The Commodity Futures Trading Commission and the Securities and Exchange Commission have issued a joint request for public comment on their initiative to update and clarify certain derivatives product definitions and interpretations.
The request seeks public input on a broad range of topics, including the definitions of "swaps" and "security-based swaps," as well as the scope of exclusions from those definitions.
The agencies are also requesting feedback on the treatment of novel or emerging products, which may include event contracts on prediction market platforms or perpetual futures contracts.
"Today's joint request for public comment presents an opportunity to address longstanding ambiguities within Title VII of Dodd-Frank that have stifled fair competition and responsible innovation," CFTC Chairman Michael S. Selig said in a press release. Title VII of the Dodd-Frank Act gives the CFTC regulatory authority over swaps, except for security-based swaps.
SEC Chairman Paul Atkins also said in the release that clarification is "long overdue" for certain definitions, specifically mentioning event-based products.
CME Group filed a lawsuit against the CFTC on Thursday over the agency's decision to approve Kalshi's offering of perpetual futures (perps) trading in the U.S., classifying them as futures contracts.
The complaint alleges that in the process of approving perps, CFTC's Selig overrode the stated definition of a "swap" and circumvented the required regulatory regime. CME Group CEO Terrence Duffy told CNBC earlier in the week that perpetual futures should be regulated as swaps.
"In short, by authorizing Kalshi and others to enter the derivatives marketplace by listing similar cryptocurrency perpetuals as futures, the CFTC ushered new entrants into CME's retail futures market that seek to compete with CME for retail customers," CME said in the complaint.
In response to the lawsuit, the CFTC told The Block that it seeks to dismiss the lawsuit, saying that it goes against the Trump administration's pro-innovation agenda.
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