Eligible exchanges can offer perpetual contracts tied to individual stocks under existing security futures rules. Exchanges need both CFTC designation and SEC registration to list the contrac
Equity perpetual futures tied to individual stocks can trade on eligible U.S. exchanges for the first time, CFTC Chair Michael Selig said on November 3. The decision gives traders a domestic route to stock-price exposure without an expiration date. Selig identified the registrations an exchange needs, but did not say which stocks would trade first or when.
In his November 3 statement, Selig said the contracts qualified as security futures products and received approval under CFTC Regulation 40.3. Because each contract tracks an individual stock, both federal securities laws and the Commodity Exchange Act apply.
An exchange needs two registrations to list equity perpetual futures. It must qualify as a designated contract market with the Commodity Futures Trading Commission. It must also register with the Securities and Exchange Commission as a national securities exchange for security futures trading. CFTC registration alone does not qualify a venue.
The legal framework predates crypto trading. Congress established joint oversight of security futures in the Commodity Futures Modernization Act of 2000. In March, the agencies agreed to coordinate their oversight of products that fall within both jurisdictions.
A trader can use equity perpetual futures to take a position on a stock without buying the shares. An investor who already owns the stock, for example, could take a short position to offset some losses if the price falls.
Unlike a conventional futures contract, the perpetual has no scheduled expiry, so the trader need not replace it when a contract month ends.
Leverage still matters. A trader can control a position worth more than the cash posted as margin. That magnifies both gains and losses relative to the amount posted.
Selig framed the decision as a way to bring trading now conducted offshore under U.S. supervision. He cited the CFTC’s May 29 approval of a KalshiEX bitcoin perpetual futures contract as the earlier step. His November statement named no exchange or launch date for the stock contracts.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.<p>The post CFTC Clears Equity Perpetual Futures Under US Securities Rules first appeared on Coin Crypto Newz.</p>
