Six firms back CFTC authority in stock futures dispute

Six firms, including Coinbase and Kalshi, have asked a federal court for permission to file a brief supporting the Commodity Futures Trading Commission’s authority over single-stock perpetual futures, as a lawsuit challenges how the contracts should be regulated.

The proposed amicus brief, filed November 9, argues that the contracts can qualify as security futures under a framework involving both the CFTC and the Securities and Exchange Commission. Payward, DRW Holdings, Jump Trading and Paradigm joined Coinbase and Kalshi in the filing. The firms’ position is that contracts can fall within the framework even without fixed expiration dates.

The dispute was brought by the Capital Markets Alliance, which argues that perpetual contracts without expiration dates are security-based swaps subject to SEC authority, rather than security futures under the CFTC’s jurisdiction. Its lawsuit seeks to overturn the CFTC’s treatment of approvals for contracts tied to individual U.S. stocks. The association also alleges that the regulator did not adequately explain its decisions or assess investor risks.

On November 3, U.S. District Judge Valerie Caproni denied the alliance’s request for a...