CFTC clears perpetual futures tied to US stocks for regulated exchanges

The Commodity Futures Trading Commission (CFTC) cleared equity perpetual futures on Tuesday for trading on regulated American exchanges. The contracts track individual US stocks without an expiration date. Americans previously had to access these products through offshore venues.

The contracts received approval through Regulation 40.3 after the CFTC's 45-day review period elapsed. CFTC Chairman Michael Selig classified the contracts as security futures in a statement, placing the products under shared oversight with the SEC. Exchanges must also hold SEC registration for trading these products before listing the contracts. The CFTC had approved a bitcoin perpetual contract on Kalshi in May.

Kalshi filed on September 18 to list 58 contracts. The filing covers 55 stocks, including Apple, Tesla, Nvidia and Microsoft, alongside Alibaba's US shares and two funds tracking the S&P 500 and Nasdaq-100. Trading extends from Sunday evening through Friday afternoon in US Eastern time. Better Markets says holders receive exposure to price movements but do not receive shares, dividends or voting rights.

Conventional futures have set expiration dates, while perpetual futures allow positions to remain open as long as sufficient margin remains. Recurring funding payments help align contract prices with the underlying share prices. Coinbase Derivatives' proposed design requires buyers to pay sellers when a contract trades above the underlying stock, with payments reaching 0.10% per hour.

Kalshi permits traders to maintain a stock position with margin equal to 15.5% of the position's value. Better Markets, a Washington reform group, warns that sharp sell-offs cause automatic liquidation of such positions. Benjamin Schiffrin, Better Markets' director of securities policy, wrote on November 2 that offshore single-stock perpetuals provide leverage of up to 20x. Schiffrin said SEC-approved single-stock ETFs generally have a 2x leverage cap. US equity perpetual futures would reportedly permit leverage of up to 6x. Better Markets calculates that a 20% price decline eliminates a position using 5x leverage.

CME Group is suing the CFTC over the agency's approval of crypto perpetuals. Intercontinental Exchange, which owns the New York Stock Exchange, plans to offer US futures trading 24/7 on Hyperliquid. Initial trading volumes in the new stock contracts will indicate whether demand shifts from offshore venues to the United States.