CFTC Lets Coinbase Turn 25-Year Index Futures Into Contracts That Never Expire

AI summary of the source article

The Commodity Futures Trading Commission's Division of Market Oversight issued no-action relief allowing designated contract markets to eliminate expiration dates on broad-based security index futures. The decision permits Coinbase Derivatives to transition contracts with expiries of up to 25 years into perpetual futures that use funding payments instead of expiry dates. To protect market participants holding open interest, the CFTC requires exchanges to provide at least five calendar days' notice, consult holders on potential harm, allow exits under old terms, and provide risk disclosures. The relief applies exclusively to broad-based security indices and waives the standard 10-business-day waiting period for self-certified rule changes.

Why it matters

The relief provides regulatory clearance for US-regulated exchanges to offer perpetual futures on broad-based stock indices without mandatory expiration dates. However, the action is strictly limited to index products and requires exchanges to adhere to specific trader-protection conditions.

Key facts

• The CFTC's Division of Market Oversight granted no-action relief allowing designated contract markets to turn broad-based index futures into true perpetuals.
• Coinbase had previously listed contracts with expiries of up to 25 years due to US regulatory uncertainty regarding perpetual contracts.
• Exchanges must provide at least five calendar days' notice and let traders with open positions close out under the original terms before converting contracts.