Stock Perpetual Futures Lawsuit: Cboe, Citadel Group Sues CFTC

A trade group whose members include Cboe and Citadel Securities filed a stock perpetual futures lawsuit against the Commodity Futures Trading Commission on Tuesday, asking a federal judge to throw out the approval that lets equity perps trade on US futures exchanges for the first time. The suit landed the same day the CFTC said the contracts could begin trading.

The plaintiff is the Capital Markets Alliance, which calls itself a New York based trade association. It filed in the US District Court for the Southern District of New York, according to the group's announcement on Business Wire. CoinDesk reported the filing on November 3.

Cboe and Citadel Securities say the SEC should be in charge

The alliance's main argument is about turf. In its release, the group says the products are security-based swaps, which Congress placed under the exclusive authority of the Securities and Exchange Commission, not the CFTC.

It adds two more claims under the Administrative Procedure Act, the law that sets the rules for how federal agencies make decisions:

• The CFTC gave no explanation for its decision and did not acknowledge that it has long treated perpetual derivatives as swaps.
• The agency failed to reasonably consider the effects on investors and on the securities markets.

The group asks the court to vacate the approvals, declare the products security-based swaps, and stop the CFTC from giving the approvals effect while the case moves forward. A statement from Cboe confirms that the alliance includes Cboe, Citadel Securities and the Healthy Markets Association, and it refers to a request for injunctive relief.

"Coherent regulatory oversight underpins the global preeminence of U.S. securities markets," Adam Ford, the alliance's secretary, said in the release. Cboe CEO Craig Donohue framed it more narrowly: "This issue, however, is about investor protection for securities trading and the rule of law."

What the CFTC cleared on November 3

Chairman Michael Selig said in a statement that perpetual futures on individual equity securities "can begin trading for the first time on CFTC-registered exchanges." The CFTC release says the contracts were deemed approved under Commission Regulation 40.3 as security futures products under the Commodity Futures Modernization Act of 2000.

The green light covers designated contract markets that are also notice registered with the SEC as national securities exchanges for security futures. The release does not name a specific exchange or product.

Selig tied the move to an earlier crypto decision. In May, the agency approved what he called the first true bitcoin perpetual futures contract on a CFTC regulated exchange, listed by Kalshi. We traced how the two agencies got here in our timeline of the equity perps approval.

A perpetual future is a derivative with no expiry date. Traders can hold a position indefinitely, and a regular funding payment keeps the contract price close to the underlying asset. The format grew up on crypto exchanges and usually comes with heavy leverage. If you want a refresher on how leverage feeds price swings, our explainer on why bitcoin goes up and down covers the basics.

The agency hits back at an "anonymous group"

The CFTC had not posted a formal response in its press room as of Wednesday. A spokesman did tell CoinDesk: "It is troubling that an anonymous group is seeking to use litigation to interfere with CFTC regulated markets." He added that markets "should be governed by law, not litigation campaigns intended to block innovation."

The anonymity point is already weaker than it was. Cboe has since put its name on the challenge in public.

Not every critic is part of the alliance. Chris Iacovella, CEO of the American Securities Association, told CoinDesk that by labeling stock perps as security futures, the CFTC sidestepped the SEC's jurisdiction.

Why crypto traders should care about a stock fight

The case is about single stock contracts, but the reasoning could travel. Perpetual futures are the core product on many crypto platforms, and US firms have spent years trying to bring them onshore under CFTC supervision. If a judge agrees that perps on securities are swaps that belong to the SEC, the same logic could be tested against perps on tokens that regulators treat as securities.

There is a political clock as well. Democrats take control of Congress in January, and the market structure bill meant to split crypto oversight between the two agencies is running short on time, as we laid out in our look at the CLARITY Act after the midterms. A court ruling on where the CFTC's authority ends could arrive before lawmakers settle that question themselves.

The first thing to watch is whether the judge grants the request to freeze the approvals while the case proceeds. If that happens, the first US equity perps could be paused before most traders ever place an order. We will keep tracking the case on our crypto page.