US regulators seek public input to redefine swaps and futures rules

The CFTC and SEC have issued a joint request for public input on updating the definitions of 'swaps' and 'security-based swaps'. The move aims to clarify longstanding ambiguities in financial regulation that have affected competition and innovation. Industry participants now have 60 days to submit their views. CFTC Chairman Michael Selig explained that the request seeks to resolve uncertainties that have hindered fair market practices. The agencies also want feedback on how to handle emerging products like prediction-market event contracts and perpetual futures.

The request additionally asks for input on exclusions from these definitions and the treatment of mixed swaps. Meanwhile, the CFTC is facing legal action from CME Group over its approval of Kalshi’s perpetual futures as futures contracts. CME argues these products should be classified as swaps under Dodd-Frank rules.

The CFTC intends to dismiss CME’s lawsuit, framing it as inconsistent with pro-innovation policies from the Trump administration. SEC Chairman Paul Atkins called the clarification on Title VII definitional issues, especially for event-based products, 'long overdue'. The outcome of this review will determine which regulator oversees perpetual futures and prediction-market contracts. It will also define the rules under which new firms can enter the US derivatives market. The 60-day comment period begins after publication in the Federal Register.