CFTC lets DCMs turn 25-year 'perpetual-style' index futures into true perpetuals

The CFTC’s Division of Market Oversight has given designated contract markets (DCMs) a short window to remove the expiry dates from their existing “perpetual-style” broad-based security index futures. That turns them into true perpetual contracts.

Staff Letter 26-29 is dated 3 October and was announced on 5 October. It responds to a 1 October request from Coinbase Derivatives. The relief covers “any other DCM” too, but the positions expired on 20 October.

From workaround to the real thing

The letter explains the background. With classification uncertain, perpetual futures grew up mainly on offshore venues. To bring the product onshore, Coinbase Derivatives listed index futures that used a periodic funding-rate mechanism, like a perpetual, but had long-dated expiries “up to 25 years”.

The legal position then changed:

• 29 May: the Commission issued an order covering perpetual futures on bitcoin and other digital commodities.
• 3 June: a policy statement followed, saying perpetuals on other assets should go through Regulation 40.3 review and approval.
• 18 August: Kalshi filed a broad-based index perpetual (its US500 contract) for review.
• 2 October: the Kalshi contract was deemed approved.

With the index perpetual’s status as a futures contract confirmed, Coinbase asked to remove the expiry dates from its existing contracts with immediate effect. It also asked staff not to stay the certification.

Conditions

Several of the contracts already had open interest, and staff spent much of the letter on that problem. Changing a material term such as expiry can move prices “driven solely by the alteration of contract terms”, the letter says, creating winners and losers. To rely on the relief, a DCM must:

• amend only contracts on broad-based security indices
• ask participants with open positions for feedback on possible adverse impacts
• give at least five calendar days’ notice and a chance to close out under the old terms
• provide risk disclosures
• change no other material term
• file under Regulation 40.5 or 40.6
• notify DMO, naming the contracts and certifying compliance

Staff say “market participants” includes the affected customers of intermediaries. The letter says it does not cover perpetual-style contracts on anything other than broad-based security indices. It notes that the funding mechanism is identical but that pricing of the older contracts “may deviate due to various factors”.

Why it matters

Perpetuals on major indices are now part of the US regulated futures menu, separate from the single-stock products expected later. For FCMs and clearing members, removing an expiry date matters operationally:

• Margin models, roll calendars, position-limit monitoring and end-of-life processes all assume a last trading day.
• Funding-rate payments become the main way the contract converges with spot. Back offices need to reconcile them as a regular cash flow, not as variation margin on a dated future.

Holders of the long-dated contracts had a few days to decide whether to stay in. Market makers quoting both old and new versions should watch for basis between them as conversions happen. Customer-facing brokers may want to check that their disclosures meet the condition that intermediated customers were given notice too.

Sources

• CFTC Division of Market Oversight, Letter No. 26-29, 3 October 2026 — https://www.cftc.gov/csl/26-29/download
• CFTC Release 9308-26, 5 October 2026 — https://www.cftc.gov/PressRoom/PressReleases/9308-26