The CFTC granted no-action relief letting US futures exchanges strip expiration dates from perpetual-style stock index futures, clearing Coinbase Derivatives to convert contracts with expiries of up to 25 years into true perpetuals. The relief lapses on October 20 and follows the agency's approval of a similar contract from Kalshi.
The Commodity Futures Trading Commission granted the no-action relief on Monday, allowing any designated contract market to drop expiry dates from perpetual-style futures on broad-based security indices. The letter, issued by the CFTC's Division of Market Oversight, responded to an October 1 request from Coinbase.
This turns contracts Coinbase Derivatives had listed with expiries of up to 25 years into true perpetuals. Perpetual futures use periodic funding payments instead of an expiry date to keep their price close to the underlying asset, and according to the letter, the market for them grew up mostly on offshore venues. Coinbase chose the long-dated design because of regulatory uncertainty over how perpetuals should be classified in the US, the letter states.
Kalshi's approval opened the door
The relief rests on a separate filing. KalshiEX asked the CFTC on August 18 to review a broad-based stock index perpetual, and that contract was deemed approved on October 2. The Division of Market Oversight treats the Kalshi decision as the agency confirming such contracts are futures. Coinbase had filed its own request a day before Kalshi's.
This sequence began on May 29, when the CFTC cleared bitcoin perpetuals and issued a policy statement requiring perpetuals on other assets to go through full Commission review.
Five days' notice before conversion
Several existing contracts carry open interest, and the letter spends most of its caution there. Staff wrote that changing a term as material as the expiry date can move prices, leaving some holders with losses and others with gains. According to the Division of Market Oversight: "it may be impossible to anticipate" the effect on price discovery and hedging.
Before converting a contract, an exchange must ask traders with open positions about possible harm, give them at least five calendar days' notice and let them close out under the old terms. In return, the division will not recommend enforcement for making the amendments effective immediately, removing the 10-business-day wait that normally applies to self-certified rule changes.
The relief does not reach beyond broad-based indices, and the positions expire on October 20. Coinbase, Kalshi and Kraken parent Payward filed in September for perpetuals on individual stocks and ETFs, which were pending approval at the time. The letter binds only the Division of Market Oversight, not the Commission, and staff kept the right to modify or end the positions.
Source: Finance Magnates
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