US — Cboe and Citadel-Backed Alliance Challenges CFTC Over Single-Stock Perpetual Futures
A coalition representing financial industry interests and backed by Cboe and Citadel Securities has filed a lawsuit against the US Commodity Futures Trading Commission (CFTC), challenging the regulator’s decision to permit perpetual futures contracts linked to individual company shares.
The legal action, submitted to a federal court on Tuesday, seeks to block the agency from approving these new financial instruments.
The dispute emerged after the CFTC announced that appropriately registered commodity markets could begin offering single-stock perpetual futures, commonly referred to as perps.
Unlike traditional futures contracts, which have fixed expiration dates, perpetual futures allow traders to maintain positions indefinitely without having to renew contracts when they mature.
These instruments can also carry significant leverage, increasing the potential for both profits and losses.
The lawsuit was filed by the Capital Markets Alliance, an organization supported by major financial industry players, including Cboe and Citadel Securities.
The coalition maintains that the CFTC’s decision effectively circumvents legislation passed by Congress governing securities markets.
In its filing, the group argues that the regulatory approach could establish a parallel marketplace for synthetic exposure to US stocks outside the exclusive jurisdiction of the Securities and Exchange Commission (SEC).
The CFTC, meanwhile, maintains that properly registered commodity exchanges can list these contracts under the existing regulatory framework.
The agency has also clarified that platforms intending to trade single-stock perpetual futures must submit the required notice to the SEC to participate in security futures trading.
The legal challenge adds to an increasingly complicated regulatory dispute involving prediction markets and alternative financial instruments.
Companies such as Kalshi and Polymarket have historically concentrated on event-based contracts, which allow users to trade based on the outcomes of events such as elections and sporting competitions.
Both platforms are now exploring perpetual futures as another potential source of business growth.
Their efforts to expand into products connected to conventional stock markets have brought them into greater competition with established financial institutions.
The latest lawsuit also comes after an earlier dispute involving the Chicago Mercantile Exchange.
In June, the CME challenged the CFTC’s decision to permit Kalshi and cryptocurrency company Coinbase to offer perpetual futures tied to digital assets.
The new case adds another dimension to broader disagreements over the regulation of financial products that combine characteristics of derivatives, prediction markets and traditional securities.
A spokesperson for the CFTC expressed criticism of the lawsuit, describing the legal action as troubling interference with markets overseen by the agency.
The spokesperson defended the regulator’s position, arguing that financial markets should be governed through legislation rather than litigation designed to obstruct innovation.
The SEC declined to comment specifically on the case.
However, an agency spokesperson said the SEC supports making previously unavailable financial products accessible through a comprehensive regulatory framework that protects investors while promoting innovation and competition.
The outcome of the dispute could influence how new derivatives products enter US financial markets.
The central issue concerns the division of regulatory authority, the responsibilities of different agencies and whether emerging financial instruments can operate under existing commodity-market regulations.
As prediction-market companies pursue additional business opportunities and traditional financial institutions seek to protect established market structures, the lawsuit introduces further uncertainty into the future regulatory landscape for financial trading in the US.
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