Available for trading around the clock, with leverage allowed! CFTC approves perpetual futures trading for individual US stocks

The Commodity Futures Trading Commission (CFTC) announced on November 3 local time that single stock perpetual futures contracts have officially been approved for listing on regulated exchanges in the U.S. This means that American investors will soon be able to trade stock-related contracts even after the stock market closes, with the ability to use leverage.

Perpetual Contracts: What Makes Them Different?

Perpetual contracts (Perpetuals, or "Perps" for short) are leveraged derivative contracts with no expiry date. Compared to traditional futures, they have two main features: First, they can be traded around the clock, even during periods when the stock market is closed; Second, they are embedded with leverage mechanisms, allowing traders to control larger positions with less capital.

These two features have helped perpetual contracts amass a huge user base overseas—particularly in the crypto market. The CFTC has now formally introduced this tool to the regulated U.S. market, extending it to traditional equity markets as well.

CFTC Chairman Michael Selig stated in his announcement: "This move marks an important step toward allowing U.S. market participants to leverage the advantages of perpetual futures—it is exactly these advantages that have made perpetual futures a popular tool for risk management and price discovery."

Selig further expressed his desire to bring such innovative products into regulated markets, "ensuring that U.S. investors and traders can use these products under the robust regulatory framework of the CFTC, instead of being forced to offshore platforms that often lack adequate oversight."

Kalshi Leads the Way—Four Single Stock Perpetuals Now Tradeable

Prediction market platform Kalshi applied to the CFTC for single stock perpetual contracts back in September. Regulatory review was completed on November 2. On the day approval was granted, Kalshi launched the first batch of four single stock perpetual contracts, based on Amgen, McDonald's, Qualcomm, and Costco.

Kalshi spokesperson Jack Such commented: "We introduced single stock perpetual contracts to the U.S. because we believe they make trading stock prices simpler, cheaper, and more efficient. Offshore traders love single stock perpetuals, and we're delighted to offer this option to Americans."

Apart from Kalshi, exchanges such as Coinbase Global and Bitnomial have also announced plans to list related contracts.

Regulatory Framework: Dual Oversight by the CFTC and SEC

According to the CFTC’s decision, single stock perpetual futures contracts are classified as "security futures products," governed by the Commodity Futures Modernization Act (CFMA) of 2000 and subject to dual oversight by both the CFTC and the SEC.

Selig noted in his statement that, in the past, lack of coordination between the two main regulatory agencies meant that innovative products such as security futures were left in what SEC Chairman Paul Atkins referred to as a regulatory "no man's land." Earlier this year, the CFTC and SEC signed a Memorandum of Understanding (MOU) to establish a foundation for coordinated cooperation between the two agencies. The approval for single stock perpetual contracts is a direct result of this framework.

It’s also worth noting that in May this year, the CFTC approved Kalshi’s launch of the first bitcoin perpetual futures contract. The introduction of single stock perpetuals continues this path of regulatory openness.

Industry Reaction: Exchange Stocks Fall, Lawsuits Filed Immediately

After the news was announced, shares of Chicago Board Options Exchange (Cboe), CME Group (CME), and Intercontinental Exchange (ICE) all fell that day.

The Capital Markets Alliance (CMA), an industry group representing Cboe, Citadel Securities, and other institutions, filed a lawsuit in the U.S. District Court for the Southern District of New York the same day the CFTC announced its decision, seeking to overturn the CFTC’s approval. The CMA argues that the related products constitute "security-based swap agreements" and should fall under the exclusive jurisdiction of the SEC, further claiming that the CFTC did not adhere to the Administrative Procedures Act during the approval process.

Cboe CEO Craig Donohue stated: "Single stock perpetual derivatives are just the latest example of a worrying trend—security products are now being launched on CFTC platforms, beyond the appropriate regulatory framework and customer protections established by Congress."

In response, Andy Ross, Head of Institutional Business at Kalshi, said at the FIA (Futures Industry Association) Annual Conference in Chicago: "Monopolists always choose litigation when faced with competition."

Additionally, within minutes of the CFTC’s announcement, Senator Elizabeth Warren, the lead Democrat on the Senate Banking Committee, issued a statement saying that single stock perpetual contracts "could inject severe volatility into the market."