ASA Files Amicus Brief to Protect Retail Investors from Highly Leveraged Perpetual Stock Futures

WASHINGTON – The American Securities Association (ASA) filed an amicus brief in the U.S. District Court for the Southern District of New York supporting the Capital Markets Alliance’s lawsuit challenging the Commodity Futures Trading Commission’s (CFTC) approval of perpetual futures tied to individual American stocks. ASA urged the court to block the approvals, while the case proceeds. The approvals allow CFTC-regulated platforms to sell these highly leveraged mislabeled futures products to American retail investors.

“A stock perp doesn’t raise a dollar of capital for American companies or help a single working family save for retirement, and Congress specifically restricted the sale of leveraged swaps to retail investors,” said ASA President and CEO Chris Iacovella. “ASA is proud to support the Capital Markets Alliance challenge and urges the court to stop the CFTC’s legally deficient approvals.”

ASA has argued that by relabeling these products as “security futures,” the CFTC sidestepped that restriction. The agency also reversed its own position: for years, it treated perpetuals as swaps in enforcement actions against offshore crypto exchanges. ASA has also warned that because these products trade nights and weekends, when markets are thinnest, a sharp price move could set off forced liquidations that spill into the stock market. That would hurt retirees and 401(k) savers who never touched a perp.

“Whatever value single-stock perpetuals hold for professional traders, it is no reason to strip retail investors of protections Congress wrote into law while this Court decides whether the CFTC acted lawfully,” ASA’s brief argued.

ASA has opposed equity perpetual futures from the start. In September, ASA submitted a comment letter urging the SEC and CFTC to reaffirm that derivatives on a single stock are securities subject to SEC jurisdiction, regardless of how a trading venue labels them. On November 3, ASA opposed the CFTC’s decision the day it took effect.

To read ASA’s full amicus brief, click here.

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The American Securities Association (ASA) represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.