CFTC permits contract markets to convert perpetual-style index futures into true perpetuals

The Commodity Futures Trading Commission’s Division of Market Oversight issued a no-action letter permitting designated contract markets to convert existing perpetual-style broad-based security index futures into true perpetual futures by removing expiration dates. The relief requires exchanges to solicit feedback from market participants, provide advance notice, offer risk disclosures and file amended contracts with regulators.

• DCMs may remove expiration dates from perpetual-style broad-based security index futures contracts
• Customer protection conditions include soliciting market participant feedback and providing exit opportunities
• No-action positions expire October 20, 2026

The no-action letter permits DCMs to amend contracts “effective upon the satisfaction of certain customer protection and procedural conditions.” These conditions include “soliciting feedback from market participants with open positions; providing advance notice and an opportunity to exit positions; offering appropriate risk disclosures; and ensuring that no other material contract terms are modified.”

The conversion requires DCMs to file amendments under CFTC Regulations 40.5 or 40.6 and certify compliance with all stated conditions before contracts convert.

The narrow window for regulatory relief

The expiration of no-action relief on October 20, 2026 creates a timeline for exchanges to file and implement conversions. Unlike permanent regulatory approval through rulemaking, no-action letters provide temporary forbearance and require explicit compliance with procedural safeguards before any amendments take effect. This structure suggests the CFTC has not codified perpetual futures conversions as a standing policy, leaving future applicants dependent on case-by-case relief or formal rulemaking.

The condition requiring DCMs to avoid modifying “any other material contract terms” during conversion narrows the scope narrowly: exchanges cannot use this relief as cover for simultaneous changes to position limits, trading hours, settlement mechanics or other specifications. This ensures market participants face only the single variable of removing expiration dates, preserving the agency’s ability to evaluate whether perpetual conversion alone creates systemic or consumer-protection risks.

What the letter does not address

The no-action letter does not specify what “appropriate risk disclosures” must contain, whether they differ from existing perpetual-futures disclosures at other venues, or how DCMs should measure participant feedback before proceeding. It also does not address whether existing customer positions automatically convert to perpetual contracts or whether participants may object and require cash settlement of perpetual-style contracts at expiration.

The letter does not clarify whether broad-based security index perpetual futures, once converted, remain subject to different leverage, margin or position-limit rules than perpetual crypto futures the CFTC has already approved, or whether this relief creates a precedent for converting other contract types.

The BlockWest read. The CFTC’s procedural conditions signal caution rather than embrace of perpetual equity-index futures as a new product class. The relief window forces action before expiration but prevents permanent regulatory acceptance without formal rulemaking, keeping the CFTC’s hand free to revisit perpetual structures if market stress emerges. Exchanges betting on perpetual equity indices now face a choice: file quickly under temporary relief or wait for permanent rules that may impose stricter conditions.

The next deadline is October 20, 2026, when no-action relief expires. Market participants should watch for CFTC filings by DCMs under Regulations 40.5 and 40.6 before that date, and for any formal rulemaking proposal that might establish permanent standards for perpetual contract conversions.

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