CME Group filed a lawsuit against the Commodity Futures Trading Commission on Thursday in the U.S. District Court for the District of Columbia, challenging the agency's approval of perpetual futures trading in the United States. The world's largest derivatives marketplace accused CFTC Chair Michael Selig of suddenly changing regulatory course after the agency approved the first perpetual futures for Kalshi and Coinbase last month. CME argues the CFTC violated the Commodity Exchange Act by allowing perpetual futures to trade as futures contracts rather than swaps, directly competing with CME's existing offerings and causing injury to the exchange.
CME Accuses CFTC of Overriding Congressional Definition
In the complaint filed by Chicago Mercantile Exchange Inc., CME accused the CFTC of circumventing the regulatory framework established by Congress. "With one stroke of his pen, the Chairman overrode Congress's definition of the term 'swap' and circumvented the regulatory regime Congress required for that form of derivative," according to the complaint. CME argued that the new derivatives products would directly compete with its offerings and cause injury to the exchange. "In short, by authorizing Kalshi and others to enter the derivatives marketplace by listing similar cryptocurrency perpetuals as futures, the CFTC ushered new entrants into CME's retail futures market that seek to compete with CME for retail customers," CME stated in the complaint. The complaint also criticized the CFTC for not allowing public comments on Kalshi's application for perpetual futures.
CFTC Approved First Perpetual Futures Last Month
The CFTC approved the first perpetual futures for Kalshi and Coinbase last month, opening the door for those assets to trade in the U.S. for the first time. Perpetuals, or perps, are a type of futures contract that don't have an expiration date and allow people to bet on the price movement of assets without owning them directly. They have become increasingly popular in crypto derivatives trading.
CME CEO Duffy Criticizes Perpetuals and Announces 2027 Resignation
CME CEO Terrence Duffy has been critical of perpetual futures, calling them a "disaster waiting to happen." On Wednesday, Duffy told CNBC that perps should be classified as swaps under the Dodd-Frank Act, a federal financial regulation law passed following the 2008 financial crisis. Duffy also announced on Wednesday that he would be stepping down from his post in 2027.
Hyperliquid Policy Center Responds on Thursday
On Thursday in a post on X, the Hyperliquid Policy Center said the CME was trying to suppress competition. Hyperliquid is a decentralized perpetual futures exchange. "Perpetual futures are the first genuinely new derivatives product to reach U.S.-regulated markets in over a decade," the center said. "More competition among exchanges is best for the people who actually use these markets. These products deserve clear rules."
FAQ
What did CME Group do on Thursday regarding perpetual futures?
CME Group filed a lawsuit against the Commodity Futures Trading Commission on Thursday in the U.S. District Court for the District of Columbia, challenging the agency's approval of perpetual futures trading in the United States and accusing CFTC Chair Michael Selig of suddenly changing regulatory course.
Why is CME Group suing the CFTC?
CME argues the CFTC violated the Commodity Exchange Act by approving perpetual futures as futures contracts rather than swaps, circumventing the regulatory regime Congress required. CME claims the new derivatives products directly compete with its offerings and cause injury to the exchange, and criticizes the CFTC for not allowing public comments on Kalshi's application.
What did CME CEO Terrence Duffy announce on Wednesday?
On Wednesday, Duffy told CNBC that perpetual futures should be classified as swaps under the Dodd-Frank Act and announced that he would be stepping down from his post in 2027.
