24/7 Derivatives Trading and Perpetual Futures in the US: CFTC Seeks Feedback

The Commodity Futures Trading Commission (CFTC) is seeking public comments on allowing round-the-clock derivatives trading and input on perpetual futures offerings. Perpetual futures are contracts without any expiry.

Round-the-Clock Trading Is the Future

“The CFTC must take a forward-looking approach to shifts in market structure to ensure our markets remain vibrant and resilient while protecting all participants,” said Acting Chair Caroline Pham. “One evolving trend is the move to 24/7, 24/6, or 24/5 trading hours.”

The popularity of round-the-clock trading is growing globally. Platforms like Robinhood and many other brokers also offer 24-hour trading for five days a week, but those trades are settled outside exchanges. However, exchanges are also taking steps to offer such continuous services.

The Securities and Exchange Commission (SEC) approved 24 Exchange to offer 23-hours-a-day, five-days-a-week trading. Other top exchanges, including the New York Stock Exchange and Nasdaq, are also exploring the possibility of extending their trading hours.

Access to Perpetual Contracts

Meanwhile, perpetual futures contracts have gained traction outside the United States. These contracts are mostly popular in the cryptocurrency industry, as many crypto derivatives platforms offer them globally, but not in the US.

Perpetual contracts, also known as “perps”, are written similarly to regular futures. Their settlement, pricing, and margin calculations are done on an ongoing basis, often multiple times a day, the CFTC stated in its request for comments.

“Innovation and new technology has created a revival in markets that presents new opportunities that are accessible to more people, as well as risks,” Pham added.

Recently, crypto exchange Kraken launched FX perpetual contracts for two major FX pairs, EUR/USD and GBP/USD. The FX perps on the platform update pricing every second while the underlying spot market is open.

Last month, Coinbase also announced its plans to launch 24/7 Bitcoin and Ethereum futures contracts in the US. “We’re also developing a perpetual-style futures contract, adding a key product US traders have been missing,” the crypto exchange noted in a blog post.