CME’s Duffy to sue CFTC over perpetual futures approval
CME CEO Terrence Duffy will sue the CFTC over its approval of perpetual futures; Kalshi’s bitcoin perpetuals cleared more than $3 billion in beta trading.
CME Group CEO Terrence Duffy plans to file a lawsuit against the Commodity Futures Trading Commission on June 18 over the agency’s approval of perpetual futures in the United States. Duffy will argue the contracts should be classified as swaps under the Dodd-Frank Act and listed through registered swap venues such as CME.
Duffy argues the exchange holds exclusive licenses for key benchmark data and that those arrangements require providers to list such products through CME. He has said the company and its board prepared the challenge for eight months and will pursue the matter in court.
The CFTC approved Kalshi to offer bitcoin perpetual futures in late May, the first time the product has been permitted in the U.S. Kalshi expanded its offerings to other cryptocurrencies and reported more than $3 billion in notional volume during just over a week of beta testing.
Kalshi’s CEO Tarek Mansour noted the platform’s maximum leverage is lower than some leverage available on certain CME futures contracts and said safeguards and disclosures were included during the phased rollout.
CFTC Chair Michael Selig defended the agency’s decision, arguing regulators should bring internationally used products onshore so they can be supervised. Selig said, “It’s time to approve regulated futures contracts that have no expiration date,” and added that brokers remain responsible for assessing customer suitability and ensuring proper disclosures.
The legal dispute hinges on classification. If a court finds perpetuals are swaps, Dodd-Frank rules on execution, reporting and clearing would apply and could require trading on designated swap execution facilities and central clearing. If the contracts are futures, the CFTC’s authorization would remain in place.
Perpetual futures are contracts with no fixed expiry that use periodic funding payments between long and short holders to keep prices close to the spot market. The contracts are commonly used in crypto trading.
A court decision will determine which firms can list perpetuals in the U.S. and is likely to shape market structure for the product.
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