Companies Back CFTC in Lawsuit Over Single-Stock Perpetual Futures

Several companies have filed a brief in a US federal court supporting the Commodity Futures Trading Commission (CFTC) in a lawsuit that challenges the agency’s authority to permit perpetual futures tied to individual US stocks.

The filing on Monday comes as a federal judge has indicated that the CFTC may have exceeded its statutory authority in allowing these contracts to trade. The lawsuit, brought by the Capital Markets Alliance Association (CMAA), questions whether these perpetual futures should be regulated as security futures or security-based swaps.

Coinbase, Kalshi, Kraken parent Payward, DRW Holdings, Jump Trading, and Paradigm Operations are among the six companies backing the CFTC. According to a proposed amicus brief, these companies argue that stock perpetual futures fall under existing US futures laws.

The CMAA, whose members include Cboe and Citadel Securities, contends that because these contracts lack a fixed expiration date, they should be regulated as security-based swaps. This category of derivatives is primarily overseen by the US Securities and Exchange Commission (SEC) and faces stricter retail trading restrictions.

US District Judge Valerie Caproni, presiding over the case, previously found that the contracts appeared to qualify as swaps rather than security futures, casting doubt on the CFTC’s legal interpretation. However, she denied the CMAA’s request for a temporary restraining order, allowing the CFTC’s trading approvals to remain in place while the lawsuit proceeds.

Perpetual futures tied to individual stocks allow traders to speculate on stock price movements without owning the underlying shares. Unlike traditional futures contracts, they do not have a fixed expiration date.

The CFTC announced on November 3 that single-stock perpetual futures could begin trading on US-regulated exchanges. The CMAA sued the CFTC last week, challenging this decision.

The outcome of this lawsuit could determine whether US exchanges are permitted to offer retail traders contracts that track individual stocks without a set expiration date. The CMAA is scheduled to file its reply to the CFTC’s opposition to a preliminary injunction on Tuesday.

Why This Matters

The materials describe a narrow update: Coinbase, Kalshi, and four other companies filed a brief in federal court supporting the CFTC’s authority to allow perpetual futures tied to individual US stocks to trade. Whether US exchanges can offer retail traders contracts that track individual stocks without expiring.

Broader Context

Source materials place the factual news in this context: Coinbase, Kalshi and four other companies backed the CFTC in a lawsuit over whether US exchanges can list perpetual futures tied to individual stocks.