Proposed Listing and Trading of Equity Perpetual Contracts
Summary
SIFMA submitted comments to the SEC on rule proposals from four CFTC-registered exchanges seeking to list and trade equity perpetual contracts as security futures. SIFMA raised concerns about potential impacts on underlying equity markets, cross-market surveillance and manipulation, trading during periods of low liquidity, and the regulatory classification of these products. SIFMA urged the SEC and CFTC to use their statutory authority to allow for further review and public input before these products begin trading.
Excerpt
The Securities Industry and Financial Markets Association (“SIFMA”) 1 appreciates the opportunity to submit this letter to the Securities and Exchange Commission (“SEC”) in response to the rule proposals filed with the SEC by four markets registered with the Commodity Futures Trading Commission (“CFTC”) as designated contract markets (“DCMs”). 2 These DCMs recently notice-registered with the SEC as Security Futures Product Exchanges pursuant to Section 6(g) of the Securities Exchange Act of 1934 (“Exchange Act”). The rule proposals, which the DCMs filed with both the SEC and CFTC (together, the “Commissions”) pursuant to the statutory processes for rule filings related to security futures, 3 would amend the DCMs’ rules to permit the listing and trading of contracts on individual equity securities 4 that do not have an expiration date (“Equity Perpetuals”) as security futures.
There are many unanswered questions related to the listing and trading of Equity Perpetuals that the Commissions should address before notice-registered Security Futures Product Exchanges, as defined in Exchange Act Section 6(g), launch these products for trading for the first time. This includes the potential impact trading in Equity Perpetuals will have on the underlying equity markets, the ability of regulators to surveil for potential cross-market manipulation, the trading of these products during low volume periods, and whether these products should be classified as security futures. We are not the first to raise these questions. 5 The Commissions have raised similar questions recently in various requests for comments (“RFCs”), 6 policy statements, 7 rule proposals, 8 and the SEC’s “Staff Statement on Affiliations Between National Securities Exchanges and Broker-Dealers.” 9 Presumably, the Commissions are still reviewing and considering the responses they received from public commenters in each of these separate initiatives, but to date we are not aware the Commissions have formed any conclusions regarding these questions.
We therefore respectfully request that the SEC and CFTC rely on their statutory tools, such as the CFTC’s authority to stay and determine not to grant approval of the DCMs’ rule filings or the SEC’s authority to abrogate the rule filings after they become effective and require that such rule filings related to the listing and trading of Equity Perpetuals be refiled pursuant to Section 19(b)(1) of Exchange Act, to allow for a more thoughtful and measured consideration of these questions with the benefit of public input.
- SIFMA is the leading trade association for broker-dealers, investment banks, and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly one million employees, we advocate for legislation, regulation, and business policy affecting retail and institutional investors, equity and fixed income markets, and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. With offices in New York and Washington, D.C., SIFMA is the U.S. regional member of the Global Financial Markets Association (GFMA).
- Bitnomial Exchange, LLC, Release No. 34-106421 (Sept. 18, 2026), 91 FR 60438 (Sept. 23, 2026); Coinbase Derivatives, LLC, Release No. 34-106420 (Sept. 18, 2026), 91 FR 60448 (Sept. 23, 2026); KalshiEX LLC, Release No. 34-106422 (Sept. 18, 2026), 91 FR 60467 (Sept. 23, 2026); North American Derivatives Exchange, Inc., Release No. 34-106521 (Sept. 29, 2026), 91 FR 62786 (Oct. 2, 2026). ICE Futures U.S. filed a Form 1-N to become notice-registered with the SEC as a national securities exchange to list security futures products, and it has been discussed that this may include Equity Perpetuals.
- 15 U.S.C. §§ 78f(g)(1); (g)(2); (g)(4)(B).
- We note that announcements have also been made to trade perpetual-style equity index futures.
- See, e.g., Letter from Patrick Sexton, EVP, General Counsel, and Corporate Secretary, Cboe Global Markets, Inc. to Vanessa Countryman, Secretary, SEC (Oct. 14, 2026); Letter from John Marchese, Senior Managing Director and General Counsel, CME Group, Inc. to Vanessa Countryman, SEC (Oct. 14, 2026); Letter from Jeffrey S. Davis, Senior Vice President, Senior Deputy Counsel, Nasdaq, Inc. to Vanessa Countryman, Secretary, SEC (Oct. 14, 2026).
- CFTC Staff Seek Public Comment Regarding Perpetual Contracts in Derivatives Markets, Release Number 9069-25 (Apr. 21, 2025) (the CFTC received more than 150 responses to this RFC, which posed 16 separate questions including, “Should Perpetual Derivatives be classified as swaps or futures contracts?”); Joint Request for Comment on Further Definition of “Swap” and “Security-Based Swap” and on Alternative Compliance, 91 FR 37873 (June 24, 2026) (“Definitions Joint RFC”) (“Is there a need for greater clarity from the Commissions regarding the treatment of futures, including security futures, in the context of innovative markets? For example, is there a need for greater clarity regarding whether a cash-settled “perpetual” contract referencing an equity security could be treated as a security future? What effects could the introduction of such products have on liquidity formation, price discovery, and hedging activity, particularly with regards to the derivatives and underlying cash equity markets?”).
- CFTC Policy Statement (May 29, 2026) (“Perpetual contracts raise novel issues and complex questions relating to market structure, customer protection, resilience during periods of market stress, and consistency with the Core Principles applicable to registrants under the CEA. . . . Each asset class will raise different considerations and merit independent analysis and review based on their unique circumstances. For example, perpetual contracts are likely particularly ill-suited for agricultural products based on the considerations identified in the Order, while perpetual contracts that reference equity securities or narrow-based security indexes, among others, would benefit from review by the Commission and the U.S. Securities and Exchange Commission.”).
- Conflicts and Affiliations, CFTC NPRM, 91 FR 50926 (Aug. 6, 2026).
- Staff Statement on Affiliations Between National Securities Exchanges and Broker-Dealers, Division of Trading and Markets (Sept. 30, 2026) (“Staff Statement”), https://www.sec.gov/newsroom/speeches-statements/tm-statement-affiliations-093026.