Summary Cboe and Citadel Securities backed Capital Markets Alliance has sued the CFTC, challenging its approval of US stock perpetual futures. Cboe CEO Craig Donohue argues that stock perpetu
A legal dispute over stock derivatives has emerged in the United States as major financial firms challenge federal regulators’ authority. According to a federal lawsuit filed Tuesday, the Capital Markets Alliance wants courts to overturn the CFTC’s approval of stock perpetual futures.
The industry group, backed by Cboe and Citadel Securities, argues that regulators approved the products under the wrong legal framework. Its lawsuit targets the Commodity Futures Trading Commission’s decision to permit perpetual contracts linked to individual US company shares. The group filed its complaint in the US District Court for the Southern District of New York, seeking to block trading pending judicial review.
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The Capital Markets Alliance, which also includes Healthy Markets Association, argues that stock perpetual futures qualify as security-based swaps. Under that classification, the group maintains that the Securities and Exchange Commission should exercise exclusive regulatory authority.
Consequently, the alliance disputes the CFTC’s decision to classify the contracts as security futures rather than security-based swaps. The complaint also accuses the commission of violating the Administrative Procedure Act during its approval process.
Specifically, the group claims regulators failed to adequately explain their decision or assess potential consequences for securities markets. Craig Donohue, CEO of Cboe Global Markets, supported the lawsuit and questioned the commission’s interpretation of existing securities regulations.
“This issue, however, is about investor protection for securities trading and the rule of law,” Donohue stated.
Additionally, Donohue argued that allowing securities products outside established regulatory structures creates opportunities to bypass investor protection requirements.
“Investors deserve the specific protections Congress established for securities markets,” Donohue emphasized.
Cboe maintains that the dispute concerns regulatory responsibilities rather than opposition to competition or financial innovation.
CFTC Chairman Michael Selig announced Tuesday that qualifying regulated exchanges could introduce perpetual futures tied to individual US stocks. According to Selig, the Commodity Futures Modernization Act of 2000 provides the legal foundation for approving these contracts.
The chairman classified the products as security futures, placing them under joint supervision by the CFTC and SEC. Unlike traditional futures, perpetual contracts allow traders to maintain leveraged stock exposure without predetermined expiration dates.
Investors can also trade these derivatives without purchasing or directly holding the underlying company shares. Meanwhile, the CFTC maintains that regulated domestic exchanges offer an alternative to offshore platforms providing similar trading products. A commission spokesperson criticized the lawsuit as an attempt to interfere with regulated markets, according to Reuters.
The dispute follows another legal challenge involving the CFTC’s authority over perpetual derivatives in the United States. CME Group filed a separate lawsuit in June challenging the commission’s approval of cryptocurrency perpetual futures offered by Kalshi and Coinbase.
Both cases concern the regulatory treatment of perpetual contracts, though they involve different underlying assets and legal questions. Significantly, the latest lawsuit could determine whether the disputed stock contracts can trade under the CFTC’s existing approval. The court must also consider the alliance’s request to suspend trading while the broader legal challenge proceeds.
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