CFTC Lets Exchanges Convert Index Futures Into True Perpetual Contracts
TL;DR CFTC staff has issued temporary no-action relief allowing designated contract markets to convert certain broad-based security index futures into true perpetual contracts. Exchanges can remove expiration dates if they meet customer-protection, notice and filing conditions. The relief is narrow, applies to existing qualifying contracts and expires on October 20. The U.S. derivatives market is taking another step toward a contract structure crypto traders know well: the true perpetual future. The Commodity Futures Trading Commission’s Division of Market Oversight said on October 5 that designated contract markets can convert certain existing perpetual-style broad-based security index futures into contracts with no expiration date. The relief is temporary and conditional, but it is still a notable shift in how U.S.-regulated venues can structure perpetual exposure. Exchanges Cannot Simply Delete The Expiry Date The no-action position comes with several safeguards. A designated contract market must solicit feedback from participants holding open positions, provide advance notice, give customers an opportunity to exit and deliver appropriate risk disclosures. The exchange also cannot use the conversion as an excuse to alter other material contract terms. Any amendment still needs to be filed under the CFTC’s existing rules, and the venue must certify that it has satisfied the conditions in the letter. That is a long way from saying every U.S. futures exchange can now list any perpetual product it wants. Crypto Popularized The Structure, But This Relief Covers Index Futures Perpetual futures became a defining product of offshore crypto markets because they provide leveraged exposure without a fixed expiration date. The contracts covered by this CFTC action are different: they reference broad-based security indexes. Even so, the regulatory direction is interesting. Earlier this year, CFTC staff also provided a route for converting certain digital-commodity perpetual-style futures into true perpetuals.
Key Takeaways
- TL;DR CFTC staff has issued temporary no-action relief allowing designated contract markets to convert certain broad-based security index futures into true perpetual contracts.
- Exchanges can remove expiration dates if they meet customer-protection, notice and filing conditions.
- The relief is narrow, applies to existing qualifying contracts and expires on October 20.
Summary generated by IndiCrypto from NewsBTC. IndiCrypto is a news aggregator and does not provide investment advice. Read the original article for full context.
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