By Douglas Gillison
WASHINGTON, Nov 3 (Reuters) – So-called perpetual futures contracts on individual companies’ stocks can now begin trading on properly registered commodity markets, the head of the US Commodity Futures Trading Commission announced Tuesday, allowing new prediction market platforms to take another step onto traditional Wall Street firms’ territory.
• The decision comes as platforms like Kalshi and Polymarket, which primarily allow trading in event contracts — or options contracts that pay out depending on the outcome of sporting events, elections and other things — look to perpetual futures as a separate avenue for growth.
• Colloquially known as perps, perpetual futures are derivative contracts with no expiry date, allowing traders to hold positions indefinitely without rolling them over. They can also involve high leverage, increasing both potential gains and losses.
• Michael Selig, the CFTC’s chair, said in a statement that bringing perps onto regulated markets “ensures that American investors and traders can access these products within the protections of the CFTC’s proven regulatory framework,” rather than encouraging the emergence of offshore markets.
• To offer trade in single-stock perps, CFTC-registered markets will also have to be registered by filing notice with the Securities and Exchange Commission to trade in security futures, the CFTC statement said.
• The Chicago Mercantile Exchange in June sued the CFTC, challenging its recent decision to let Kalshi and cryptocurrency exchange Coinbase list perpetual futures in digital assets, claiming that the CFTC had exceeded its legal authority, a charge the CFTC rejected.
(Reporting by Douglas Gillison in Washington; Editing by Chizu Nomiyama )
Comments