Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. From the CFTC's chair and sole commissioner Michael Selig: Today, perpetual futures contracts on individual equity securities, known as "Equity Perps", can begin trading for the first time on CFTC-registered exchanges. This marks the first extension of the perpetual futures instrument beyond digital commodities into traditional securities in the U.S. Selig directed the CFTC to onshore these products so they can flourish subject to safeguards.
Earlier this year, the CFTC approved the first bitcoin perpetual futures contract on a regulated exchange. The expansion allows U.S. market participants to access the advantages of perpetual futures for risk-management and price-discovery within the CFTC's regulatory framework, rather than turning to offshore, often unregulated venues. The Equity Perps were deemed approved pursuant to Commission Regulation 40.3 as security futures products under the Commodity Futures Modernization Act of 2000 ("CFMA").
The contracts are subject to the Commodity Exchange Act, U.S. Federal securities laws, and the regulatory frameworks of both the CFTC and the SEC. More than two decades ago, Congress enacted the CFMA to establish a framework for the joint regulation of security futures products, recognizing the complementary roles of the CFTC and SEC. Earlier this year, the CFTC and SEC entered into a historic memorandum of understanding ("MOU") to guide coordination.
The Equity Perps build on this foundation, turning the page on an era of regulatory uncertainty described as a "no man's land" by SEC Chairman Paul S. Atkins. The CFTC and SEC are committed to delivering regulatory clarity and a clear path to market for innovative products.
Selig thanked CFTC staff for their hard work and collaboration with the SEC, looking forward to ensuring the new frontier of finance is built in the United States of America.
Source: Financial Times Markets · Summarized by HeadlinesBriefing