Commodity Futures Trading Commission chairman Michael Selig said on November 3 that perpetual futures on individual stocks can trade on exchanges registered with the CFTC that also meet the SEC’s relevant registration requirements. The products have been approved under a joint CFTC-SEC framework and are subject to both commodities and federal securities law. Unlike traditional futures contracts, perpetual futures have no conventional expiration date and use specific mechanisms to keep their price linked to the underlying asset. Applying them to individual stocks raises questions about corporate actions, shareholder rights, trading halts, market hours, margin and price adjustments. The regulatory opening does not mean that every broker will immediately offer the products, whose clearing arrangements, reference prices and customer eligibility requirements still need to be specified.
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