CFTC and SEC Request Public Comment on Derivatives Definitions Amid Perpetual Futures Classification Dispute

The CFTC and SEC have requested public comment on definitions and interpretations of derivatives products, including "swaps" and "security-based swaps," under the Dodd-Frank Act. The joint initiative addresses how regulators should classify emerging products such as perpetual futures contracts and event-based prediction market contracts, which currently fall into regulatory gray areas.

The timing coincides with CME Group's lawsuit challenging the CFTC's decision to approve Kalshi's perpetual futures trading in the U.S. and classify the products as futures rather than swaps. CME argues that the approval bypassed the regulatory framework required for swaps. How these products are classified—as futures, swaps, or security-based swaps—determines which regulator has authority, which compliance rules apply, and how accessible the products are to retail participants.