CFTC Clears a Regulatory Path for Equity Perpetual Futures Trading on U.S. Exchanges

The Commodity Futures Trading Commission has cleared a regulatory path for perpetual futures tied to individual U.S. stocks, allowing the contracts to begin trading on exchanges with the required federal registrations. Chairman Michael S. Selig announced the development Tuesday, November 3, extending the perpetual-futures format from digital commodities into the market for traditional securities.

The decision concerns contracts that track share prices without a scheduled expiration date. They can give traders continuing long or short exposure without requiring them to own the underlying stock. The change does not mean that every futures exchange can offer these products or that a full menu of stock-linked perpetuals is already available to brokerage customers.

In his official statement, Selig said the equity perpetual futures were deemed approved under CFTC Regulation 40.3 as security futures products. That legal classification matters: the contracts sit within a system of oversight shared by the CFTC and the Securities and Exchange Commission, rather than operating solely under the rules that govern ordinary commodity futures.

Why equity perpetuals require both CFTC and SEC oversight

Eligible venues must be CFTC-designated contract markets that also hold SEC notice registration as national securities exchanges for security futures products. The CFTC was explicit about that dual-registration requirement in its November 3 announcement. It is narrower than permission for any trading app, cryptocurrency platform or derivatives exchange to introduce perpetual contracts on U.S. shares.

The legal foundation predates the latest announcement. The Commodity Futures Modernization Act of 2000 established joint federal regulation for security futures, which draw their value from individual securities or certain securities indexes. Selig said the newly cleared equity perpetuals fall under the Commodity Exchange Act, federal securities laws and the regulatory frameworks of both agencies. Their perpetual design does not remove those obligations.

Coordination between the regulators became a central policy priority earlier this year. In March, the SEC and CFTC signed a memorandum of understanding and established a joint initiative addressing overlapping responsibilities. Their stated areas of work included product definitions, margin and clearing, and coordinated market surveillance. Selig cited that agreement as part of the framework supporting the equity-perpetual decision, although the memorandum itself did not approve a particular trading contract.

There was also a precedent within the CFTC’s own markets. In May, the commission approved the listing of a bitcoin perpetual futures contract on a regulated exchange. Equity perpetuals build on that development but introduce an additional layer of securities regulation. A product tied to the shares of a public company raises questions about the relationship between the derivatives market and trading in the underlying stock.

Exchange filings reveal the funding and margin mechanics

The regulatory groundwork was visible before Tuesday. September filings published by the SEC described equity-perpetual frameworks proposed by KalshiEX, Coinbase Derivatives and Bitnomial; a separate filing from North American Derivatives Exchange followed. Those documents show active preparations by several venues, but a filing or a regulatory clearance is not the same as confirmation that a named contract has started trading.

Kalshi’s proposed rules, published in the Federal Register, describe a futures contract that has no fixed expiry and whose value references an individual equity security. Holders of long and short positions would exchange periodic funding payments. If the perpetual contract trades above the stock reference price, long positions would pay short positions; the direction reverses when the futures contract trades below the stock. The mechanism is intended to keep the derivatives price aligned with the underlying market.

That funding arrangement distinguishes a perpetual from a conventional futures contract with a defined settlement month. A position does not automatically mature on a preset date, but maintaining exposure can carry costs that change over time. A trader can be directionally right about the share price and still incur funding charges. The applicable calculation, timing and settlement procedures depend on the particular exchange contract.

Coinbase Derivatives, in its separate filing, outlined cash-settled products referencing individual stocks and exchange-traded fund shares. Cash settlement means a holder does not receive the underlying shares at settlement or gain shareholder voting rights simply by entering a futures position. These instruments provide price exposure, not ownership of the company whose stock supplies the reference price.

Margin is another important distinction from buying stock outright. Kalshi’s filing specified a proposed customer margin floor of 15.50% of a perpetual position’s current market value. That figure belongs to Kalshi’s proposed framework, not a universal margin rate for every exchange or investor. Lower upfront collateral relative to a contract’s notional value creates leverage, so adverse price movements can erode margin quickly and lead to additional collateral demands or a forced position closure.

The filings also address market safeguards. Kalshi described trading interruptions when the underlying security is halted, along with rules for corporate actions such as stock splits and delistings. Such provisions matter because perpetual contracts must continue to reference a share whose capital structure or trading status can change. Each exchange’s final contract specifications and risk controls remain essential to understanding the exposure a customer would actually take.

Market-structure concerns remain as exchanges prepare

Not everyone in the securities industry views the new route as ready for immediate use. On November 2, the Securities Industry and Financial Markets Association, a trade group representing broker-dealers and asset managers, asked the SEC and CFTC for further review of the exchange proposals. Its letter raised questions about potential effects on underlying share markets, cross-market manipulation surveillance and trading when liquidity is thin. Those were concerns raised by the association, not findings that misconduct had occurred.

The issue is especially relevant if an equity-linked perpetual trades when the underlying stock market is closed or comparatively inactive. Reference prices may be less robust at those times, and abrupt moves in the share price can require a response in leveraged futures positions. Exchanges must balance longer trading access against reliable pricing, margin management and the ability to halt or adjust a contract when the underlying market changes.

Selig framed the policy shift as a way to move demand for perpetual derivatives into supervised U.S. venues rather than leaving traders to seek offshore access. That is the regulator’s stated rationale, not evidence that the products eliminate trading risks. Oversight by the CFTC and SEC sets a framework for exchange conduct and customer protections, while the details of leverage, clearing and market access still depend on the products actually listed.

The November 3 statement did not identify a first trading session, specify which stock-linked contracts had begun trading or announce that a particular brokerage was offering them. The practical next developments will come from the qualifying exchanges and intermediaries: published contract terms, trading schedules, margin disclosures and notices confirming when customers can place orders. Until those details are public, regulatory clearance should be distinguished from live availability.