Capital Markets Alliance Files Suit Challenging CFTC Approval of Single-Stock Perpetual Derivatives

SEC should maintain oversight of products tied to U.S. stocks

NEW YORK--(BUSINESS WIRE)--The Capital Markets Alliance (CMA) today filed suit in the U.S. District Court for the Southern District of New York seeking to vacate the Commodity Futures Trading Commission's (CFTC) approval of perpetual derivatives on individual U.S. stocks.

"Coherent regulatory oversight underpins the global preeminence of U.S. securities markets," said Adam Ford, Secretary of CMA. "The hasty roll out of financial products that circumvent well-established regulatory frameworks erodes investor protection and undermines the integrity and resiliency of the American financial system."

In its complaint, CMA argues that the approvals violate the Administrative Procedure Act because:

• The products are security-based swaps, which Congress placed under the Securities and Exchange Commission's exclusive jurisdiction.
• The CFTC gave no explanation for its decision and did not acknowledge that it has long treated perpetual derivatives as swaps.
• The CFTC failed to reasonably consider impacts to investors and the securities markets.

CMA asks the court to vacate the approvals, declare that the products are security-based swaps, and bar the CFTC from giving the approvals effect while the case is pending.

About the Capital Markets Alliance

The Capital Markets Alliance is a New York-based trade association that brings together some of the most significant institutions in American finance — leading exchanges, market makers, broker-dealers, investors, and data providers — to advance policies that strengthen our capital markets. We unite around a shared interest: competitive, resilient, well-regulated, and innovative markets that serve businesses, investors, and the broader economy.