CFTC and SEC Launch Swaps Review During CME Court Battle

TLDR

• CFTC and SEC launched a joint public consultation on derivatives product definitions.
• Regulators seek feedback on swaps, security-based swaps, mixed swaps, and emerging financial products.
• The comment period will remain open for 60 days after publication in the Federal Register.
• CME Group is suing the CFTC over its approval of crypto perpetual futures contracts.
• CME argues bitcoin perpetual futures should be classified as swaps under Dodd-Frank rules.

U.S. derivatives regulators have opened a public consultation on key product definitions as a court dispute over crypto perpetual futures continues. The Commodity Futures Trading Commission and the Securities and Exchange Commission released a joint request for comment on rules covering swaps, security-based swaps, mixed swaps, and emerging financial products. The agencies said they want feedback on whether existing definitions still match current market structures and trading activity.

CFTC Opens Review of Core Derivatives Definitions

The agencies issued the request through a joint statement. They asked market participants to provide views on several long-standing derivatives classifications.

Regulators said the review covers swaps, security-based swaps, and mixed swaps. They also requested input on products that combine features from multiple regulatory categories.

The notice asks whether current rules remain effective. It also seeks recommendations on interpretive issues and compliance approaches.

Officials said they want definitions that reflect evolving financial products. They added that market practices have changed since the original framework took effect.

The comment period will remain open for 60 days. It will begin after publication in the Federal Register.

During that period, exchanges and crypto firms may submit responses. Lawyers, industry groups, and members of the public may also participate.

The agencies said they are reviewing jurisdictional boundaries as well. They requested views on exclusions and products that fall between existing categories.

According to the notice, the effort supports Title VII of the Dodd-Frank Act. Regulators said the framework should continue reflecting current market conditions.

CME Lawsuit Remains at Center of Perpetual Futures Debate

The consultation arrives shortly after CME Group filed suit against the CFTC. The exchange challenged the agency’s approval of crypto perpetual futures contracts.

CME argues that the regulator applied the wrong classification. The company said the products should be treated as swaps rather than futures.

In its complaint, CME stated that the CFTC “overrode Congress’s definition of the term ‘swap.’” The filing also claims the agency bypassed requirements established under Dodd-Frank.

The dispute focuses on bitcoin perpetual contracts approved for Kalshi. CME maintains that those contracts belong under the swap regulatory framework.

CME Chief Executive Terry Duffy has also addressed the issue publicly. He said perpetual contracts are “essentially swaps” and require appropriate oversight.

The new comment process does not determine the lawsuit. However, it addresses many of the same classification questions raised in court.

Regulators also requested feedback on event contracts and prediction markets. They asked how emerging products should fit within existing regulatory categories.

The notice specifically references products tied to crypto prices. It also covers instruments linked to macroeconomic data and sports outcomes.

Officials asked whether such products should qualify as swaps. They also requested views on security-based swaps and other classifications.

The agencies will collect comments throughout the review period. The request remains open for 60 days following Federal Register publication.

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