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FalconX Bravo asks SEC to treat certain single-stock perpetuals as swaps

FalconX Bravo says it is seeking SEC oversight for cash-settled single-security and narrow-index perpetuals that fall outside the joint SEC-CFTC security futures framework.

Reported · Written up by our desk · Regulation

FalconX Bravo has asked the SEC and the CFTC to treat certain cash-settled perpetual contracts tied to a single security, or a narrow-based security index, as security-based swaps under SEC rules when they are not covered by the joint SEC-CFTC security-futures framework.

In its filing dated Aug. 12, the firm, which is listed on the CFTC’s registered swap dealer roster, said the proposal would cover specified perpetuals and options on them, but would not extend to Bitcoin perpetuals or crypto perpetuals generally.

FalconX Bravo argued that qualifying contracts that are listed as security futures products on markets authorized by both agencies should remain in the joint regime, which it said includes listing and market safeguards such as clearing, margin, position limits, surveillance, and trading halts.

The firm also requested an amendment to Rule 18a-10 to raise an alternative-compliance combined-notional threshold from 10% to 49% for dealers already overseen by the CFTC, and said SEC treatment could trigger requirements including SEC registration, business-conduct, transaction reporting, capital, margin, and segregation; the comment window closes Aug. 24, with an independent researcher submitting a comment on Aug. 21.

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