Ondo Urges Us Regulators to Allow Stock Perpetuals

Ondo Finance has formally petitioned the Securities and Exchange Commission and the Commodity Futures Trading Commission to permit the trading of perpetual futures tied to individual stocks on US soil, arguing that the existing security futures framework can accommodate the novel products without new legislation. The firm's offshore platform has already processed $8 billion in cumulative trading volume within roughly six weeks, underscoring growing demand for these instruments. The $8 Billion Offshore Volume Argument In three separate Aug. 24 comment letters addressed to both the SEC and CFTC, Ondo Finance laid out a detailed legal and economic case for bringing stock perpetuals into the regulated US market. The company's proposal covers product classification, margin requirements, and the use of onchain market data. Instead of asking Congress or federal agencies to create a separate regulatory category, Ondo wants the SEC and CFTC to apply rules already used for futures tied to individual securities. According to its product-classification letter, the lack of a fixed expiration date does not prevent a perpetual contract from qualifying as a security futures product. “Nothing in the statutory definition of a security futures product requires a fixed expiration date,” Ondo said. Perpetual Funding Mechanism as a Functional Equivalent to Expiration Traditional futures expire on a set date, when the contract settles against the value of its underlying asset. Perpetual futures have no scheduled expiry and use recurring funding payments to keep their market prices close to the assets they track. When a perpetual trades above its reference price, traders holding long positions generally pay traders holding short positions. Payments move in the opposite direction when the contract trades below the reference price, creating an incentive for both prices to converge. Ondo told regulators that the funding mechanism performs a function similar to expiration in a dated futures contract. Under its interpretation, the economic structure of the product matters more than whether the contract ends on a predetermined date. Regulatory Timeline and Parallel Requests Regulator Requesting Entity Core Proposal Key Market Data Securities and Exchange Commission (SEC) Ondo Finance Qualify equity perpetuals as security futures under existing legal framework $8 billion cumulative volume on Ondo's offshore platform in ~6 weeks Commodity Futures Trading Commission (CFTC) Ondo Finance Apply current security futures rules for margin, listing, and trading Proposal covers product classification, margin systems, and onchain data Both SEC and CFTC Hyperliquid Policy Center Treat equity perpetuals with futures-like characteristics as security futures $480 billion cumulative notional volume on HIP-3 markets in 10 months A similar request reached both agencies on Aug. 24, when the Hyperliquid Policy Center proposed treating equity perpetuals with futures-like characteristics as security futures. The group said Hyperliquid's HIP-3 markets had processed more than $480 billion in cumulative notional volume during their first 10 months. Margin Systems and Onchain Data Integration The filing also addresses updated margin systems and blockchain-based pricing data. Ondo argued that regulators could account for such features within current law, although the SEC and CFTC would still need to decide how individual products satisfy listing, trading, and investor-protection requirements. The company's technical approach emphasizes that modern margin methodologies can be calibrated to match the risk profiles of perpetual contracts. Ondo's letters suggest that the SEC and CFTC could adopt rules that recognize the real-time settlement and collateralization capabilities inherent in blockchain-based trading infrastructure. Market Implications and Industry Reaction The coordinated push from Ondo Finance and Hyperliquid Policy Center signals growing institutional appetite for stock perpetuals as a regulated asset class. The $8 billion in cumulative volume on Ondo's offshore platform within approximately six weeks demonstrates significant market demand that currently flows outside US regulatory oversight. Legal experts following the filings note that the comment letters strategically avoid requesting new legislation, instead focusing on interpretive flexibility within existing statutes. This approach could accelerate regulatory consideration compared to the slower pace of congressional rulemaking. The dual agency letters create a parallel track where both the SEC and CFTC could potentially issue joint guidance or rules, though jurisdictional boundaries between the two agencies over crypto derivatives remain a complex issue. What Are Stock Perpetual Futures? Stock perpetual futures are derivative contracts that track the price of individual stocks without a fixed expiration date. They use a funding rate mechanism to keep the contract price aligned with the underlying stock, with long positions paying short positions when the contract trades above the reference price, and vice versa when it trades below. Why Is Ondo Finance Asking Us Regulators Right Now? Ondo Finance has submitted formal comment letters to the SEC and CFTC after its offshore platform recorded $8 billion in cumulative trading volume within roughly six weeks, indicating strong market demand. The company argues that existing security futures regulations can accommodate perpetuals without requiring new legislation from Congress. How Do Perpetual Futures Differ from Traditional Futures? Traditional futures contracts expire on a fixed date when the settlement price is determined against the underlying asset. Perpetual futures have no scheduled expiration and use recurring funding payments between long and short traders to maintain price alignment, which Ondo argues is functionally equivalent to the expiration mechanism. What Is the Market Reaction to Ondo's Regulatory Proposal? Market participants have responded with cautious optimism as the proposal seeks to bring substantial offshore trading volume back into the US regulated ecosystem. The filing has generated significant discussion among legal and trading communities about the feasibility of applying security futures rules to perpetual contracts. Will the SEC and Cftc Approve Stock Perpetuals? The SEC and CFTC have not issued formal responses to the comment letters, and approval would require the agencies to determine that perpetuals satisfy existing listing, trading, and investor protection requirements. The outcome remains uncertain but represents a significant test of regulatory flexibility toward crypto-native financial products.