Trading in stock perpetuals across KalshiEX, Bitnomial Exchange, and Coinbase Derivatives has avoided an immediate freeze. U.S. District Judge Valerie Caproni of the Southern District of New York (SDNY) denied an emergency motion for a temporary restraining order (TRO) brought by the Capital Markets Alliance Association.
The legal action was backed by options exchange Cboe Global Markets, market maker Citadel Securities, and the Healthy Markets Association to halt stock perpetual transactions across the three exchanges. Caproni’s decision keeps the Commodity Futures Trading Commission (CFTC) approval in effect, allowing the platforms to continue offering trading while the preliminary injunction proceedings unfold.
Yet relief for exchange operators could be short-lived. Alongside the emergency denial, the judge signaled legal doubts regarding the commodities regulator’s statutory authority.
Why the Emergency Halt Was Denied
Caproni denied the emergency motion because the plaintiffs’ filings failed to demonstrate an immediate threat of irreparable harm. Without proof of irreparable injury, the court refused to freeze the market immediately.
Cboe CEO Craig Donohue stressed that the coalition’s objections were not driven purely by commercial competition. According to Donohue, the lawsuit was brought to uphold the rule of law and protect U.S. capital market investors.
Signals of CFTC Exceeding Authority
Despite denying the emergency halt, Caproni indicated in a preliminary assessment that the plaintiffs have a strong likelihood of success on the claim that the CFTC exceeded its statutory authority.
The judge noted that equity perpetual contracts lack a future delivery clause, a mandatory requirement for security futures classification. The products were deemed a closer fit for the definition of swaps, which fall under the regulatory purview of the Securities and Exchange Commission (SEC), rather than the CFTC.
The CFTC approved equity perpetuals on November 3, 2026, citing Commission Regulation 40.3 and the Commodity Futures Modernization Act of 2000. At the time, CFTC Chair Michael Selig maintained that the new instruments fell under joint jurisdiction between the CFTC and the SEC.
Upcoming Court Schedule
The court set a deadline for the defendants to file their formal responses by November 6, 2026. The plaintiffs are then scheduled to submit their reply brief on November 10, 2026.
For market participants, stock perpetuals trading across the three exchanges continues as normal for now. However, the long-term viability of these instruments now hinges on whether the judge maintains her jurisdictional interpretation when ruling on the preliminary injunction.
Reported via crypto.news.
Previously: CFTC Approves Stock Perpetuals on US Exchanges - Citadel and Cboe Retaliate in Court
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
