Comment Text:
I am writing as a retail investor to express my strong opposition to the inclusion or normalization of perpetual contracts within regulated U.S. derivative markets. As someone who actively participates in financial markets, I am deeply concerned about the systemic risk, predatory dynamics, and lack of investor protections associated with these instruments.
Perpetual contracts — especially as they currently exist in unregulated cryptocurrency markets — are a highly speculative, opaque, and potentially destabilizing financial product. These contracts often feature no maturity date, are subject to frequent funding rate fluctuations, and can be easily manipulated in low-liquidity environments. The structure encourages excessive leverage and attracts speculative behavior that increases volatility and risk, not only to the individuals trading them but potentially to the broader financial system.
From the standpoint of a retail investor, these instruments pose asymmetric risks:
Lack of Transparency: The funding rate mechanisms are often poorly understood and not uniformly applied across platforms, leading to confusion and unexpected losses.
Market Manipulation: Perpetuals are ripe for exploitation by large actors ("whales") who can move prices to trigger liquidations, harming smaller participants.
Inadequate Investor Protections: Unlike traditional regulated products, perpetuals typically lack robust margin requirements, safeguards against excessive leverage, or mechanisms to prevent cascading liquidations.
Psychological Manipulation: The 24/7 nature and gamified interfaces of platforms offering perpetuals can fuel addictive and impulsive behavior, especially among less experienced traders.
The CFTC’s primary mandate is to promote market integrity, protect market participants, and reduce systemic risk. Allowing or encouraging perpetual contracts in U.S. regulated markets runs counter to all three of these goals. It introduces speculative excess, makes market dynamics more fragile, and ultimately places the most vulnerable participants — retail investors like myself — at the greatest risk.
I urge the Commission to take a cautious and protective stance and to reject proposals that would enable the widespread use or endorsement of perpetual contracts in U.S. markets. If any consideration is to be given, it must include clear leverage limits, strict transparency rules, real-time surveillance mechanisms, and comprehensive investor education requirements.
In conclusion, perpetual contracts represent a dangerous evolution of speculative trading with few redeeming qualities for the real economy or long-term investors. I ask that you stand on the side of market stability and investor protection.
