Citadel and Cboe-backed group sues to halt Kalshi's single-stock perps

what happened

Kalshi received regulatory approval last week to list perpetual futures, or perps, tied to more than 50 individual stocks, among them McDonald's, SpaceX and Meta, according to The Wall Street Journal. Within days, an industry group that counts Citadel Securities and Cboe Global Markets among its backers filed suit to block the contracts. The plaintiffs argue that single-stock perps bypass investor safeguards and could pull trading away from the underlying shares.

Kalshi calls the case an attempt to suppress competition. Its CEO, Tarek Mansour, said the single-stock perps became the firm's best-selling launch within a day of going live on Tuesday. The lawsuit also contends the contracts are security-based swaps under the SEC's authority, which would restrict them to institutional buyers. A federal judge has set an expedited schedule to decide whether trading should be halted.

why it matters

Perps trade around the clock, never expire and allow leverage, so the dispute reaches the structure of the market itself. If trading is halted, US brokers and market makers would need to rethink a model where payment-for-order-flow revenue depends on retail volume.

market impact

US single stocks and brokers: the dispute could shift trading volume from shares to perpetual contracts.

tags

instruments