Terrence Duffy runs CME Group. CME Group operates exchanges. Exchanges make money when people trade things. The CFTC just approved perpetual futures. Perpetual futures are futures contracts that never expire. They trade mostly on crypto platforms. CME does not dominate crypto platforms. Duffy has decided the appropriate response is to sue the government agency that regulates him.
The legal theory goes like this: The CFTC approved a product we don't control, therefore the CFTC is wrong. Solid.
Duffy is outgoing, which means he's already got one foot out the door. His legacy will be "that guy who sued the referee for allowing touchdowns." He could have spent his final months doing literally anything else. Golf. Charity. Staring at a wall. Instead he chose litigation against the Commodity Futures Trading Commission, an agency with the words "futures trading" in its name, over whether they can approve a type of futures contract.
Perpetual futures have existed for years. Retail traders love them because they offer leverage without expiration dates, which is like giving a toddler a chainsaw with no off switch. Binance has been printing money with them since 2019. CME watched from the sidelines. Now that the CFTC says American exchanges can offer them too, suddenly it's a constitutional crisis.
The irony is that CME could just list perpetual futures themselves. They have the infrastructure. They have the regulatory relationships. They have the customer base. But filing a lawsuit is apparently easier than building a product people want to trade.
Duffy's replacement starts soon. Imagine walking into that job. First day, someone hands you a briefing book. Page one: "You are actively suing your own regulator because they approved competition."
The case will go nowhere. The CFTC will file a motion to dismiss. A judge will read it and wonder why this landed on their desk. CME will burn through legal fees that could have funded an actual product launch. And retail traders will keep getting liquidated on perpetual futures, just on platforms that aren't run by the guy crying to the teacher.
Photo by on Unsplash
Leave a Comment