The action opens up trading for “perpetual futures contracts” on individual shares, said Michael Selig, commissioner of the US Commodity Futures Trading Commission.
“This expansion marks a significant step towards allowing US market participants, consistent with applicable law, to avail themselves of the advantages of perpetual futures that have led to their emergence as widely sought tools for risk management and price discovery,” Selig said in a statement.
These products are better suited to operating within “the protections of the CFTC’s proven regulatory framework, rather than being forced to turn to offshore, and often unregulated, venues,” he said.
The CFTC action opens up a pathway for much higher volume in securities tied to underlying stocks outside of the hours of traditional trading, between 9.30am (1430 GMT) and 4pm (2000 GMT), when the New York Stock Exchange and Nasdaq sessions are held.
Last week, Intercontinental Exchange, which owns the New York Stock Exchange, announced plans to bring perpetual trading “onshore in the US, subject to regulatory approvals.”
The venture with Trade{XYZ} aims to serve a growing market and meet demand for “retail traders increasingly seeking short-duration exposure, often around the clock, across crypto, equities, commodities, foreign exchange and other real-world assets,” ICE said in an October 29 press release.
ICE described the venture as “a new retail growth opportunity, operated separately from ICE’s institutional core”.
