On November 3, the U.S. Commodity Futures Trading Commission announced that single-stock perpetual futures could be traded on its registered exchanges for the first time. That same day, the decision to allow them was challenged in a lawsuit.
HOOD was listed as an underlying asset associated with this type of product, but that doesn’t mean HOOD contracts have already launched. The more important question for now is whether single-stock perpetuals can withstand regulatory scrutiny over their classification.
These contracts took effect through a 45-day no-objection process and have no expiration date. The plaintiffs argue that they are more akin to security-based swaps and should not be treated as security futures. They are seeking to overturn the approval and obtain an injunction.
So, regulatory approval has opened the door for the product, but the lawsuit leaves uncertain whether that door will stay open. Next, watch to see whether the court takes up the merits of the dispute and whether trading venues actually launch HOOD-related contracts. If contracts can start trading before their classification is settled, do you think the market should test them first or clarify the rules first?
HOOD was listed as an underlying asset associated with this type of product, but that doesn’t mean HOOD contracts have already launched. The more important question for now is whether single-stock perpetuals can withstand regulatory scrutiny over their classification.
These contracts took effect through a 45-day no-objection process and have no expiration date. The plaintiffs argue that they are more akin to security-based swaps and should not be treated as security futures. They are seeking to overturn the approval and obtain an injunction.
So, regulatory approval has opened the door for the product, but the lawsuit leaves uncertain whether that door will stay open. Next, watch to see whether the court takes up the merits of the dispute and whether trading venues actually launch HOOD-related contracts. If contracts can start trading before their classification is settled, do you think the market should test them first or clarify the rules first?