CFTC Rejects CME's Challenge to Perpetual Futures Market

In a move that amounts to a regulatory check on the Chicago Mercantile Exchange, the CFTC has put an end to CME’s legal opposition to perpetual futures, making clear that it has seen no evidence of market damage from such contracts. For CME, which was prepared to press the matter all the way to the Supreme Court, it is a significant defeat.

CME’s Battle Against Perpetual Futures

The exchange has been at odds with the advent of perpetual futures in America. CME has not shied away from arguing, as ‘The Wolf Of All Streets’ has noted, that these are akin to options and have no expiration date; their capacity for disruption means they ought not to be allowed. Calci, the crypto exchange, only fanned the flames of the dispute by putting its Bitcoin perpetual futures on the market, an act CME decried. In the eyes of the exchange, the product is an affront to the regulated futures it offers.

CME has lobbied hard for more stringent rules, contending that because of their design, perpetual futures are more appealing to traders than the traditional variety and should be held to the same standard. The row became so heated that CME threatened to sue the Commodity Futures Trading Commission.

CFTC’s Response and Industry Impact

Yet the CFTC has not been swayed by the threats or the lobbying. ‘The Wolf Of All Streets’ reports the regulator has rebuffed CME’s position, pointing to the fact that there is nothing to indicate these futures have done any harm. The CFTC has drawn attention to the role they have come to play in the world of global cryptocurrency.

One could view the CFTC’s dismissal of CME as a vote of confidence for what is being done in crypto derivatives. The commission is showing it will stand behind novel financial products provided they do not create systemic risk, and in doing so has given exchanges such as Calci the go-ahead to put forward new contract types. It is a result that may well alter the course of U.S. crypto trading while leaving CME with a setback.