Judge Says CFTC Likely Lacked Authority Over Kalshi Stock Perps, But Lets Trading Continue

Published November 4, 2026, 7:00 PM PKT. Based on U.S. District Judge Valerie Caproni's November 3, 2026 order in Capital Markets Alliance Association v. Commodity Futures Trading Commission, case 1:26-cv-09608, in the U.S. District Court for the Southern District of New York (primary source, via the public CourtListener docket), Gaming America's November 4, 2026 report on the ruling and Kalshi's launch (secondary source), and CFTC Chairman Michael S. Selig's November 3, 2026 statement on equity perpetuals (primary source, via MABOnChain article 437). The ruling is a likelihood finding on an emergency request, not a final judgment.

A federal judge in Manhattan ruled on November 3, 2026 that the Wall Street backed group challenging stock perpetual futures is likely to prove the Commodity Futures Trading Commission lacked the authority to approve them, and then refused to stop the trading anyway. U.S. District Judge Valerie Caproni denied the Capital Markets Alliance's emergency bid for a temporary restraining order, so Kalshi's first four single stock perpetual contracts stayed live, even as the judge's own reasoning handed the challengers their strongest result so far. The split outcome leaves the newest U.S. derivatives market trading on an approval a federal judge has already said likely exceeds the regulator's power, with the next court deadline days away.

The ruling that split the difference

Caproni found that the alliance, whose named members include Cboe Global Markets, Citadel Securities and the Healthy Markets Association, “is likely to succeed on the merits” of its claim that the CFTC lacks statutory authority to allow perpetual derivatives on individual stocks for retail investors, Gaming America reported from the November 3 order. The contracts “appear to satisfy the definition of a swap,” she wrote, a product that falls under the Securities and Exchange Commission rather than the CFTC. She went further on the underlying legal question: because the contracts “do not provide for a ‘sale for future delivery of a single security,'” she wrote, “they cannot be a security future over which the CFTC has statutory and regulatory authority.” She also found that the balance of equities and the public interest favored the alliance, writing that the CFTC's actions “seem to represent a major disruption to the equities market.” The emergency order still went against the group on the one point that mattered immediately. Caproni refused the temporary restraining order only because the alliance had not shown its members faced harm that was “actual and imminent,” Gaming America reported. She ordered the CFTC to answer the alliance's request for a preliminary injunction by November 6, with the alliance's reply due November 10. If a preliminary injunction is granted after November 10, Gaming America reported, Kalshi's four stock perps could be halted within weeks of launch, and an injunction on the alliance's terms would also bar the CFTC from giving effect to the Coinbase Derivatives and Bitnomial approvals.

Four contracts already trading

Kalshi moved while the case was being heard. As of 5:30 a.m. ET on November 4, Kalshi's stock perps page listed four contracts, on Qualcomm, McDonald's, Amgen and Costco, each with maximum leverage of 4.9 times, Gaming America reported. The page says the products are offered by Kalshi Prime LLC, with a first use date of November 3, and at that time the four contracts showed combined 24 hour volume of about $7.85 million, led by Qualcomm at about $3.85 million. Kalshi's listing standards for security futures, published in the Federal Register on September 23, limit single stock perps to companies worth at least $100 billion and set a minimum margin of 15.5 percent of a position's value, which would permit leverage of about 6.5 times, so the 4.9 times launch cap sits inside the permitted ceiling. Trading runs from 6 p.m. ET Sunday to 5 p.m. ET Friday, including overnight hours when U.S. stock exchanges are closed. Kalshi did not immediately respond to Gaming America's request for comment on its launch plans, and the low key rollout left some prediction market watchers searching for an announcement, Gaming America reported. Coinbase Derivatives and Bitnomial, the other two venues whose filings the alliance challenges, also did not immediately respond to requests for comment on their launch plans.

How approval happened without a written order

The approval at the center of the case was never a written CFTC order. Kalshi, Coinbase Derivatives and Bitnomial filed their stock perps on September 18, and under CFTC rules a contract filed for approval is deemed approved if the agency takes no action within 45 days. That period ended November 2, according to a legal briefing on the pending filings by Eversheds Sutherland, and CFTC Chairman Michael Selig confirmed in a November 3 statement that the “Equity Perps were deemed approved by the Commission, pursuant to Commission Regulation 40.3.” The accompanying CFTC press release said U.S. traders would no longer be “forced to turn to offshore, and often unregulated, venues.” The contrast with the first U.S. regulated perpetual is sharp. On May 29, the CFTC issued a written order approving Kalshi's perpetual contract on Bitcoin ($BTC), and Kalshi launched the product the same day. The agency's June 3 policy statement on listing perpetual contracts had said perps on equity securities “would benefit from review by the Commission and the U.S. Securities and Exchange Commission.” Selig's statement does not say how the agency weighed those questions, and the CFTC had not answered Gaming America's questions on why it issued no written order by the time of publication. A fourth filing sits outside the lawsuit: OG.com, the Crypto.com owned venue formerly known as Nadex, filed stock perps on September 24, so its 45 day period ends November 8, and the alliance's complaint does not challenge that filing.

The objections the judge adopted

Caproni's order adopted the core of objections the CFTC let pass in the weeks before approval. On October 14, CME Group General Counsel John Marchese told the SEC that “perpetual duration contracts by definition lack an essential element of a futures contract.” Nasdaq argued in its own October 14 letter that the contracts “are not, and cannot be, security futures products,” and Cboe warned the same day that trading would fall outside the Consolidated Audit Trail, the SEC's system for tracking equity orders. On October 29, the Healthy Markets Association asked both agencies to reject all four filings, citing the risks of high leverage and round the clock trading for retail investors. Cboe, pointing to its statement announcing it had joined the alliance's lawsuit, had its chief executive Craig Donohue say: “This issue, however, is about investor protection for securities trading and the rule of law.” Alliance secretary Adam Ford said in the group's statement announcing the suit: “The hasty roll out of financial products that circumvent well-established regulatory frameworks erodes investor protection.” The CFTC answered in kind. A spokesperson called the lawsuit “troubling,” telling Reuters: “Our markets should be governed by law, not litigation campaigns intended to block innovation.” The SEC declined to comment on the litigation to Reuters and had not replied to Gaming America by publication. The alliance's case is the second challenge to the CFTC's perps approvals: CME sued the CFTC in June over the approval of Kalshi's Bitcoin ($BTC) perp, in Chicago Mercantile Exchange Inc. v. Selig, and the CFTC has moved to dismiss that case on the grounds that CME lacks standing. The SEC also retains a separate check: the four exchanges filed security futures listing standards with the SEC, which has 60 days after those standards take effect to “summarily abrogate” them and force a full review.

What happens next

Three dates now decide whether stock perps survive their first month. On November 6 the CFTC must answer the preliminary injunction request, on November 10 the alliance replies, and after that a judge could halt Kalshi's four contracts and block effect being given to the Coinbase Derivatives and Bitnomial approvals. On November 8 the 45 day clock expires on the unchallenged OG.com filing, which could add a fourth venue to the market even as the court fight continues. Watch also for any SEC move on the listing standards, for Coinbase Derivatives and Bitnomial launch announcements, and for whether Kalshi's early volume, about $7.85 million across four contracts in its first day, grows or stalls under the legal cloud. Until the preliminary injunction decision, the honest summary is the split one the judge herself delivered: the challengers are likely right on the law, and the trading goes on anyway. This article is news reporting and is not investment advice.

Sources

• U.S. District Judge Valerie Caproni, order, November 3, 2026, Capital Markets Alliance Association v. Commodity Futures Trading Commission, case 1:26-cv-09608, U.S. District Court for the Southern District of New York (primary source, via the public CourtListener docket: alliance likely to succeed on the merits, contracts appear to satisfy the definition of a swap, no sale for future delivery of a single security, balance of equities and public interest favor the alliance, temporary restraining order denied for lack of actual and imminent harm, CFTC answer due November 6, alliance reply due November 10)
• Gaming America, Judge: CFTC Likely Lacked Power to Approve Kalshi Stock Perps (November 4, 2026, secondary source: Kalshi page figures as of 5:30 a.m. ET November 4, four contracts and 4.9 times maximum leverage, Kalshi Prime LLC and November 3 first use date, about $7.85 million combined 24 hour volume led by Qualcomm at about $3.85 million, listing standards and 15.5 percent minimum margin, trading hours, September 18 filings and November 2 clock expiry, OG.com September 24 filing and November 8 clock, October 14 CME, Nasdaq and Cboe letters, October 29 Healthy Markets request, Donohue and Ford quotes, CFTC spokesperson comment to Reuters, SEC decline to comment, CME June lawsuit over the Bitcoin ($BTC) perp)
• CFTC Chairman Michael S. Selig, statement on equity perpetual futures, November 3, 2026 (primary source via MABOnChain article 437: deemed approved under Regulation 40.3, security futures under the Commodity Futures Modernization Act of 2000, joint CFTC and SEC oversight, venues notice-registered with the SEC, no exchanges or stocks named in the statement)
• Reuters, Cboe, Citadel-backed group sues US regulator over single-stock perps (November 3, 2026, secondary source: filing date and court, Capital Markets Alliance members, security-based swap argument, CFTC spokesperson troubling interference comment)
• Kalshi, stock perpetuals product page, accessed November 4, 2026, via Gaming America (secondary source: four contracts on Qualcomm, McDonald's, Amgen and Costco, maximum leverage 4.9 times, first use date November 3, 2026)