Coalition Seeks to Halt Single-Stock Perpetual Contract Approvals Amid Dispute Over U.S. Regulatory Authority
Key Facts
The Capital Markets Alliance asked a federal court to halt U.S. Commodity Futures Trading Commission approvals for perpetual contracts linked to individual stocks, in a dispute pitting the commission’s jurisdiction against that of the Securities and Exchange Commission. The coalition includes Cboe, Citadel Securities and the Healthy Markets Association, according to Cboe. The request targets approvals related to applications by KalshiEX, Bitnomial and Coinbase Derivatives to list the derivatives, and asks the court to bar the commission from taking steps to implement them while the case proceeds. The lawsuit argues that the contracts are closer to securities-based swaps, which fall under the Securities and Exchange Commission’s authority. The commission, meanwhile, announced on 3 November 2026 that perpetual contracts on individual stocks could begin trading on markets registered with it and also registered with the commission as national securities exchanges for security futures products.
The dispute centers on the contract’s legal classification and which agency has authority to permit it to trade. The coalition argues that a perpetual contract does not meet the definition of a “security futures product” because it does not provide for the sale of a single security for future delivery. In its preliminary assessment, the court relied on that argument, finding the coalition likely to succeed in showing that the commission lacks authority to approve the products as security futures. The court said perpetual contracts, by definition, do not involve “the sale for future delivery of a single security.” That assessment does not resolve the final dispute over each agency’s jurisdiction, as the case continues to examine the legal basis for the approvals.
Judge Valerie Caproni rejected the coalition’s request for a temporary restraining order to halt the approvals immediately, despite the court’s view that the coalition’s legal argument was likely to prevail. The court found that the coalition had not shown imminent harm that could not be remedied, precluding an emergency halt. At the same time, it said the public interest and balance of equities favored the coalition, and that the commission’s actions “appear to represent a major disruption to the stock market.” The approvals therefore remain in place for now as the court continues to consider the request for a preliminary injunction. The ruling separates the court’s preliminary assessment of the likelihood that the coalition will prevail from its procedural decision on whether the conditions for an immediate halt have been met.
Cboe says it joined the lawsuit to protect the regulatory framework that has governed U.S. securities markets for more than nine decades, according to a statement from its chief executive. The company argues that making securities products available through commission-regulated platforms, outside the customer-protection framework established by Congress, could create “regulatory arbitrage” and circumvent federal and state laws. The argument focuses on which agency oversees the product and the customer-protection rules that accompany its trading. The commission’s chairman, meanwhile, defended making the contracts available on regulated U.S. markets, saying that extending the instrument to traditional securities broadens its use in risk management and price discovery. He added that providing domestic trading within a regulatory framework could reduce investors’ need to use offshore platforms that are often unregulated.
The proposed contracts in Coinbase Derivatives’ filing with the Securities and Exchange Commission do not confer ownership of the underlying stock; they are cash-settled and have no fixed expiration date. Their structure therefore differs from buying the stock directly, as returns are tied to changes in its price without delivery of the security. This structure puts the product at the center of the dispute over whether it is a derivative subject to Commodity Futures Trading Commission oversight or a securities-based swap within the commission’s jurisdiction. The commission had announced that the perpetual instrument was expanding in the United States from digital commodities to traditional securities. Its chairman said bringing it to regulated markets aims to make risk-management and price-discovery tools available within the U.S. market.
Commodity Futures Trading Commission records showed that Coinbase listed perpetual contracts on individual stocks in the security futures products category. The commission recorded the SBUX contract as “approved” on 5 November 2026, after announcing that trading in these products would be available. The move shows that contract listings are advancing while the legal challenge remains pending. The court had set 6 November 2026 as the deadline for defendants to respond to the request for a preliminary injunction, followed by 10 November for the coalition’s reply. That schedule remains subject to change as the case awaits the parties’ responses to the request to halt the approvals.