Commodity Futures Trading Commission Chairman Michael Selig appeared on CNBC’s “Fast Money” on Monday to address the debate over perpetual futures and defend the agency’s decision to approve the asset domestically.
Selig said incumbent companies always fear for the future, but the commission is making sure that internationally developed products can be brought into the country and manufactured safely under strict regulations.
“The time has come to approve regulated futures contracts with no expiration date,” he said. “We’re going to make sure the product is available, but it’s highly regulated here in the United States.”
In late May, the CFTC approved prediction market platform Kalsi to begin offering Bitcoin perpetual futures (“purps”) with no expiration date that allow traders to speculate on prices without owning the underlying asset. Popular overseas as well, this approval marks the first time the asset class has been allowed in the United States, and Kalsi has since expanded PERP offerings to other cryptocurrencies.
Purp is in high demand. Carsi said at an event Thursday celebrating the company’s perps product that contracts in beta testing have reached more than $3 billion in notional value in just over a week.
During an appearance on “Fast Money” shortly after the regulator’s decision, CME Group CEO Terrence Duffy slammed the decision to approve the criminals, saying he was concerned about the high leverage and risk associated with the deal.
But Selig dismissed that argument in an appearance Monday.
“I think the idea that we should be paternalistic and allow one type of product just because it’s easier to understand is, frankly, a misconception in itself, because of course the options are very complex,” he said. “We’re going to try to make sure that appropriate disclosures are made, and of course, to the extent that there are questions about suitability, brokers have to make those calls to make sure they’re evaluating the clients that are trading in their markets.”
Kalsi CEO Tarek Mansour pointed out in an appearance on “Fast Money” last week that the maximum leverage the company allows on its PERP (about 6x) is lower than the leverage CME offers on some futures contracts.
Selig also denied that the CFTC’s move to approve criminal charges was due to political pressure from President Donald Trump’s administration. The president’s son, Donald Trump Jr., is Kalsi’s strategic advisor.
“That insinuation is completely ridiculous,” he said.
Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.
