The Coinbase Derivatives asked the Commodity Futures Trading Commission (CFTC) for authorization to list in the United States perpetual futures tied to individual stocks and ETFs. The request, submitted on Friday (18), opens the way to bring a derivative format popularized by the cryptocurrency sector to the US regulated market.
The official documentation calls the products Equity Perpetual Contracts. They would be cash-settled, would have no fixed expiration date and would track the price of a single stock or ETF, without delivering ownership of the underlying asset to the investor. The CFTC registration remains with the status of pending approval.
The contract presented as a model by Coinbase is tied to Apple (AAPL). According to the Wall Street Journal, the company plans to launch about 50 to 60 contracts, with shares of Apple, Microsoft, Tesla and Nvidia among the planned names, if it obtains the necessary authorizations.
In the proposal, the contracts could be traded continuously from 20:00 Sunday to 17:00 Friday, in US Eastern Time. The structure uses a mechanism of funding to keep the futures price close to the value of the reference stock.
The funding rate would be calculated every hour based on the difference between the contract price and the stock's reference price. Depending on this difference, long positions would pay short positions or the flow would occur in the opposite direction. The proposal caps the rate at ±0.10% per hour.
Contracts depend on CFTC and SEC
Because the products are futures tied to individual stocks, they are classified in the US as security futures products and fall under the joint jurisdiction of the CFTC and the Securities and Exchange Commission (SEC).
Coinbase Derivatives filed on September 1st a Form 1-N to register with the SEC as a national securities exchange exclusively for this type of product. On September 18, the company also filed with the SEC the rules it intends to use for futures on individual stocks and ETFs, including the perpetual contracts.
The proposed rules restrict eligible assets to highly liquid stocks and ETFs. For a stock to be initially accepted, for example, it must have a market capitalization of at least US$ 100 billion and a minimum average daily dollar volume of US$ 450 million over the previous six months, in addition to other requirements.
Coinbase told the CFTC that it intends to list the contracts shortly after a possible approval, provided it obtains the other necessary regulatory authorizations. So far, the CFTC has not approved the product nor publicly set a date for the start of trading.
