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From the President and Sole Commissioner of the CFTC, Michael Selig:
Today, perpetual futures contracts on individual equity securities (“Equity Perps”) can begin trading for the first time on CFTC-registered exchanges.
In my inaugural address, I called on the CFTC to use the tools at its disposal to offshore perpetual derivatives so they can thrive in the United States, subject to appropriate safeguards. Earlier this year, the CFTC took a historic step in this regard by approving the listing of the first true Bitcoin perpetual futures contract on a CFTC-regulated exchange.
Today’s announcement builds on this milestone by expanding the availability of perpetual futures contracts in the United States beyond digital commodities and to traditional securities. This expansion marks an important step toward allowing U.S. market participants, under applicable law, to enjoy the benefits of perpetual futures contracts that have led to their emergence as widely sought-after tools for risk management and price discovery. I believe that introducing these types of innovative products to our regulated markets ensures that U.S. investors and traders can access these products within the protections of the CFTC’s proven regulatory framework, rather than being forced to turn to offshore, often unregulated platforms.
The Equity Perps have been deemed approved by the Commission, pursuant to Commission Regulation 40.3, as securities futures products under the Commodity Futures Modernization Act of 2000 (the “CFMA”). The contracts are therefore subject to the applicable requirements of the Commodity Exchange Act, the United States federal securities laws and the regulatory frameworks of the CFTC and the SEC.
More than twenty years ago, Congress passed the CFMA to establish a common regulatory framework for securities futures products. This framework recognized the complementary roles of the CFTC and the SEC in overseeing U.S. financial markets by providing a path for innovation at the intersection of the U.S. federal commodities laws and the U.S. federal securities laws. Earlier this year, and consistent with these principles, the CFTC and the SEC entered into a historic Memorandum of Understanding (the “MOU”) to guide coordination and collaboration between the two agencies.
Equity Perps build on the foundations of the CFMA and the MOU. For too long, regulatory uncertainty has left innovative products, such as securities futures and perpetual stock futures, stuck in what SEC Chairman Paul S. Atkins has rightly described as a regulatory “no man’s land” due to a lack of harmonization across agencies. The CFTC and SEC have turned the page on that era and committed to providing regulatory clarity for innovative products and a clear path to market, rather than victimizing more victims in jurisdictional disputes.
The Equity Perps demonstrate the strength of the CFTC and SEC’s ongoing commitments to supporting legal innovation, maintaining market integrity, and ensuring investor and customer protections through harmonization of the CFTC and SEC’s regulatory frameworks.
I would like to thank the CFTC’s many dedicated employees for their continued hard work and collaboration with the SEC. And I look forward to building on today’s milestone as the CFTC works to ensure that the new frontier of finance is built in the United States of America.
Further reading:
— American Gaming Association CEO calls CFTC chairman a ‘joke’ (Card Player)
— The giant void of nothingness where American financial regulation (FTAV) once sat
— “The darkest depths of winter still await US financial markets” (FTAV)
— The CME’s lawsuit against the CFTC is worth reading (FTAV)
Gn bussni
