CME Group sues CFTC over perpetual futures

CME Group, the world’s largest derivatives exchange, is taking legal action against the US regulator, the Commodity Futures Trading Commission (CFTC). Outgoing CEO Terrence Duffy has announced that the company is filing a lawsuit against the CFTC over its decision to approve perpetual futures in the US.

What is happening?

At the end of May, the CFTC approved a number of platforms to offer regulated crypto perpetual futures. These platforms include Kalshi and Coinbase. Perpetual futures, also known as “perps”, are futures contracts without an expiry date that allow traders to speculate on the price of an asset. Kalshi has reached a futures volume of $5.5 billion with this product.

CME Group disagrees with this and is now raising the alarm through the courts. Duffy argues that, under the Dodd-Frank Act, perpetual futures should legally be treated as swaps, not as ordinary futures. This distinction is crucial because swaps fall under different regulations and go through different channels than standard futures contracts.

CME claims exclusive rights

Duffy goes even further in his argument. According to him, CME Group has exclusive rights to the relevant benchmark provider associated with these products. This means, he says, that related products must go through CME regardless of whether they are structured as perpetual contracts or not.

The lawsuit therefore touches not only on the question of how perpetual futures are regulated, but also on CME’s competitive position relative to newcomers such as Kalshi and Coinbase. With the growing interest of large financial institutions in crypto, as seen in the migration of Wall Street towards crypto infrastructure, a great deal is at stake for all parties involved. The outcome of this case could have major implications for how the US crypto market develops in the coming years. Reports CNBC.