Equity Perps Lawsuit: Cboe and Citadel-Backed Group Sues the CFTC Over Stock Perps

The equity perps lawsuit arrived before the first contract could trade. On November 3, hours after CFTC Chairman Michael Selig said perpetual futures on individual stocks could list on US exchanges, a coalition called the Capital Markets Alliance, backed by Cboe and Citadel Securities, sued the agency in New York federal court, Parameter reported citing Reuters. The group wants the approvals reversed and trading blocked while the case runs.

For perp traders this is more than a turf war between Wall Street incumbents and a regulator. The case asks a court to decide what a stock perp legally is, and the answer determines who can offer one in the US, to whom, and under which rulebook.

What the equity perps lawsuit asks the court to do

The complaint seeks three things, according to crypto.news: overturning the CFTC approvals, barring the agency from letting the products trade during the litigation, and a declaration that the contracts are security-based swaps under SEC jurisdiction. The Healthy Markets Association is also named as a supporter of the action.

The procedural claim runs through the Administrative Procedure Act. The coalition argues the CFTC did not adequately explain its approval, failed to weigh investor risks and departed from its earlier treatment of perpetual derivatives, per Blockonomi.

Cboe CEO Craig Donohue framed it this way: "This issue, however, is about investor protection for securities trading and the rule of law." A CFTC spokesperson called the challenge "troubling" and said: "Our markets should be governed by law, not litigation campaigns intended to block innovation." The SEC declined to comment, according to Parameter.

Futures or security-based swaps: the legal question

The CFTC built the approval on the Commodity Futures Modernization Act of 2000 and a memorandum of understanding with the SEC. Its November 3 statement says the contracts can trade on designated contract markets that are also notice-registered with the SEC as national securities exchanges for security futures products. Selig said the products keep US traders on regulated venues rather than "offshore, and often unregulated, venues."

Parameter reports the products received deemed approval under CFTC Regulation 40.3 rather than a formal vote, and the CFTC statement itself does not describe one. That gap is what the APA argument goes after: the coalition says the agency never adequately explained why a product this new fits the futures framework.

The plaintiffs' substantive point is that these contracts are security-based swaps, not futures. If a court agrees, the retail problem follows directly. American Securities Association CEO Chris Iacovella said the CFTC "sidestepped the SEC's jurisdiction and Congress' ban" on offering security-based swaps to retail investors, per crypto.news.

This is not the first challenge of its kind. CME Group sued the CFTC in June over crypto perpetual futures, raising a similar question about non-expiring contracts, according to Parameter.

Who is exposed: Kalshi, Coinbase, Bitnomial and the ICE plan

Three US venues had stock-linked perp proposals in flight. Kalshi's proposed rules include a 15.50% minimum customer margin and trading across 23 hours on weekdays. Coinbase's filings cover cash-settled contracts on individual stocks and ETFs. Bitnomial submitted its own proposals, crypto.news reported.

The Hyperliquid angle runs through trade[XYZ]. On October 29, Intercontinental Exchange, the owner of the NYSE, announced a plan with Trade.xyz for US-regulated perpetual venues built on Hyperliquid infrastructure, with no rollout date disclosed and regulatory approval still required, per Blockonomi. Stanley Druckenmiller said the same day that he had invested in TradeXYZ, The Motley Fool reported.

A ruling that these contracts are security-based swaps would not end that plan, but it would change it. A product barred from retail is a different business from one sold to retail on a broker app. An injunction pending review would simply push every US launch timeline back.

Why HIP-3 stock perps keep trading either way

The case targets a US regulatory approval, not offshore markets. Hyperliquid's HIP-3 markets, led by trade[XYZ], already run the largest onchain perp books for Apple, Nvidia and Tesla with daily turnover in the hundreds of millions of dollars, while Hyperliquid still geoblocks US residents, U.Today reported.

HIP-3 lets a third party deploy a market by staking 500,000 HYPE, and Hyperliquid takes 50% of the fees on those markets while the deployer keeps the other 50%, per The Motley Fool. None of that depends on how a New York court classifies a US contract.

What the lawsuit does change is the competitive clock. The CFTC's stated rationale was to bring US demand onshore. Every month that US equity perps stay tied up in court is another month in which price discovery for stocks happens on HIP-3 order books outside US cash hours rather than on a regulated US venue.

What to track while the case runs

The first signal is procedural: whether the coalition files for a preliminary injunction and how fast a judge sets a schedule. None of the coverage so far names a judge or a hearing date. The second is whether Kalshi, Coinbase or Bitnomial list anyway under the deemed approval, or wait.

On the market side, watch HIP-3 stock perp volume and open interest around US earnings and weekend gaps. If US launches slip, those books keep the flow, and the funding rate on contracts like xyz:NVDA becomes the cleanest read of retail positioning in single names outside cash hours. The Buildix screener covers HIP-3 markets alongside crypto perps, with CVD, open interest and funding per pair, so the shift in where stock perp flow concentrates shows up in the data as it happens.

The CFTC opened the door and two of the largest US market structure players moved to shut it within hours. Until a court rules on whether a stock perp is a future or a swap, the only stock perps with live, continuous order books remain the ones that never needed a US approval to begin with.