The CFTC opened the door to perpetual futures in the U.S. in May, approving the first bitcoin perp from Kalshi and signaling it was open to reviewing more such contracts. Perps, which allow traders to speculate on an asset's price with leveraged positions and have no built-in expiration, have become a major form of crypto derivatives overseas.
CME Group, the dominant global derivatives exchange, objected in court, arguing that perpetual futures are actually swaps, not futures, and should be regulated differently. The CFTC has now responded, arguing in a brief filed Friday that CME cannot show it faces imminent financial injury from increased competition.
"Allegations of increased competition, without any plausible inference of an imminent financial injury," do not give CME legal standing, the agency said. It noted that CME's crypto futures volumes have actually risen since the policy shift. The CFTC also pointed to what it called contradictory statements from CME, saying the exchange has told investors it has not heard demand for perps and that they are not substitutes for its futures. "CME cannot have it one way with the court and another way with the investing public on earnings calls," the agency argued.
Policy analyst Jaret Seiberg of TD Cowen said in a Monday client note that CME may still have an edge on standing and on its argument that perps are swaps. But he expressed concern about the growth of the perps market while litigation proceeds. "If this growth continues, it could create complications in trying to unwind this market if the CME prevails in the lawsuit," Seiberg wrote.
The CFTC had previously asked a federal judge to dismiss CME's case last month. The latest filing details the agency's case against CME's standing.