CFTC Seeks Input on 24/7 Futures, Energy Perpetuals Trades

The Commodity Futures Trading Commission (CFTC) initiated a request for public comment on the potential regulation of perpetual futures contracts and 24/7 trading for traditional energy derivatives on March 18, 2024. This move follows significant concerns raised by major industry participants regarding the risks associated with offshore trading platforms and the potential for excessive leverage in these markets. The CFTC is seeking to understand the implications of these evolving trading practices on market integrity, financial stability, and investor protection. Specifically, the commission is interested in feedback on how to best manage the unique risks presented by perpetuals, which lack a fixed expiry date, and the operational challenges and risks of continuous trading in energy futures. Industry stakeholders, including exchanges, clearinghouses, and trading firms, are expected to provide detailed input to inform the CFTC's future regulatory approach. The commission aims to balance fostering innovation and market access with its mandate to prevent fraud and manipulation and ensure orderly markets.