Comment Text:
I am writing to express my strong opposition to the introduction or legitimization of perpetual derivatives in the markets regulated by the Commodity Futures Trading Commission. While some may present these instruments as innovations or tools of efficiency, they are fundamentally dangerous. Not only due to their structure, but more importantly because of the ways they enable the concealment of risk by sophisticated market participants.
Perpetual derivatives, by design, have no maturity. This seemingly innocuous trait allows large institutions and hedge funds to construct indefinitely rolled positions, positions that never come due and therefore never require full reckoning. In practice, this creates a powerful tool for hiding losses, leveraging risk without clear limits, and manipulating financial reporting. These instruments do not just increase the opacity of markets, they institutionalize it.
This kind of can-kicking behavior is not hypothetical. It is a historically documented strategy used with other derivatives, most notably swaps, to shift risk out of view and push accountability into the future. By never forcing resolution or exposure, perpetual contracts grant traders an open-ended mechanism to juggle toxic positions in perpetuity. This is not hedging. This is deception.
Allowing perpetual derivatives into mainstream use will not expand opportunity, it will expand the surface area for fraud, obfuscation, and systemic risk. The absence of an expiration date removes a fundamental market discipline: the need to settle up. That is not a feature. It is a fatal flaw.
The CFTC must take a clear and unambiguous stance: perpetual derivatives should not be permitted in U.S. regulated markets. Not conditionally. Not provisionally. Not with guardrails. If permitted, these instruments will be exploited by actors with the resources and motivation to do so. Their risks are not manageable, they are intrinsic.
I urge the Commission to reject any proposals to authorize, list, or clear perpetual derivatives. Their inclusion would mark a substantial step backward in the effort to bring transparency and accountability to our financial system.
Sincerely,
Merrick Plaisance
