The Commodity Futures Trading Commission has authorized the initial launch of perpetual futures tied to specific stocks on qualified American exchanges, thereby importing a contract format without expiration dates from cryptocurrency markets into the realm of regulated equity derivatives. This approval follows the CFTC's product review procedures, which mandate that participating venues maintain both CFTC designation and SEC registration to engage in security futures trading.
Kalshi's suggested regulations define a 15.50% minimum margin requirement and set weekday trading windows spanning 23 hours for these new instruments. Operating within the framework of federal securities laws and the Commodity Exchange Act, the Commission issued its clearance on Nov. 3, with Chairman Michael Selig stating that contracts linked to stocks are ready to trade on approved domestic platforms.
Regulatory Framework and Approval Process
CFTC Chairman Michael Selig announced that perpetual futures contracts on individual equity securities can commence trading for the first time on registered exchanges, a move deemed approved under Commission Regulation 40.3 as security futures products pursuant to the Commodity Futures Modernization Act of 2000.
This regulatory classification subjects the new instruments to the Commodity Exchange Act and federal securities laws while operating within the frameworks of both the CFTC and SEC, requiring eligible venues to be designated contract markets registered with the SEC specifically for security futures trading.
Commissioner Selig characterized domestic access to equity perpetual futures as a mechanism enabling American investors to utilize these contracts within a regulated framework, highlighting their utility for risk management and price discovery. The approval process permits compliant products to achieve deemed approved status once the applicable review period expires without receiving a notice of non-approval, with an initial review period set at 45 days and provisions available for extensions.
Before the official announcement, Kalshi, Coinbase Derivatives, and Bitnomial submitted regulatory rules detailing their proposed stock futures markets. Kalshi's filing sets a minimum customer margin at 15.50% of a position's current market value; under this requirement, a $10,000 position necessitates $1,550 in margin, representing roughly 6.45 times the exposure.
The contracts under consideration do not include a predetermined expiration date. Participants exchanging funding payments for both long and short positions adjust these payments according to the relationship between the perpetual contract prices and the underlying stock prices. As previously reported by the report, Kalshi's proposal mandates that underlying securities satisfy specific thresholds, including a market capitalization of $100 billion, an estimated deliverable supply exceeding 20 million shares, and average daily trading value surpassing $450 million over a six-month period.
Under the proposed schedule, trading commences at 6 p.m. Eastern Time on Sunday and concludes at 5 p.m. on Friday, with a daily maintenance window scheduled between 5 p.m. and 6 p.m.; furthermore, trading is required to cease whenever regulatory halts impact the underlying security. Coinbase's rule filing addresses cash-settled futures contracts for individual stocks and ETF shares, while its proposed margin amendments stipulate that positions generally must maintain a margin of at least 15% of the current market value.
The firm's application submitted in September detailed intentions to launch over 50 single-stock perpetual contracts, with specific documentation for each contract set to define trading windows, pricing mechanisms, and funding structures. In a distinct filing, Bitnomial suggests establishing a 15.25% minimum margin requirement for unhedged positions, though clearing houses and intermediaries retain the authority to demand additional collateral.
Selig connected the equity-related announcement to the CFTC's approval on May 29 of Kalshi's Bitcoin perpetual futures contract, an instrument that tracks Bitcoin's spot price. A policy statement released on the same day noted that perpetual contracts tied to assets not included in the recent order would require individual case reviews, given that their features fluctuate based on the underlying market conditions.
After Coinbase moved forward with its domestic registration process following the launch of stock perpetual futures for qualified clients abroad, a distinct event occurred when Intercontinental Exchange, the parent company of NYSE, revealed on Oct. 29 that it had reached an accord with Trade[XYZ]. This partnership aims to build a specialized US marketplace and clearing mechanism for Hyperliquid-based perpetuals, pending necessary regulatory sign-offs. The scope of these intended markets spans equities, cryptocurrencies, commodities, and foreign exchange.
Proposed Trading Rules and Eligibility Criteria
In correspondence dated Oct. 14, Cboe contested the exchanges' methodology, maintaining that stock perpetuals ought not to be classified as security futures. The organization called on the SEC to reverse the suggested rule modifications and instead mandate a conventional securities-exchange evaluation process.
In a statement dated November 2, Better Markets voiced comparable concerns. Benjamin Schiffrin, who serves as the director of securities policy for the group, cautioned that high leverage might quickly deplete an investor's funds and noted that these agreements do not grant ownership of shares. According to Bitnomial's submission, the SEC could revoke its rule modification within 60 days following CFTC approval, provided it consults with the commission first, and would then mandate a refiling under the standard review process.