A trade group whose members include Cboe and Citadel Securities sued the CFTC to overturn approvals of single-stock perpetual contracts from Coinbase Derivatives, KalshiEX and Bitnomial Exchange. The group says the products are security-based swaps under SEC jurisdiction, while the CFTC chairman calls them security futures.
The Capital Markets Alliance sued the Commodity Futures Trading Commission on Nov. 3, seeking to overturn approvals of single-stock perpetual derivatives for Coinbase Derivatives, KalshiEX and Bitnomial Exchange. The group argues the contracts fall under the Securities and Exchange Commission's exclusive jurisdiction as security-based swaps.
The alliance's members include Cboe, Citadel Securities and Healthy Markets Association. The complaint was filed in the Southern District of New York as case 1:26-cv-09608.
What the alliance wants from the court
The group asks the court to vacate the approvals and declare the covered products security-based swaps. It also requests a temporary restraining order, preliminary and permanent injunctions, and a stay while the case proceeds.
The requested injunction would also stop the CFTC from permitting the same contracts to be listed as security futures through an alternative route, including exchange self-certification.
Deemed approved after the review period lapsed
The challenge targets Sept. 18 product applications and related rule filings. According to the complaint, the CFTC's 45-day review period expired Nov. 2 without a rejection or extension. CFTC Chairman Michael Selig then confirmed on Nov. 3 that the equity perps "were deemed approved" under Regulation 40.3 and could begin trading.
The contracts give ongoing exposure to stock-price changes without ownership of the shares. Unlike dated futures, they have no fixed expiration and use recurring payments between long and short positions to help keep their prices aligned with the underlying stock.
Two readings of the same product
CMA argues that the absence of an expiration date and future-delivery obligation makes the contracts swaps, not futures. It also alleges violations of the Administrative Procedure Act, saying the CFTC failed to explain its classification or adequately consider risks to investors and securities markets.
Selig's statement takes a different position: the products are security futures subject to both CFTC and SEC regulatory frameworks. He said the eligible exchanges must also be notice-registered with the SEC to trade them.
The alliance also says the new products threaten to divert customers, transactions and related revenue from its members' securities businesses.
ICE and TradeXYZ are not among the three applicants whose approvals CMA challenges. Their separate plan, announced Oct. 29, calls for a U.S.-regulated perpetuals market built on Hyperliquid, and ICE says it still needs regulatory approvals.
Source: The Defiant
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