CME Group is prepared to launch perpetual futures if demand develops, but Chief Executive Officer Terry Duffy said the exchange is not currently seeing interest in the products from its core institutional customer base, according to a report by Bloomberg.
“We have contract specifications and are prepared to bring these products to market should evolving demand or structural shifts make it appropriate to do so,” Duffy said during CME’s second-quarter earnings call. “However, we have not heard demand from our customers for these products.”
Institutional traders accounted for 94% of CME’s trading volumes during the first half of the year, according to Duffy.
His comments came a day after Kalshi filed for regulatory approval to list perpetual contracts linked to precious metals including gold, silver and platinum. The products would compete with CME’s conventional futures, which are widely used by investors and companies to hedge commodity price exposure.
Perpetual futures, or “perps”, do not have an expiry date and typically incorporate leverage, allowing traders to take on larger exposures relative to the capital they post.
The products were initially associated primarily with cryptocurrency markets but have gained broader attention this year. During the war involving the US, Israel and Iran, perpetual contracts became one of the few ways for investors to maintain exposure to oil while traditional futures markets such as CME were closed.
Duffy said the products could appeal to some retail traders seeking high leverage, but were less suited to the institutional risk managers that make up the bulk of CME’s business.
The CME chief executive has repeatedly criticised perpetual futures, arguing that their utility is limited for many institutional investors.
The issue has also brought CME into conflict with the Commodity Futures Trading Commission. CME sued the regulator in June after the CFTC allowed Kalshi to launch crypto-linked perpetual futures, making it the first US-regulated venue to offer the products.
Duffy continued to criticise the contracts during Wednesday’s earnings call, as competition around the future of perpetual derivatives in regulated US markets continues to intensify.
