FalconX requests SEC to classify single-stock perpetuals as security-based swaps

FalconX Bravo has proposed that US regulators classify cash-settled perpetuals linked to a single security or a narrow-based security index as security-based swaps under SEC rules, particularly when they fall outside the SEC-CFTC security-futures framework. The proposal, submitted to the Securities and Exchange Commission and Commodity Futures Trading Commission on Aug. 12, includes contracts offered through DeFi protocols. FalconX's definition encompasses the specified perpetuals and options but excludes Bitcoin perpetuals and general crypto perpetuals. Contracts listed as security futures products on authorized markets remain under the joint regime, which includes safeguards for the underlying security or index. Examples from FalconX include bilateral and over-the-counter transactions, contracts from eligible venues, and comparable DeFi protocols. SEC classification could impose registration, business conduct, transaction reporting, capital, margin, and segregation requirements on affected dealers. FalconX also requested the SEC to reduce duplicated requirements for firms already regulated by the CFTC, proposing to raise the combined-notional threshold for alternative compliance from 10% to 49%. The CFTC's June policy statement indicated that equity and narrow-index products require separate review. A comment submitted by researcher Amadeus Brandes on Aug. 21 suggested maintaining the existing mixed-swap process with protections against insider information and manipulation. The comment window closes on Aug. 24, and while both FalconX's and Brandes' submissions are under consideration, they do not constitute agency policy.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.