CFTC Relief Lets Perpetual-Style Index Futures Become True Perpetuals

The Commodity Futures Trading Commission’s Division of Market Oversight on October 5, 2026 announced no-action relief allowing designated contract markets to convert their existing perpetual-style broad-based security index futures contracts into true broad-based security index perpetual futures. Under the relief, DCMs may remove the expiration dates from those contracts and implement the amendments with immediate effect once they satisfy customer-protection and procedural conditions set out in the letter. The no-action positions expire on October 20, 2026.

The relief was issued as CFTC Staff Letter No. 26-29, signed by DJ Hennes, acting director of the division, in response to an October 1, 2026 request from Coinbase Derivatives, LLC, a designated contract market, submitted under Commission Regulation 140.99.

Coinbase Derivatives asked the division to confirm it would not recommend enforcement action if the exchange removed the expiration dates from its existing perpetual-style contracts with an immediate effective date upon publication of the amendments, notwithstanding the requirements of Regulations 40.6(a)(3) and 40.6(b)(1). The exchange also asked the division to confirm it would not recommend that the Commission, or exercise delegated authority to, stay the certification of the amendments under Regulation 40.6(c)(1). Specifically, the request seeks relief from the 10-business-day requirements of Regulations 40.6(a)(3) and 40.6(b)(1) to expedite implementation, and the exchange argued that absent expedited relief it would have to await that framework. Coinbase described its request as narrowly tailored and argued it aligns with the Commodity Exchange Act, Commission regulations, and the CEA’s objective to promote “responsible innovation and fair competition,” according to the letter.

Regulatory Background

On May 29, 2026, the Commission issued an order under Regulation 40.3 stating that listing perpetual futures contracts referencing the spot price of bitcoin or other digital commodities with “deep, active, and continuous” spot market trading would not violate the CEA or Commission regulations. The Commission emphasized that the order’s analysis applied only to perpetual contracts tied to bitcoin and other digital commodities. In a policy statement published June 3, 2026 (91 Fed. Reg. 33160), the Commission stated its position that the public interest is best served by requiring perpetual contracts referencing assets not contemplated in the order to undergo review and approval under Regulation 40.3.

Consistent with that policy statement, the Commission received a filing from KalshiEX LLC on August 18, 2026 seeking Regulation 40.3 review of a broad-based security index perpetual futures contract, the US500 Futures Contract. The contract was deemed approved by the Commission on October 2, 2026.

The letter defines perpetual futures contracts as derivative contracts with no fixed expiration date that rely on a periodic funding rate mechanism, rather than a fixed expiration date, to maintain relative price parity with the underlying asset’s spot price. For purposes of the letter, an index is a broad-based security index if it does not meet the definition of a narrow-based security index under Section 1a(35) of the CEA. Under 7 U.S.C. 2(a)(1)(C)(ii), a futures contract on a group or index of securities may trade subject to the Commission’s exclusive jurisdiction where settlement is effected in cash or by means other than the transfer or receipt of any security, the contract is not readily susceptible to manipulation of its price or to being used to manipulate the price of an underlying security or option, and the index is not narrow-based.

According to the letter, regulatory uncertainty over the classification of perpetual futures in U.S. derivatives markets meant the market largely developed outside the United States, with the majority of trading occurring on offshore venues. To bring perpetual-type contracts to the U.S. market, the exchange listed perpetual-style futures on certain broad-based security indices; unlike true perpetuals, those contracts carried long-dated expiration dates, including up to 25 years. The request letter states that the fundamental mechanics of the existing perpetual-style contracts, including the funding rate mechanism, are identical to those of the approved broad-based security index perpetual contract, though division staff noted that pricing of the perpetual-style contracts may deviate due to various factors.

The letter also addresses open interest. Several of the existing perpetual-style contracts currently have open interest, and announcing or implementing changes to contracts with open interest can affect prices, producing losses for some holders and benefits for others depending on their market positions, with outcomes that are unpredictable, the letter states. Division staff noted that amending contracts that are not yet listed or lack open interest generally does not pose the same risks, because no market participants have financial exposure in them.

To amend the terms and conditions of the existing perpetual-style contracts, DCMs are required to submit a certification of the amendments under Regulation 40.6(a) or an approval request under Regulation 40.5, the letter states. For certified amendments, the Commission, or the division’s director through delegated authority, may stay the certification under Regulation 40.6(c) where the amendment presents novel or complex issues that require additional time to analyze or is potentially inconsistent with the CEA or Commission regulations. A stay gives the Commission an additional 90 days of review and provides a 30-day comment period on the stayed amendments.

Conditions for Conversion

Under the letter, the division will not recommend enforcement action against the exchange, or against any other DCM, that implements the amendments with immediate effect, provided that before implementing them the DCM meets eight conditions: it amends only contracts referencing broad-based security indices; solicits feedback from market participants with open positions on potential adverse impacts; provides at least five calendar days of notice to market participants with open positions that it intends to implement the amendments; provides an opportunity to close out open positions under the existing terms; provides appropriate risk disclosures regarding the risks associated with amendments to contract terms and conditions; amends no other material contract terms or conditions besides the expiration date; files the amendments under Regulation 40.6(a) or Regulation 40.5; and notifies the division of its intention to rely on the no-action positions and certifies compliance with the conditions, specifically identifying the contracts covered. The notice and certification may be contained in the Regulation 40.5 or 40.6 filing or in a submission to [email protected].

The division stated it would expect impacted customers of an intermediary to be included among market participants for the feedback, notice, exit-opportunity, and disclosure conditions. The no-action positions do not apply to perpetual-style futures contracts that reference assets other than broad-based security indices.

The letter states that it represents the views of the division only, is not binding on the Commission, and is based on the facts and circumstances presented, and that different, changed, or omitted material facts might render the positions void. The letter creates no right or benefit enforceable at law or in equity, and the division retains the authority to condition, modify, suspend, terminate, or otherwise restrict the positions. Questions concerning the letter may be directed to Roger Smith of the Division of Market Oversight.

On June 12, 2026, the division announced parallel no-action relief allowing DCMs to convert existing perpetual-style digital commodity futures into true digital commodity perpetual futures under similar customer-protection and procedural conditions. Those no-action positions, issued as Staff Letter No. 26-19, expired on June 30, 2026.