

Buying shares gives an investor ownership of the stock. A perpetual futures position gives price exposure instead. For example, a trader could take a position tied to a company’s shares without purchasing those shares directly. The contract’s value would move as the referenced stock price moved.

The article does not describe every contract rule, such as funding payments or margin requirements. It does say the products could trade on regulated US exchanges, extending a product popularized by BitMEX in cryptocurrency markets. Their arrival could give American traders a regulated alternative to offshore venues.

The CFTC determined that stock perpetual futures were approved under CFTC Regulation 40.3. This means contracts tied to individual stocks can begin trading on regulated US exchanges for the first time. The decision extends a crypto trading product into traditional equity markets.

The eligible venues are exchanges registered with both the CFTC and the Securities and Exchange Commission. They must be authorized to trade security futures products. The article does not identify which exchanges will list the contracts. It also gives no launch date.

CFTC Chairman Michael Selig said regulated access could protect American traders who might otherwise use offshore, often unregulated venues. The decision follows September filings from Coinbase, Kalshi and Payward through Bitnomial, plus OG.com. Those firms sought approval for stock-linked or related perpetual contracts, including proposals for weekday, around-the-clock trading.

The potential market could be broad because the contracts may be tied to individual US stocks rather than one stock index or a limited asset group. Each eligible stock could become a separate market. The article does not provide a projected value, trading volume, or number of possible contracts.

The absence of expiration is important. Traders would not need to close a position simply because a contract reached its scheduled end. A weekday, around-the-clock proposal from OG.com illustrates how some venues could make access nearly continuous during the trading week, although the article does not say that proposal was approved.

The immediate market remains uncertain. Selig did not identify participating exchanges or provide a start date. Regulatory lawsuits from the Capital Markets Alliance and CME Group could affect whether approvals take effect or how these products are structured. Therefore, the article supports broad potential, not a precise market-size forecast.

A stock perpetual futures position is marked against the referenced stock price. If the position moves in the trader’s favor, its value rises; if the price moves against it, the value falls. The trader receives economic exposure without owning the stock itself.

Typically, traders post margin rather than paying the full value of the shares. A losing position can use up that margin and be closed automatically if it falls below required levels. Perpetual contracts also commonly use funding payments between opposing positions to keep the contract price near its reference price. The article does not specify these rules for the proposed US products.

For exchanges, the key task is operating the marketplace and managing the contracts’ settlement and risk controls. The contracts could bring this activity under US regulatory safeguards. However, lawsuits argue that the products may belong under different rules, so their final operation could depend on the legal outcome.

Perpetual futures are popular in cryptocurrency markets because they offer a direct way to trade an asset’s price without buying the underlying asset. Their lack of an expiration date also lets traders keep positions open instead of replacing contracts when a scheduled term ends.

BitMEX helped popularize the instruments in 2016. Crypto traders commonly came to call them “perps.” The article presents BitMEX as an important early force, but it does not describe a specific product launch, trading volume or technical feature that established the market.

That crypto history now matters because regulators are considering the same basic product for traditional equities. The CFTC says stock-linked perpetuals can trade on eligible US exchanges. Coinbase, Kalshi, Payward through Bitnomial and OG.com later pursued related approvals. The shift could move a crypto-native instrument into a regulated stock-market setting.

The distinction matters because futures and swaps operate under different regulatory frameworks. The CFTC approved the perpetual contracts as futures under Regulation 40.3. The Capital Markets Alliance argues instead that they are security-based swaps under the SEC’s jurisdiction.

That classification can change practical obligations. The article says swaps may face different requirements, potentially including stricter reporting, margin and registration rules. Futures can trade within the existing futures-exchange framework. The regulator, therefore, is not deciding only what the products are called; it is determining which oversight system governs them.

The issue is unresolved. CME Group sued the CFTC in June over cryptocurrency perpetual futures, claiming the contracts should be swaps and that the agency exceeded its authority. The Capital Markets Alliance later challenged the stock-perpetual approval. Its members include Cboe, Citadel Securities and Healthy Markets, and they seek to pause the approvals while the case proceeds.

A derivative is a financial contract whose value is linked to an underlying asset, price or reference measure. The underlying asset can be a stock, cryptocurrency or another instrument. The derivative itself is not ownership of that asset; it is an agreement whose value changes with the reference.

Futures set terms for gaining or losing from future price movements, usually through an exchange and margin system. A perpetual future applies that idea without an expiration date. Swaps are agreements in which parties exchange payments based on changes in an underlying value. In both cases, traders can obtain exposure without buying the asset directly.

The article uses stock perpetual futures as the central example. A trader can take a position tied to an individual stock without owning its shares. The CFTC says eligible regulated US exchanges may offer them, while opponents argue some should instead be treated as security-based swaps under SEC oversight.