Capital Markets Alliance sues CFTC over stock perpetuals

The Capital Markets Alliance filed a federal lawsuit on November 3 seeking to overturn the Commodity Futures Trading Commission’s approvals for perpetual futures tied to individual U.S. stocks and to block trading while the case proceeds. The challenge, brought in the U.S. District Court for the Southern District of New York, contests the regulator’s authority to approve the products under its derivatives framework. The Alliance argues the contracts qualify as security-based swaps subject to the Securities and Exchange Commission’s jurisdiction, rather than security futures eligible for the CFTC’s approval pathway. Its complaint alleges the CFTC did not adequately explain its decision or consider investor risks. Those claims have not been decided by a court. CFTC Chairman Michael Selig said eligible exchanges could offer the contracts as security futures under Commission Regulation 40.3. He said the products would be subject to applicable CFTC and securities rules. The Commission’s approach allows qualifying exchanges to offer the contracts within a regulated U.S. market. A CFTC spokesperson characterized the lawsuit as interference with regulated markets. The Commission has...