Capital Markets Coalition Sues CFTC to Challenge Approvals of Perpetual Stock Contracts
Key Facts
The Capital Markets Coalition filed a lawsuit in the U.S. District Court for the Southern District of New York challenging Commodity Futures Trading Commission approvals of perpetual contracts linked to individual U.S. stocks. Cboe Global Markets said on November 3, 2026, that it had joined the action in support of the coalition. The coalition includes Cboe, Citadel Securities and the Healthy Markets Association, according to the exchange’s statement. The plaintiffs seek to vacate the agency’s approvals and have the contracts declared securities-based swaps, as well as to stay the approvals while the case is pending. The lawsuit concerns the classification of new financial products and the boundary of jurisdiction between the CFTC and the Securities and Exchange Commission. The claims remain allegations by the plaintiffs until the court rules on them.
The coalition said the approvals violate the Administrative Procedure Act and that the agency did not explain its decision or reasonably assess the products’ effects on investors and securities markets. In its complaint, it said the “agency provided no explanation for its decision and did not acknowledge that it had long treated perpetual derivatives as swaps.” The challenge rests on a dispute over whether the contracts are security futures products, as the agency classified them, or securities-based swaps, as the coalition asks the court to declare. No court ruling has resolved the classification or substantiated the coalition’s claims. The dispute leaves it to the court to determine whether the approvals and the procedures that preceded them complied with the law.
On the same day, the CFTC said single-stock perpetual futures could begin trading for the first time on markets registered with the agency and dual-registered with the SEC to trade security futures products. CFTC Chairman Michael Selig said the contracts were deemed certified under Regulation 40.3 as security futures products. He added that this classification subjects them to the requirements of federal commodities and securities laws and to both agencies’ oversight frameworks. Selig presented the move as an extension of U.S. access to perpetual contracts, from digital commodities to traditional securities. The opening of a domestic trading channel thus coincided with a legal challenge targeting the basis for the approvals.
Selig said offering the contracts on regulated markets would give U.S. traders access within the CFTC’s investor-protection framework, rather than forcing them to turn to offshore platforms that are “often unregulated.” His position sets out the agency’s aim in bringing the products into markets under its oversight, while the coalition focuses on which agency has jurisdiction and the appropriate legal classification. Perpetual contracts are derivatives with no expiration date, allowing traders to hold a position without rolling it into a new contract, according to Reuters. They can involve leverage that increases potential gains and losses. These features make the rules governing oversight and reporting of the contracts and related activity central to the dispute.
Cboe had previously objected to proposed rules concerning perpetual contracts in a letter to the SEC dated October 14, 2026, calling for four proposed changes to be withdrawn and refiled under Section 19(b). The exchange said perpetual contracts are not security futures contracts. In the letter, it warned that order and trading data for the contracts would fall outside the Consolidated Audit Trail, potentially creating a gap between monitoring hedges in the stock market and monitoring trading in related contracts. These are concerns and characterizations Cboe submitted in the comment record, not judicial findings or final regulatory decisions. The letter shows the exchange’s objections to the classification and oversight predated the lawsuit.
On November 2, the Securities Industry and Financial Markets Association called on the SEC and the CFTC to review the effects of perpetual contracts on underlying stock markets and oversight of cross-market trading. Its concerns included potential manipulation, trading during periods of low liquidity and the classification of products before trading begins. The association addressed rule proposals from four platforms registered with the CFTC. Its comment came amid a broader regulatory debate over how to monitor linked transactions in the stock market and perpetual contracts. The coalition’s lawsuit, meanwhile, puts the agency’s approvals before a court and seeks to stay and vacate them.
Cboe Chief Executive Craig Donohue said the company joined the action because it believes the agency’s steps threaten to weaken the market-regulation and investor-protection framework that, it said, has governed U.S. securities markets for more than nine decades. That is the company’s position in its statement, while the agency says offering the contracts through regulated markets provides traders with domestic regulatory protections. The two positions meet on whether the classification adopted by the agency provides appropriate oversight of these products or whether the agency exceeded its authority in approving them. The lawsuit asks the court to resolve the legal claims, including whether to stay the approvals during the litigation. The available evidence gave no date for a hearing or forthcoming court decision.