The U.S. Commodity Futures Trading Commission is challenging CME Group's legal standing in its lawsuit over perpetual futures. The agency argues CME has not shown it is harmed by the new policy, while CME maintains the contracts are swaps, not futures.
The CFTC filed a brief in court on Friday arguing that CME Group has not shown it is being harmed by the government's new push into perpetual futures. Without harm, the agency says, the derivatives giant has no legal standing to sue.
CFTC says CME has not shown injury
The CFTC approved the first bitcoin perp from Kalshi in May, signaling the U.S. was open for business on such contracts. CME then objected in court.
In its brief, the agency said that allegations of increased competition, without any plausible inference of an imminent financial injury, do not give CME standing. It also noted that volume in crypto futures at CME has risen since the policy shift.
The CFTC argued that CME must plausibly allege an actual or imminent increase in competition. According to the CFTC: "CME has not even done that." The agency said CME has been telling investors it has not heard of demand for perps and that they are not substitutes for its futures.
CME calls perps swaps
Perpetual futures let traders speculate on an asset's future price, typically with a leveraged position, and the contracts have no built-in expiration. CME has insisted the contracts are not futures because they have no end date. In its argument, they are swaps, which would bring an entirely different regulatory approach.
The CFTC said it will regulate the products on a case-by-case basis as futures. CME spokespeople did not immediately respond to a request for comment on the latest filing.
Analyst sees time pressure
Jaret Seiberg, a policy analyst at TD Cowen, argued in a Monday client note that CME may still have the edge on its standing as a competitor and on its argument that perps may be treated as swaps.
Seiberg also warned that growth in perps during the litigation could complicate efforts to unwind the market if CME prevails.
Source: CoinDesk
Trading involves risk.
Risk Disclaimer
