A federal court in Manhattan has given the Commodity Futures Trading Commission until Friday, November 6, to explain why single-stock perpetual futures should be allowed to reach retail traders. The order follows a lawsuit from the Capital Markets Alliance, a trade group seeking to stop approvals tied to the products.
The dispute centers on stock “perps,” a crypto-style derivative that uses perpetually rolling futures funding to create leveraged exposure to individual equities. The case has quickly become a flashpoint in a broader competitive fight involving Kalshi, Coinbase, and established market participants linked to the Chicago Board Options Exchange.
Judge signals skepticism but denies emergency block
US District Judge Valerie Caproni ordered the CFTC to respond after the Capital Markets Alliance filed suit in Manhattan on Tuesday. The group is challenging approvals connected to listings of single-stock perpetual futures.
Caproni declined to issue an immediate restraining order, saying the declarations describing harm were too conjectural at that stage. Even so, she indicated the plaintiffs are “likely to succeed on the merits” and pointed to a preliminary view that the CFTC may lack statutory authority to permit perpetual derivatives on individual stocks for retail investors.
That combination left the products in place for now while sharply raising the pressure on the agency to justify its position before the Friday deadline.
What the lawsuit is trying to stop
The Capital Markets Alliance is asking the court to halt a range of approvals for stock perpetual futures listings. According to the source article, the trade group includes members such as the CBOE and Citadel Securities, the market-making firm founded by Ken Griffin.
At issue are instruments that mirror crypto perpetual contracts but are tied to individual company shares instead of digital assets. They rely on a continuously rolling futures structure and can provide leveraged bets on stock prices, a format that has prompted questions about whether the CFTC has legal authority to let retail investors trade them.
Kalshi has already expanded its lineup
Kalshi has been actively listing the contracts on its platform. On Tuesday, it introduced four single-stock perpetual futures tied to Costco, McDonald’s, Qualcomm, and Amgen, with leverage of up to 4.9x.
Since then, the available roster has expanded to dozens of names, including Nvidia, Tesla, and SpaceX. The pace of those listings has added urgency to the case because the court is being asked to weigh in while the market is already taking shape.
Why Friday matters
The Friday filing is the next confirmed step in the case. The CFTC, under acting chair Michael Selig according to the source article, must tell the court why Judge Caproni’s preliminary conclusion is mistaken if it wants to oppose further relief.
The immediate question is not yet a final ruling on the legality of stock perps. But the judge’s early language suggests the agency now faces a demanding task: persuading the court that it does have authority to allow retail access to perpetual futures on individual stocks.
Source: protos.com