Better Markets Backs Suit to Kill CFTC's Single-Stock Perpetual Futures

Better Markets is joining the fight over perpetual futures tied to individual U.S. stocks. The advocacy group filed a friend-of-the-court brief supporting the Capital Markets Alliance's (CMA) challenge to the CFTC's approval of those products, arguing they are security-based swaps rather than futures because they carry no fixed delivery date.

The brief was filed by former SEC Acting Chair and Commissioner Allison Herren Lee, along with former SEC General Counsel John C. Coates, now a Harvard Law professor. If the perpetuals count as security-based swaps, they fall under SEC jurisdiction and Dodd-Frank's protections, including registration and a requirement that trading happen only on regulated national securities exchanges.

Better Markets didn't mince words about the retail risk. It called the products leverage of roughly six-to-one, meaning a 16% market move could zero out an investor's entire portfolio — a swing it described as common for single stocks. The group also flagged no expiration dates and automatic liquidation features as fuel for a speculative ecosystem, warning investors can be wiped out in minutes, including overnight when liquidation thresholds trigger.

The CMA, whose members include Cboe Global Markets, Citadel Securities and the Healthy Markets Association, wants the approvals vacated outright. It argues the CFTC never explained why it long treated perpetual derivatives as swaps, and that the agency ignored the impact on investors and the wider securities market. The CMA also wants the CFTC barred from approving such products while the case is pending.

The CFTC isn't fighting alone. The SEC has filed its own amicus brief backing the agency's rule changes and pushing back on CMA's claim that it is, according to Bitcoin.com News, going rogue. The CFTC is separately tangled with state regulators over prediction markets.