Judge keeps stock perps live despite questioning CFTC authority

Judge Valerie Caproni’s Nov. 3 order allows perpetual contracts to continue trading on platforms including KalshiEX, Bitnomial Exchange, and Coinbase Derivatives. While the court found that the alliance—led by Cboe and Citadel Securities—holds a strong position on the merits of the case, the request for a temporary restraining order failed because the plaintiffs could not prove that the products would cause immediate, irreparable harm to market participants.

In her preliminary assessment, Caproni noted that the instruments appear to lack the mandatory future delivery requirements typically associated with security futures. She suggested these contracts might actually fall under the definition of swaps, which would necessitate SEC regulation rather than the CFTC oversight currently in place. CFTC Chairman Michael Selig maintains that the products are legally compliant under the Commodity Futures Modernization Act, arguing that domestic access provides a regulated alternative to offshore venues.

Cboe CEO Craig Donohue contends the move bypasses vital investor protections, dismissing claims that the lawsuit is merely a commercial dispute. The legal battle continues, with the CFTC’s opposition due on Nov. 6 and the alliance’s reply scheduled for Nov. 10.