Kalshi listed perpetual futures on more than 50 U.S. stocks on Nov. 5. By the end of the morning, the contracts had traded more than $300 million, according to the company. The product is the first of its kind in the United States: a perpetual contract tied to a single stock, with no expiry date and no rollover, priced by a funding rate and cleared through a CFTC-regulated exchange.
The approval behind that launch did not come from a vote. It came from a clock. The CFTC let its 45-day review window for the contracts lapse on Nov. 2 without issuing a non-approval notice, a path known as deemed approval under Regulation 40.3. Chairman Michael Selig announced on Nov. 3 that the contracts could begin trading. Hours later, a trade group sued to stop them.
The case, Capital Markets Alliance Association v. CFTC, is now the first real test of whether the agency can use a procedural deadline to put a crypto-style product inside the SEC's equities market. The product is live. The legal foundation is not settled.
What the contracts are
A perpetual future has no delivery date. It tracks the price of an underlying asset through a funding rate that periodically moves money between longs and shorts. When the contract trades above the spot price, longs pay shorts; when it trades below, shorts pay longs. The payment keeps the perpetual anchored to the underlying without a settlement date. Offshore venues have offered the structure on crypto and equities for years. The American version wraps it in a security future, a category created by the Commodity Futures Modernization Act of 2000 and regulated jointly by the CFTC and the SEC. To list the contracts, a venue must be a CFTC-designated contract market and an SEC notice-registered national securities exchange.
KalshiEX's filing describes the mechanics. The contracts require a 15.50% minimum customer margin, mark to market once a day at 4:00 p.m. ET, and trade from 6:00 p.m. ET on Sunday to 5:00 p.m. ET on Friday. Funding is calculated once a day. The exchange has coordinated trading halts with the underlying equity markets. Kalshi offered about 4.9 times leverage, well below the offshore versions, and says it charges transaction fees rather than selling its order flow.
The funding rate is the part retail traders may underestimate. A perpetual can stay open indefinitely, but it is not free to hold. If the funding rate stays positive, a long position bleeds a small payment every day. Over weeks, that cost can exceed the leverage benefit. The contracts are designed for short-term trading, not for buy-and-hold exposure, even though nothing in the contract forces a trader to close.
The contracts are not crypto. They are equity exposure in a derivative wrapper. That is what makes the legal fight interesting. The CFTC says they are security futures. The plaintiffs say they are security-based swaps, a category that belongs to the SEC.
The lawsuit
On Nov. 3, the Capital Markets Alliance Association sued the CFTC in the Southern District of New York. The alliance's members include Cboe Global Markets, Citadel Securities, and the Healthy Markets Association. The complaint makes two core claims. First, the contracts are security-based swaps because they lack future delivery, which is the defining feature of a security future. Second, the CFTC violated the Administrative Procedure Act by failing to explain its classification, departing from its earlier treatment of perpetuals as swaps, and failing to weigh the products' risks.
Judge Valerie Caproni denied the plaintiffs' request for a temporary restraining order the same day. She found they had not shown the kind of irreparable harm that emergency relief requires, and she described the alliance's member declarations on harm as speculative. But she also said they were likely to succeed on the merits of their claim that the CFTC lacks statutory authority, according to Cleary Gottlieb's account of the ruling. The contracts "do not appear to satisfy the definition of a security future," the court said, and they appeared to meet the definition of a swap. Those were preliminary comments, not a final ruling. The preliminary injunction motion is scheduled to be fully briefed on Nov. 10.
The distinction matters because security futures and security-based swaps sit on different sides of the CFTC-SEC boundary. A security future is a contract for future delivery of a security, jointly regulated by both agencies. A security-based swap is a derivative on a single security or a narrow index, regulated by the SEC. A perpetual has no future delivery. That is the plaintiffs' opening, and the court's preliminary view suggests it is a serious one.
If the court grants a preliminary injunction, the practical question becomes what happens to positions already on the books. A freeze on new listings is one option. A freeze on trading is another. Either would give the CFTC a reason to negotiate with the SEC or to revisit the classification before the case reaches a final judgment. The court has not indicated which route it would take.
Why the CFTC used the clock
The agency has been moving toward onshoring perpetuals for most of the year. In May, it approved KalshiEX's bitcoin perpetual as a futures contract. In June, it issued a policy statement that allowed self-certification for certain crypto perpetuals while requiring pre-approval for other asset classes. The equity perpetual filings arrived on Sept. 18 from KalshiEX, Coinbase Derivatives, Bitnomial, Nadex, and ICE Futures U.S. The CFTC's review window expired on Nov. 2.
Deemed approval is a legal path, but it is not a merits decision. It puts the burden on the agency to object within the window. If the agency does not object, the product can trade. The plaintiffs argue that is exactly the problem: the agency did not explain why these contracts are futures, and a deadline should not do the work of a rulemaking.
Selig framed the move as regulatory clarity. He said regulatory uncertainty had left innovative products stranded for too long and that the two agencies had moved past that period. The CFTC and SEC signed a memorandum of understanding in March, and the SEC notice-registered the venues. But the SEC's role is the subject of the lawsuit, not a resolution of it.
The boundary drawing is not limited to equity perpetuals. In October, the SEC approved Cboe's binary options on issuer-reported key performance indicators as security options, while the CFTC approved Rothera's contracts on similar indicators as swaps. Each agency said its approval left the other's jurisdiction open. The equity perpetual fight is a more consequential version of the same question: when a product sits between two regulatory categories, which agency gets to decide, and how much explanation does the choice require?
The market reaction
Kalshi's launch was a commercial hit. The contracts covered more than 50 stocks and exchange-traded funds, including Palantir, Meta, McDonald's, Costco, Qualcomm, Amgen, Tesla, Apple, and Nvidia. The company said the first-day volume was its most successful product launch.
The incumbents were less enthusiastic. Cboe and Citadel Securities are part of the alliance that sued. CME challenged the earlier bitcoin perpetual approval in June. The fight is partly about market share. Perpetuals are a high-volume, fee-generating product that offshore venues have dominated. Kalshi says offshore venues handle about $4.5 trillion a year in perpetual volume. That number is the commercial case for onshoring, and it is also the reason the incumbents are paying attention.
Bringing the product onshore gives regulated exchanges a new source of fees, but it also takes order flow from the futures and options markets the incumbents already run. The alliance's mix of competitors and investor-protection advocates makes the lawsuit unusual. Cboe and Citadel have a commercial interest in the outcome. The Healthy Markets Association has a governance interest. Their shared legal theory is that the CFTC stretched the definition of a security future to capture a product that belongs to the SEC.
The CFTC's bet is that onshoring is safer than leaving the product offshore, where leverage is higher and oversight is thinner. The plaintiffs' bet is that the agency is expanding its jurisdiction by labeling a swap a future. Both arguments can be made in good faith. The court will have to choose.
What to watch
The preliminary injunction motion is the next date that matters. It will be fully briefed on Nov. 10, with a hearing to follow. If the court grants an injunction, the contracts could be frozen while the case proceeds. If it denies one, the products keep trading and the case moves toward a merits ruling.
The SEC has not taken a public position on the lawsuit. Its notice registrations are what allow the venues to list security futures. If the court says the products are security-based swaps, the venues would need a different regulatory path, and the SEC would become the primary regulator.
The other exchanges that filed on Sept. 18, including Coinbase Derivatives, Bitnomial, Nadex, and ICE Futures U.S., will watch the ruling before deciding how quickly to launch. Congress could clarify the boundary between futures and securities, but no bill has moved. A court decision would be narrower and faster.
The product itself also deserves attention. A perpetual has no expiry, so a position can stay open indefinitely as long as the trader meets margin calls and funding payments. The 15.50% minimum margin is the main investor-protection lever. Kalshi's 4.9 times leverage is lower than the offshore norm, but it is still leverage. The contracts are available to retail traders through a regulated venue, which is the point of onshoring and the reason the incumbents are worried.
The CFTC's argument is that the products are futures and that the agency has the authority to let them trade. The plaintiffs' argument is that the products are swaps and that the SEC has exclusive authority. The court's preliminary view favors the plaintiffs on the legal question but not on the emergency relief. That leaves the product live while the answer is decided.
A product can trade for a long time on a deadline. It cannot trade forever on one.
Primary sources
- KalshiEX's Nov. 4, 2026 filing with the CFTC for the Perpetual SFP contract, for the contract specifications, margin, trading hours, and funding mechanics.
- Cleary Gottlieb for the Nov. 3, 2026 lawsuit, the statutory classification dispute, the TRO ruling, and the preliminary injunction schedule.
- Yahoo Finance for Kalshi's Nov. 5 launch, the stock list, and the $300 million in first-day volume.
- The CFTC for Chairman Michael Selig's May 29, 2026 statement on the bitcoin perpetual approval and the agency's onshoring rationale.