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Key Takeaways
- Kalshi reportedly plans to seek approval for about 60 perpetual futures tied to large-cap stocks and ETFs, but no filing or approval has been announced.
- The CFTC’s approval of Kalshi’s Bitcoin perpetual was limited to digital commodities with deep, continuous spot trading.
- Equity perpetuals would need to fit within the existing joint SEC-CFTC security-futures framework and address market closures, halts and corporate actions.
Kalshi is reportedly preparing to seek approval for perpetual futures tied to approximately 60 large-cap stocks and exchange-traded funds, including Apple, Nvidia and Tesla.
The proposal would apply a crypto-native derivative structure to an asset class with fixed trading hours, corporate actions and exchange-imposed halts. The CFTC’s May approval covered Bitcoin and similarly structured digital-commodity products, not stocks or other asset classes.
No application or approval has been announced. The immediate question is how the existing joint SEC-CFTC security-futures framework would apply to an open-ended contract.
Bitcoin Approval Does Not Extend to Equity Perpetuals
Kalshi’s approved Bitcoin perpetual is a cash-settled contract with no expiry date. It uses periodic funding payments between long and short holders to keep its market price close to a Bitcoin reference index.
The CFTC’s approval relied on Bitcoin’s 24/7 trading, broadly distributed venues, observable reference price and liquidity. Those conditions allow traders to arbitrage differences between the contract and the underlying market in real time.
The order limited its analysis to Bitcoin and similarly structured digital commodities. In a related policy statement, the CFTC said perpetual contracts on equities and narrow-based security indexes would benefit from review by both the CFTC and the SEC.
SEC and CFTC Would Share Oversight of Equity Perpetuals
U.S. law already treats futures on individual stocks and narrow-based security indexes as security futures products. The SEC and CFTC share jurisdiction over those products.
The framework applies to more than common stock. The CFTC says ETFs, American depositary receipts, closed-end fund shares and certain debt securities can also serve as the underlying asset for a security futures product.
An open-ended term does not remove the central classification question. The product would still need to meet the requirements for a standardized futures contract referencing a security, while its market, clearing and intermediary arrangements would need to comply with both agencies’ rules.
Existing security-futures rules cover listing standards, surveillance, manipulation risk, position limits and customer margin. They set a 15% minimum initial and maintenance margin requirement for unhedged positions, subject to limited offsets for related positions.
Closed Markets Complicate Pricing and Funding
A perpetual contract needs a reliable reference price for funding and margin calculations. Bitcoin trades continuously, so its reference price remains current while the perpetual contract trades. Stocks do not.
U.S. equity markets close overnight, on weekends and on holidays. A contract that continues trading could rely on the last official price, an after-hours quotation or a separate pricing methodology. Each option raises different questions about liquidity, reliability, and manipulation risk.
Using the last regular-session price would leave funding tied to a stale reference while new information changes expectations. Using after-hours prices may produce a fresher reference, but those markets are generally less liquid than regular trading.
Liquidations and Corporate Actions Need Separate Rules
If an equity perpetual were treated as a security future, current rules require trading to halt whenever the underlying stock is subject to a regulatory halt. That creates a direct limit on continuous trading during news-pending or circuit-breaker events.
The more difficult question is what happens to existing positions while trading is paused. The platform would need rules for marking positions, calculating margin and handling liquidation risk when the underlying price is unavailable or cannot be relied upon.
Corporate actions would need equally clear treatment. Stock splits, cash dividends, mergers, spin-offs, and delistings can change the economic value of a position or the number of shares represented by a contract.
Traditional single-stock futures already use adjustment procedures for corporate actions. A perpetual contract would need comparable rules without a scheduled expiration date.
Any Approval Would Depend on Kalshi’s Contract Terms
Kalshi could seek approval for equity perpetuals, but the CFTC has said that non-Bitcoin perpetuals should undergo product review because each underlying asset class raises different issues.
For stocks, the design would need to explain how funding works when the reference market is closed, how prices are protected from manipulation, how margin is calculated and how trading halts are coordinated with the underlying market.
How Kalshi could fit an open-ended contract inside the current security-futures system while safeguarding consumers when the underlying stock is not trading is the unresolved issue.
