The US Commodity Futures Trading Commission has approved the trading of perpetual derivatives contracts tied to equities. CFTC Chairman Michael Selig stated that these perpetual futures contracts will be regulated as security futures, falling under both CFTC and Securities and Exchange Commission oversight. Perpetuals, or perps, are leveraged contracts without expiration dates that trade around the clock, including when equities markets are closed.
Their popularity overseas has grown due to these features, though critics warn of risks for less sophisticated traders. The CFTC has prioritized bringing perpetual contracts into regulated US markets, including approving crypto perpetuals earlier this year. Kalshi sought approval in September to list single-stock perpetual contracts, which were under review until November 2.
Kalshi declined to comment. The CFTC’s decision could face congressional scrutiny if Democrats retake the House or potentially the Senate next year. Lawmakers from both parties have raised concerns.
Republican Senator Katie Britt called on the SEC and CFTC to ensure adequate investor protections. Six Democratic senators urged the SEC to solely regulate equity derivatives, citing market surveillance and insider trading concerns. Senator Elizabeth Warren criticized the decision, warning it could inject serious volatility into US markets.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing