ASA Opposes CFTC Approval of Equity Perpetual Futures

WASHINGTON – The American Securities Association (ASA) today opposed the Commodity Futures Trading Commission’s (CFTC) decision to allow U.S. exchanges to list perpetual futures contracts tied to individual stocks. These contracts never expire and let traders take highly leveraged positions on American companies, including during overnight sessions when trading is thin.

“ASA has opposed equity perpetual futures from the start because they don’t raise a dollar of capital for American companies or help a single working family save for retirement; they exist to let traders bet on stock prices around the clock, when markets are at their thinnest. If those leveraged bets unravel, the damage will spill into the stock market, and retail investors who never touched these contracts will pay the price. By labeling stock perps as security futures, the CFTC sidestepped the SEC’s jurisdiction and Congress’ ban on selling security-based swaps to retail investors,” said ASA President and CEO Chris Iacovella. 

Until now, perpetual futures have traded mainly on offshore crypto platforms and in Europe. ASA has warned that a sharp price move in a thin trading session can trigger cascading liquidations, and that on a U.S. exchange those losses would spill into the stock market Americans rely on for their savings and retirement.

In September, ASA submitted a comment letter to the SEC and CFTC urging both agencies to reaffirm that instruments based on a single security, a narrow-based security index, or an event directly affecting a public company's financial condition are securities subject to SEC jurisdiction, regardless of how a trading venue labels them.

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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.