CFTC opens US market to single-stock perpetual futures

The Commodity Futures Trading Commission said Nov. 3 that perpetual futures tied to individual stocks can begin trading for the first time on qualifying US exchanges, bringing a crypto-market contract structure under US oversight. The CFTC announcement said exchanges must also be notice-registered with the Securities and Exchange Commission to trade security futures products.

Which exchanges can list single-stock perps?

Only designated contract markets registered with the CFTC and notice-registered with the SEC for security futures can offer the contracts, according to the CFTC. Reuters reported that CFTC Chair Michael Selig said the contracts could now begin trading on those properly registered markets.

The CFTC announcement did not name an exchange, a stock or a launch date. CoinDesk reported that Selig’s statement also did not specify which firms would offer the products or which equities would be available.

How do perpetual futures work?

Perpetual futures, often called perps, have no expiration date, so traders can hold positions without rolling contracts over, Reuters reported. They are derivatives that let traders take positions on an asset’s price without owning it; leverage can increase both gains and losses.

The CFTC said the individual-equity contracts, which it calls “Equity Perps,” can trade within the agency’s regulatory framework. Selig said the move would let US traders access the products in regulated markets instead of turning to offshore venues.

What happens before trading starts?

The CFTC’s statement sets the eligibility conditions but identifies no first listing. Exchanges seeking to offer the contracts must meet the CFTC and SEC registration requirements; the next step is for eligible markets to identify their products and announce listings.

Source material

• CFTC announcement — cftc.gov