US judge refuses emergency stock-perps block despite doubts over CFTC authority

A US judge denied an emergency application to stop single-stock perpetual derivatives from trading on CFTC-regulated platforms, while expressing substantial doubts about the agency’s authority over the products. Judge Valerie Caproni’s 3 November order turned on the failure to demonstrate likely irreparable harm, rather than an endorsement of the CFTC’s legal position.[1]

The case was brought by the Capital Markets Alliance Association in the Southern District of New York. In the order reproduced in the public docket, the court said the association was likely to succeed on its argument that the contracts did not fit the statutory definition of a security future because they lacked future delivery of a single security.[1]

The judge considered the contracts more consistent with a security-based swap framework under SEC jurisdiction. That was a preliminary assessment in an emergency-relief decision, not a final judgment resolving the classification of every perpetual derivative.[1]

The distinction is consequential for trading venues and intermediaries. A refusal to grant a temporary restraining order leaves that particular emergency block unissued; it does not convert the judge’s adverse assessment of the regulator’s authority into legal approval.[1]

The order directed further briefing on a preliminary injunction. Its reasoning and outcome should therefore be reported together: the plaintiff failed at the immediate-harm hurdle despite receiving a favourable preliminary assessment on the core statutory issue.[1]

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