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3 hours ago
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CFTC lets exchanges convert index futures into perpetual contracts until October 20

2 min

The Commodity Futures Trading Commission’s Division of Market Oversight issued temporary and conditional no-action relief that allows designated contract markets to convert certain existing perpetual-style broad-based security index futures into true perpetual contracts with no expiration date. The relief applies only to qualifying contracts and expires on October 20. It requires exchanges to meet specific customer-protection, notice and filing conditions.

Key points

  • Scope: Applies to perpetual-style futures that reference broad-based security indexes. It does not authorize new listings beyond existing qualifying contracts.
  • Temporary window: Relief is effective through October 20. It functions as a controlled test period rather than a permanent rule change.
  • Conversion to no-expiry: Exchanges can remove expiration dates only if they meet defined safeguards.
  • Regulatory context: Earlier this year, CFTC staff outlined a path for converting certain digital-commodity perpetual-style futures into true perpetuals. Extending similar relief to index products indicates growing regulatory familiarity with the perpetual structure.

Customer-protection and compliance conditions

  • Participant engagement: The exchange must solicit feedback from participants with open positions and provide advance notice.
  • Orderly transition: Customers must have an opportunity to exit positions before conversion and must receive appropriate risk disclosures.
  • Contract integrity: The exchange cannot alter other material contract terms as part of the conversion.
  • Regulatory filings: Amendments must be filed under existing CFTC rules, and the exchange must certify that all conditions in the no-action letter are satisfied.

Implications

  • Market design: U.S.-regulated venues gain a path to test true perpetual index futures under explicit safeguards.
  • Crypto linkage: Perpetual futures were popularized in offshore crypto markets. While this relief targets index futures, it advances the acceptance of perpetual structures in mainstream U.S. derivatives.
  • Limitations: The relief is narrow and does not permit exchanges to list any perpetual product at will.