Capital Markets Alliance challenges CFTC stock perps approval
Key points
- The Capital Markets Alliance filed a lawsuit challenging the CFTC's approval of perpetual derivatives tied to individual US stocks.
- The group argues these products qualify as security-based swaps under the SEC's exclusive jurisdiction.
- The lawsuit seeks to overturn the approvals and restrict trading while the legal challenge proceeds.
The Capital Markets Alliance (CMA) has sued the CFTC to overturn approvals for individual US stock perpetual derivatives.
The lawsuit targets contracts that allow traders to speculate on stock prices without owning underlying shares.
“Coherent regulatory oversight underpins the global preeminence of U.S. securities markets,” according to CMA Secretary Adam Ford.
CMA argues the contracts qualify as security-based swaps, placing them under the Securities and Exchange Commission's exclusive jurisdiction.
The alliance also claims the CFTC failed to explain its decision or assess potential effects on investors.
CMA wants the court to vacate the approvals, classify the products as security-based swaps and suspend their implementation.
The New York-based association represents financial market participants, including exchanges, market makers, broker-dealers, investors and data providers.
The lawsuit places federal oversight of single-stock perpetual derivatives at the centre of an emerging regulatory dispute.
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