Its amicus brief rejects the picture of a CFTC gone rogue and an SEC gone missing, but takes no position on whether a perpetual future on one stock is a security future or a security-based swap. The judge who refused to halt the contracts had already leaned the other way on that question.
The Securities and Exchange Commission has asked a Manhattan federal court not to halt trading in perpetual futures on individual US stocks, siding with the Commodity Futures Trading Commission in the case brought to undo its clearance of the contracts. The Block and Ledger Insights both reported the agency's amicus brief on November 11, in Capital Markets Alliance Association v. Commodity Futures Trading Commission, case 1:26-cv-09608 in the US District Court for the Southern District of New York.
What the SEC filed is narrower than a defense of the contracts. Both accounts have the brief rejecting the trade association's portrait of the dispute, with the agency calling the depiction of "a CFTC gone rogue, and an SEC gone missing" mistaken. It told the court that the exchanges' rule changes for these products remain subject to its own review, and that it works closely with the CFTC on oversight. On the question the case turns on, whether a perpetual future on one stock is a security future for the CFTC or a security-based swap for the SEC, the agency took no position.
That silence is the notable part, because a judge has already given a preliminary answer and it went against the CFTC. The court denied the association's request for emergency relief on November 3, the same day it was filed, on the ground that the association had not shown irreparable harm. In the same ruling, according to the law firm Cleary Gottlieb's note on the case, the court said the association was likely to succeed on the merits, because the contracts look like swaps on securities rather than security futures. Finance Magnates reports that Judge Valerie Caproni heard the emergency application and found the association likely to show the CFTC had exceeded its authority, since a perpetual contract never provides for delivery of a stock on a future date.
The case has since moved to Judge Lorna Schofield, whose initials appear in the docket number, and Finance Magnates reports that she will schedule oral argument on the preliminary injunction. Briefing on that motion closed on November 10 under an expedited schedule the court set when it refused the emergency order. The CFTC's answer to the complaint is due on November 25.
Neither account gives a filing date for the SEC brief, and the filing itself was not available to read. The Block places it in the week the briefing closed, and Finance Magnates puts it on Monday, November 9, the same day the industry filed. MiningPool could not confirm either.
The SEC was not the only party to weigh in. Coinbase, Payward, Kalshi, DRW Holdings, Jump Trading and Paradigm Operations filed a joint brief supporting the CFTC on November 9, which argues that the only relevant statutory question is whether equity perpetuals are security futures, and that under the Commodity Exchange Act they are. That brief also tells the court that policy concerns are irrelevant to the question and in any event weigh against the relief the association seeks. Better Markets filed against the CFTC, and its statement calls the products "in fact securities swaps" the SEC should regulate and says such instruments contributed to the 2008 crash. Allison Herren Lee, a former SEC commissioner, filed a brief arguing the SEC should regulate them.
The association's members include Cboe, Citadel Securities and, by Ledger Insights' account, the Healthy Markets Association. It alleges that the CFTC violated the Administrative Procedure Act by failing to explain its decision and by not weighing the risks, and it asks the court to vacate the approvals.
Those approvals were never an affirmative vote. The CFTC let its 45-day review period run out, which deemed the contracts approved on November 2 under Commission Regulation 40.3, and they became eligible to trade the following day. Chairman Michael Selig announced the clearance on November 3 naming no exchange, no stock and no start date, and the association filed suit hours later. Cleary Gottlieb lists the exchanges that had filed as Coinbase Derivatives, KalshiEX, Bitnomial Exchange, Nadex and ICE Futures U.S., several of them on September 18.
A second track runs through the SEC, which is what the agency means by saying the rules remain under review. The same exchanges applied to the SEC in September to register as national securities exchanges for security futures, and filed rule changes covering listing standards and margin. Those changes took effect immediately, subject to publication for comment and to the power of either agency to abrogate or stay them, and neither agency has acted. Ledger Insights reports that the SEC has until December 31 to decide whether to overturn the Kalshi, Coinbase and Bitnomial rules, and that the brief gave no indication which way it is leaning.
The CFTC is defending its perpetuals policy on a second front as well. CME is suing the agency in Chicago over the policy that preceded these listings, and the CFTC's reply brief there turned the exchange's own volume data against it.
The contracts trade while two clocks run. Judge Schofield has yet to set a date for argument on whether to pull them, and the SEC has seven weeks to say whether it will undo the exchange rules that let them list. In court this week it declined to say what the products are.
