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WASHINGTON – Perpetual futures tied to individual stocks can begin trading on U.S. exchanges that meet joint federal registration requirements, CFTC Chairman Michael Selig said Tuesday, opening a regulated path for a trading model widely used in cryptocurrency markets.
The Commodity Futures Trading Commission’s statement applies to designated contract markets that are also registered with the Securities and Exchange Commission as notice-registered national securities exchanges for security futures products. It is not blanket permission for every exchange to offer the contracts.
The products, known as equity perpetual futures or equity perps, use the existing security-futures framework, with oversight from both the CFTC and SEC.
Unlike traditional futures, perpetual futures have no expiration date. They let traders take positions on an asset’s price without owning it and often use leverage, which can amplify losses as well as gains.
A regulated route for equity perps
Selig said bringing the products into regulated U.S. markets would give American investors and traders an alternative to offshore venues.
“I believe that bringing these types of innovative products into our regulated markets ensures that American investors and traders can access these products within the protections of the CFTC’s proven regulatory framework, rather than being forced to turn to offshore, and often unregulated, venues,” he said.
The chairman said the contracts build on the Commodity Futures Modernization Act of 2000 and the CFTC-SEC memorandum of understanding. Stock-based derivatives fall across the two agencies’ jurisdictions, making coordination part of the route to market.
Perpetual futures have become a major part of cryptocurrency trading, including on offshore exchanges and decentralized platforms, CoinDesk reported Tuesday. The equity contracts extend that model to individual stocks under the security-futures rules.
The CFTC statement did not name exchanges that would offer equity perps, identify the stocks to be covered or provide a specific launch schedule.
JBizNews Desk | Washington, D.C.
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