The CFTC and the SEC have opened a public comment process on Thursday to tighten their shared definitions of key derivatives. It targets the same legal question that CME is now litigating in its lawsuit against the CFTC.
The joint request asks for input on how regulators define “swaps” and “security-based swaps,” what products should be excluded, and how to treat “mixed swaps.” It also floats a practical problem. Regulators need a workable approach for novel or emerging products, which they say may include prediction-market event contracts and perpetual futures.
The regulators pick a fight with the text of Title VII
The timing is hard to miss. The request comes “directly on the heels” of CME’s filing on Thursday. CME is challenging the CFTC’s approval of Kalshi perpetual futures.
CFTC Chairman Michael Selig framed the comment request as a chance to address “longstanding ambiguities within Title VII of Dodd-Frank that have stifled fair competition and responsible innovation.” SEC Chairman Paul Atkins called definitional clarification “long overdue,” specifically pointing to event-based products.
A 60-day clock starts after the request is published in the Federal Register. That is the window for market participants, lawyers, and anyone with an opinion on classification to push their case before regulators settle (or at least narrow) the lines.
CME argues perpetual futures were misclassified
CME’s lawsuit targets the CFTC’s decision to approve Kalshi perpetual futures as futures contracts. In its complaint, CME alleges CFTC Chairman Selig overrode the established definition of a swap and avoided the regulatory regime that CME says should apply.
CME also argues the approval lets new entrants compete for what it describes as CME’s retail futures customers. CME’s underlying position is that perpetual futures, in which two parties exchange ongoing payments, fit the Dodd-Frank definition of a swap rather than a future.
CME CEO Terrence Duffy made that point earlier in the week, according to Unchained Crypto. Duffy argued that perpetual futures meet the Dodd-Frank “swap” definition because of the payment structure.
Two tracks, opposite directions
These two developments pull in opposite directions on the same classification problem.
CME is asking a court to decide that the CFTC misclassified perpetual futures.
The CFTC and SEC are inviting the public to help them redraw definitional boundaries through rulemaking and administrative action.
The CFTC told reporters it intends to seek dismissal of CME’s suit. It characterizes the lawsuit as opposing the Trump administration’s pro-innovation agenda, per Unchained Crypto.
That sets up a classic regulatory tension. A court can narrow what the agencies can do. A rulemaking process can shift how future products get treated, even if the underlying litigation is still alive.
Why the answer matters for prediction markets and perpetuals
The swap definition is not academic. The way the issue resolves can determine which regulator oversees perpetual futures and prediction-market contracts in the US derivatives market.
Unchained Crypto ties the stakes directly to market access. The outcome affects which agency controls oversight and under what rules new entrants can enter the derivatives space.
This is where the comment request’s scope matters. It is not only about swaps versus security-based swaps. It also covers exclusions, mixed swaps, and novel product handling. Prediction-market event contracts and perpetual futures are both explicitly in the agencies’ “may include” bucket.
Key dates and issues
| Item | What’s happening | Deadline or status |
|---|---|---|
| Comment request | Joint CFTC and SEC input on “swaps,” “security-based swaps,” exclusions, mixed swaps, and novel products | 60 days after Federal Register publication |
| Court case | CME sues CFTC over approval of Kalshi perpetual futures as futures contracts | Filed Thursday, CFTC seeks dismissal |
| Core dispute | Whether perpetual futures were properly classified or wrongly treated as swaps | Depends on court and possible rulemaking outcomes |
The agencies’ next step is procedural. The comment process runs for 60 days. Meanwhile, the courtroom track tests whether the CFTC’s classification choices were lawful.
Which track wins control of the definition will shape compliance burdens and product permissioning, not just headlines.