SEC Backs CFTC in Court Fight Over Stock Perpetuals, Rejecting Claims the CFTC 'Went Rogue'

Published November 12, 2026, 7:15 AM PKT. Based on reporting by The Block on November 11, 2026 and a docket timeline compiled by The Crypto Guide from court filings (secondary sources), and KalshiEX's November 4, 2026 filing with the Commodity Futures Trading Commission (primary source).

The Securities and Exchange Commission has sided with its sister regulator in the court fight over single-stock perpetual futures, filing a friend-of-the-court brief that backs the Commodity Futures Trading Commission and rejects the claim that the CFTC acted beyond its authority when it cleared the products for trading in the United States.

The Block reported the filing on November 11, 2026. The SEC asked the court on November 9 for permission to file the brief, and Judge Lorna G. Schofield of the U.S. District Court for the Southern District of New York accepted it as filed on November 10. The brief lands a week after the Capital Markets Alliance, a trade group whose members include Cboe and Citadel Securities, sued the CFTC to undo the approvals.

The SEC's intervention matters because the trade group built its case on the SEC's absence. The alliance argues the contracts are security-based swaps that belong under the SEC's sole jurisdiction, and that the CFTC violated the Administrative Procedure Act by approving them without explanation. The SEC answered that picture directly in its brief, writing, "The SEC's amicus brief addresses why that depiction, of a CFTC gone rogue, and an SEC gone missing, is mistaken."

The SEC's brief: the CFTC did not go rogue

According to The Block, the SEC pushed back against the alliance's assertion that the CFTC had "gone rogue." The agency said the CFTC's new rule changes are subject to the SEC's own review, and that the two agencies collaborate often, which is vital when it comes to overseeing equity perpetuals. The point is jurisdictional as much as it is political: the SEC is the very agency the challengers say should control these products, and it is telling the court the CFTC's process was legitimate.

The brief is narrower than a full endorsement of the products. Ledger Insights, cited in the docket timeline, reports that the SEC's brief argues against an injunction but does not say whether the contracts are futures or swaps, which is the core legal question in the case. The SEC also gave no hint of its decision on the separate question it must answer by December 31, whether to overturn the exchanges' rules for these products.

An amicus brief is an argument, not a ruling. The judge decides, and an early order in the case already went partly against the CFTC. But the SEC's entry changes the shape of the fight: the challengers can no longer argue that the CFTC acted alone while the securities regulator stood aside.

The lawsuit: swaps or futures, and who decides

The dispute turns on a single classification. A perpetual future has no fixed expiration date. The CFTC said the contracts were deemed approved on November 2, 2026 as security futures products under Commission Regulation 40.3, after the 45-day review period for applications from Coinbase Derivatives, KalshiEX and Bitnomial Exchange passed without objection. CFTC Chairman Michael S. Selig announced the approval on November 3, saying qualifying U.S. exchanges could begin trading perpetual futures on individual equity securities for the first time.

The Capital Markets Alliance sued the same day in federal court in Manhattan, in a case numbered 1:26-cv-09608. The group argues that contracts with no fixed delivery date do not fit the legal definition of a security future and are instead security-based swaps, which Congress put under the SEC's sole jurisdiction. It also argues the CFTC broke the Administrative Procedure Act by not explaining its decision, and it asks the court to vacate the approvals and bar the CFTC from giving them effect.

The distinction is not academic. Security futures sit under joint CFTC and SEC oversight, with both agencies reviewing the rules. Security-based swaps fall under the SEC alone and carry the securities laws' stronger protections for retail investors, which is why the challengers' backers argue the products need that regime. A ruling that the contracts are swaps would not just pause trading, it would move the whole product line under a different regulator.

Both sides have lined up their backers

The crypto industry moved first. On November 9, Coinbase, Kalshi, Kraken parent Payward, DRW Holdings, Jump Trading and Paradigm asked the court for permission to file a joint friend-of-the-court brief defending the CFTC. Their 36-page brief argues the contracts do count as security futures under existing law, and warns that blocking them would push U.S. traders toward offshore platforms. Judge Schofield accepted the brief on November 10 but turned down Coinbase's request to take part in oral argument.

The other side has support too. Better Markets, former SEC Commissioner Allison Herren Lee and former SEC general counsel John C. Coates asked to file a brief backing the challengers. Better Markets said in a statement on November 10 that the products "are in fact securities swaps that are supposed to be regulated by the SEC with strong investor protections," adding that these types of products "contributed to the 2008 crash and pose an unreasonably high risk of causing total losses to retail investors."

The American Securities Association also backed the alliance. The line-up puts the fight in unusual terms: the sitting SEC and the crypto industry's biggest names on one side, a consumer advocacy group and two former SEC officials on the other, with the traditional exchanges and market makers behind the challenge.

The judge's early warning, and what happens next

The court has already ruled once, on the trade group's first emergency request, and the order cut both ways. On November 3, U.S. District Judge Valerie Caproni, handling emergency matters before the case was assigned to a judge, denied the alliance's request for a temporary restraining order because it had not shown its members were likely to suffer irreparable harm without emergency relief. The approvals therefore stay in place while the case continues.

But the same order said the group is likely to succeed on its claim that the CFTC exceeded its authority, because contracts with no fixed delivery date do not appear to fit the legal definition of a security future and look more like swaps. That is an early finding on an emergency motion, not a final judgment, and it is the reason the case matters even though trading continues.

The case was assigned on November 4 to Judge Schofield, who will handle the request for a preliminary injunction. The trade group filed its reply brief on November 10, which Ledger Insights reports wrapped up briefing on the injunction request, and no hearing date had been posted when the timeline was last checked. Separately, the SEC has until December 31 to decide whether to overturn the exchanges' rules for these products, a deadline that gives the agency a second lever over the same approvals.

Kalshi faces a separate pressure point. Reuters reported on November 10, citing a Politico report, that the CFTC could bring charges against Kalshi over how it approved new event contracts, a procedural matter about filing a small number of contracts, many of which were never offered for trading. That investigation concerns event contracts, not stock perpetuals, and is a separate track from the lawsuit.

The products are already trading

Whatever the court decides, the market has not waited. Kalshi said on November 5 that it had launched single-stock perpetual futures, so at least one of the approved products is already trading while the case proceeds. The three applications, from Coinbase Derivatives, KalshiEX and Bitnomial Exchange, were deemed approved on November 2, and the exchanges that list them must be CFTC-designated contract markets with SEC notice registration as national securities exchanges for security futures products.

Kalshi is already widening the pipeline. On November 4, KalshiEX filed amendments to Rule 14.3 of its rulebook with the CFTC, self-certifying changes that let it list perpetual security futures on a stock that has recently completed a large initial public offering, on the timetable and under the quantitative standards that options exchanges apply to newly public securities. The exchange said it intends to implement the amendments on November 19, 2026. The SEC published notice of the change, filed as SR-KALSHIEX-2026-03, on November 6, with immediate effectiveness under the exchange's self-regulatory process and a public comment period tied to publication in the Federal Register. The SEC may summarily abrogate the change within 60 days after consulting the CFTC.

The fight now has three clocks running at once: the preliminary injunction request, with briefing complete and a hearing date still to be set; the SEC's December 31 deadline to decide whether to overturn the exchanges' rules; and Kalshi's November 19 listing-standards change. The products stay available on approved exchanges until a court or the SEC says otherwise, and the early judicial signal is that the challengers' core argument, that a contract with no expiry is a swap, not a future, is the one the judge will have to answer.

Sources

• The Block, SEC enters fight over who regulates perpetual derivatives on stocks in the US, November 11, 2026 (secondary source: SEC filed an amicus brief supporting the CFTC after the Capital Markets Alliance sued to overturn approval of perpetual derivatives on individual stocks; the SEC pushed back against the assertion that the CFTC has "gone rogue"; the CFTC's rule changes are subject to the SEC's review and the SEC collaborates often with the CFTC; the brief states "The SEC's amicus brief addresses why that depiction, of a CFTC gone rogue, and an SEC gone missing, is mistaken"; the alliance argues the CFTC violated the Administrative Procedure Act and that the products should be under SEC jurisdiction; Coinbase, Kalshi, Payward, DRW, Paradigm and Jump Trading filed a joint amicus brief against the alliance, and their applications were deemed approved on November 2; Better Markets and former SEC Commissioner Allison Herren Lee said the products should be regulated by the SEC)
• The Crypto Guide, CFTC Equity Perpetual Futures: What Changes in the US, updated November 11, 2026 (secondary source: docket timeline compiled from court filings; the SEC asked on November 9 to file a friend-of-the-court brief and Judge Schofield accepted it on November 10; Ledger Insights reports the brief opposes the injunction request and does not take a side on whether the contracts are futures or swaps, and that the SEC has until December 31 to decide whether to overturn the rules; Judge Valerie Caproni denied the temporary restraining order on November 3 but found the group likely to succeed on its claim that the CFTC exceeded its authority; the case was assigned on November 4 to Judge Lorna G. Schofield; the trade group filed its reply brief on November 10, wrapping up briefing on the injunction request; the judge accepted the Coinbase-led brief but denied Coinbase's request to take part in oral argument; Kalshi said on November 5 that it had launched single-stock perpetual futures)
• KalshiEX LLC, Security Futures Product Rule Submission: Self-Certification of Amendments to Rule 14.3, November 4, 2026 (primary source: KalshiEX submitted amendments to Rule 14.3 of Chapter 14 of its rulebook under CFTC Regulations 40.6 and 41.24, permitting it to list a perpetual security futures product on a recently IPO'd underlying security on the timetable and quantitative standards that options exchanges apply to newly public securities; the exchange intends to implement the amendments on November 19, 2026; KalshiEX is a CFTC-registered designated contract market and notice-registered with the SEC as a national securities exchange for security futures products; it filed Chapter 14 with the SEC on Form 19b-7 on November 4, 2026)
• The Block, SEC enters fight over who regulates perpetual derivatives on stocks in the US, November 11, 2026 (secondary source: SEC filed an amicus brief supporting the CFTC after the Capital Markets Alliance sued to overturn approval of perpetual derivatives on individual stocks; the SEC pushed back against the assertion that the CFTC has "gone rogue"; the CFTC's rule changes are subject to the SEC's review and the SEC collaborates often with the CFTC; the brief states "The SEC's amicus brief addresses why that depiction, of a CFTC gone rogue, and an SEC gone missing, is mistaken"; the alliance argues the CFTC violated the Administrative Procedure Act and that the products should be under SEC jurisdiction; Coinbase, Kalshi, Payward, DRW, Paradigm and Jump Trading filed a joint amicus brief against the alliance, and their applications were deemed approved on November 2; Better Markets and former SEC Commissioner Allison Herren Lee said the products should be regulated by the SEC; the case is Capital Markets Alliance Association v. Commodity Futures Trading Commission, No. 1:26-cv-09608-LGS, in the Southern District of New York)

This article is news reporting and is not investment advice.