CFTC clears start of equity perpetual futures trading on U.S. registered exchanges
Perpetual futures tied to individual U.S. stocks can now begin trading on certain regulated exchanges, opening a new product category in the domestic derivatives market. The move applies to designated contract markets that also hold SEC notice registration as national securities exchanges for security futures products.
Highlights
- CFTC authorizes trading of perpetual futures contracts on individual equities, or 'Equity Perps,' on registered U.S. exchanges with dual registration.
- Chairman Michael S. Selig claims the move expands risk management and price discovery tools, keeping transactions within the CFTC’s regulatory protections.
- Regulatory alignment between CFTC and SEC resolves past jurisdictional uncertainty, creating a clearer path for innovative derivatives and securities products in the U.S. market.
Regulatory framework opens market access
As stated by the Commodity Futures Trading Commission, the new framework allows perpetual futures contracts on individual equity securities, described by Chairman Michael S. Selig as "Equity Perps," to begin trading for the first time on CFTC-registered exchanges that meet the dual-registration requirement.Selig says the launch expands access for U.S. market participants to instruments used for risk management and price discovery, while keeping trading within the protections of the CFTC regulatory structure. He adds that a regulated domestic venue could reduce the need for investors and traders to use offshore and often unregulated platforms for similar products.
Implications for U.S. market structure
Selig links the development to the Commodity Futures Modernization Act of 2000 and the CFTC-SEC Memorandum of Understanding, presenting the start of trading as part of a broader effort to bring regulatory clarity to innovative financial products.In his statement, he says regulatory uncertainty had left security futures and equity perpetual futures stuck between agency jurisdictions for years. He adds that the CFTC and SEC are now aligned on creating a clearer path to market for such products, a shift that could support further innovation in the U.S. derivatives and securities trading sector.
Our earlier coverage of the Philippine Social Security System’s equity portfolio explained how the state pension fund defended its performance by highlighting long-term realized gains and steady dividend income despite recent unrealized losses. The SSS stressed that paper losses only become cash losses if positions are sold below cost, and pointed to its disciplined, diversified approach and risk monitoring as key to sustaining investment income.
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