Perpetual Futures Classification Stakes Rise as CFTC Weighs Swap or Future Status

Perpetual futures contracts have been gaining traction globally, with notional trading volume reaching $150 billion per day. However, their classification as swaps or futures in the US could change the game for retail traders.

The CME Group, the world's largest derivatives exchange, has drafted perpetual futures contracts and is ready to launch them if clients demand it. CEO Terry Duffy has described these instruments as 'highly engineered' and 'leveraged spot products', which can be detrimental to retail traders who take on high leverage.

President Trump's recent comment that Hyperliquid, a crypto-native exchange built around perpetual futures, could be brought into compliance with US regulations has reignited the debate. The CFTC must classify perpetual futures as either swaps or futures, which will determine the margin requirements for these contracts.

If they are classified as swaps, the 5-day margin requirement would effectively eliminate 50x retail leverage from US markets. This would be a significant change for traders who have grown accustomed to high leverage.