CME claims the perps are damaging their long-dated futures products. The lawsuit alleges that the CFTC did not consider the consequences of approving perps, and that these products are actually “swaps” as defined by the Dodd-Frank Act, and not “futures.”
Each concept is important for how the products themselves must be regulated and what requirements there are for the companies that issue them. CME CEO Terrence Duffy, who recently announced he will step down next year, told CNBC last week that the distinction requires different rules for participants.
“The CFTC did not engage in its own analysis of whether its approval of Kalshi’s Bitcoin perpetual as a future is consistent with the law,” CME’s lawsuit said. “The CFTC did not even cite the relevant Dodd-Frank provision defining ‘swap.’ Indeed, the word ‘swap’ appears nowhere in the order.”
The CFTC instead just “rubber-stamped Kalshi’s application,” the lawsuit claimed.
What’s interesting is that the actual landscape of companies securing DCM (designated contract market) approvals and moving into perps is growing quite rapidly. On the same day the CFTC granted Kalshi’s application, it sent a no-action letter to Coinbase, apparently opening the door for that exchange to also disclose perpetrators — albeit through an offshore intermediary.
