Wall Street Warns ‘Perp’ Futures Pose New Risks to Markets

Wall Street’s biggest exchanges have warned that the Trump administration’s embrace of perpetual futures — the fast-growing, never-expiring derivatives known as “perps” — could introduce serious new risks to the multitrillion-dollar derivatives market.

In interviews with Reuters published on Monday, four executives at incumbent exchanges and other key market participants said the products, which trade around the clock and are often leveraged by as much as 50 times, could disrupt market structure and erode the risk-management safeguards put in place after the 2007–09 financial crisis.

Perpetual futures were pioneered in offshore crypto markets. Unlike traditional futures, they never expire, so investors can hold positions indefinitely, with funding payments passing between counterparties in place of a settlement date. They are predominantly traded by retail investors.

Trading in crypto perps reached $61.7 trillion in 2025, up 29 per cent from the year before, according to data provider CryptoQuant, with much of that volume on big platforms such as Binance and Hyperliquid, based in Asia.

A regulatory embrace — and a courtroom fight

Traditional Wall Street exchanges were alarmed by the US Commodity Futures Trading Commission’s decision in May to formally approve US-listed crypto perps, with Kalshi, Coinbase, Robinhood and other financial technology firms jumping into the new market. Last week, the regulator also approved single-stock equity perps. CFTC Chair Michael Selig has said it is important to maintain US oversight of the nascent market to protect American investors.

The industry’s biggest futures operator is not convinced. CME Group is suing the CFTC to overturn its May decision, arguing it has wrongly classified perps as futures, creating unfair competition and downplaying their risks. A group representing Cboe Global Markets and Citadel Securities also sued last week to reverse the CFTC’s recent equity perp approval on the same grounds.

“I think they’ve muddied the waters here significantly,” said Terry Duffy, CME’s chief executive and a 40-plus-year industry veteran. “Anytime you have ambiguity in markets … that could hurt the business.”

The CFTC declined to comment on the concerns raised in the interviews. It has previously said the CME had chosen “lawfare” over competing in the new market.

The clash is the latest sign that the administration’s support for crypto and prediction markets, where some of the leading companies also run new exchanges, is fuelling tensions with traditional Wall Street firms.

Swaps or futures? The classification question

At the heart of the dispute is a definitional question with billion-dollar consequences. The exchanges argue that perps are more akin to swaps, which face tougher margin, capital and reporting requirements and are generally less accessible to retail investors. Traditional futures let counterparties lock in a transaction price for a later date, while swaps involve counterparties periodically exchanging cash flows or liabilities based on a benchmark. Because perps do not expire and involve ongoing funding payments between counterparties, they meet the 2010 Dodd-Frank Act’s definition of a swap, the exchanges say.

The CFTC has said perps have futures-like features and their funding mechanism is a substitute for expiration.

“The industry is at an inflection point where product classification risks becoming a competitive tool,” said Rob Hocking, global head of derivatives at Cboe, adding that the development is bad for markets. “There needs to be a resolution in short order.”

The standoff over market risks could grow next year when Democrats, propelled by midterm elections this week that handed them control of Congress, are likely to square off against President Donald Trump and step up oversight of the young industries.

“Many of these incumbents haven’t faced this type of disruption for a very long time,” said Chris Perkins, head of crypto at Franklin Templeton.

The 24/7 problem

Beyond classification, executives warned that futures-style margin requirements may be inadequate for products that behave more like swaps, increasing counterparty and liquidity risks during intense volatility. Mechanisms that automatically liquidate traders’ perp positions when their margin falls below required levels could amplify such stress, some said. Last year, such mechanisms triggered the biggest ever liquidation of bitcoin positions, amplifying the sell-off.

The CFTC, in an advisory to futures commission merchants, has emphasised the need for enhanced customer disclosures about auto-liquidation features during extended trading hours.

Some industry executives also say that perps pose market-structure risks, because they trade continuously and require exchanges, clearing houses, brokers and traders to manage positions and meet margin calls around the clock.

The CME last month said that it had shelved its proposed 24/7 crude oil futures contract mainly because commercial clients were unwilling to staff weekend trading desks.

“The traditional financial market infrastructure in the US is not yet fully equipped for true 24/7 markets,” said Thomas Restout, chief executive of B2C2, an institutional crypto market maker.

The upstart platforms, meanwhile, are pushing to extend the products into other assets. Some of their executives say that without a workable US framework, the market will continue to flourish overseas and take US investors and funds with it.

“I think it’s better for those products to trade transparently inside the US regulatory perimeter than for that activity to remain offshore,” said Andy Ross, Kalshi’s head of institutional business.