June 17 (Reuters) – CME Group chief Terry Duffy, who announced his plans to step down from his role next year, told CNBC in an interview that the exchange operator will sue the Commodity Futures Trading Commission over its approval for perpetual futures.
The veteran executive has been critical of the so-called “perps,” which are listed derivatives without an expiration date, allowing traders to maintain positions indefinitely without the need to roll over contracts.
“I’m always up for a good battle. I’ve never shied away from one,” Duffy told CNBC, adding that the company will file the lawsuit on Thursday.
CME confirmed the news of the lawsuit on Thursday in an emailed statement to Reuters.
A CFTC spokesperson said the agency looks forward to addressing the claims and dismissing the “frivolous” lawsuit.
Cryptocurrency exchange Coinbase and prediction market platform Kalshi last month said they would launch perpetual crypto futures after the CFTC gave them the green light, marking the first time such instruments will be available to U.S. investors through domestic, regulated exchanges.
Besides their indefinite timelines, perpetual futures also permit high degrees of leverage — often as much as 50-to-1 — enabling investors to amplify their exposure to market moves.
Duffy had warned at a conference earlier in the month that this extreme leverage, combined with the automatic liquidation models prevalent in the sector, poses a significant threat to retail investors who may not fully grasp the corrosive effects of funding rate costs on their positions.
He had also criticized the CFTC’s approval process as hasty, saying it bypassed a traditional “full review” for what it deemed a “novel and complex” instrument.
Shares of CME Group, Cboe Global Markets and Intercontinental Exchange, the parent of the New York Stock Exchange, fell after the approval of perpetual futures, as investors worried the CFTC’s move could pose a significant long-term competitive threat to incumbent exchanges.
Duffy, who took over the role of CEO about a decade ago, will make way for insider Lynne Fitzpatrick, who will take over as CME’s first female CEO, the company announced earlier in the day.
(Reporting by Pritam Biswas and Ananya Palyekar in Bengaluru; Editing by Leroy Leo)
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