Hyperliquid and trade(XYZ) urge CFTC to bring energy perpetuals to US markets

The Hyperliquid Policy Center (HPC) and third-party developer trade[XYZ] on Wednesday submitted a joint comment letter to the Commodity Futures Trading Commission (CFTC), urging the regulator to open a pathway for US-regulated perpetual contracts tied to energy commodities such as West Texas Intermediate (WTI) crude oil, Brent crude, and Henry Hub natural gas.

The filing comes in response to the regulator’s launch of consultation in June regarding proposed rule changes that would permit 24/7 trading of standard energy futures and introduce perpetual contracts for storable energy commodities.

In their submission, HPC and trade[XYZ] argued that weekend closures in traditional benchmark markets leave commercial hedgers, such as airlines and industrial producers, exposed to significant geopolitical gap risk.

The group highlighted market dynamics observed during weekend geopolitical flare-ups in the Middle East earlier in February, where price discovery shifted to offshore crypto exchanges while CME markets remained closed.

A cited study in the filing noted that crude perpetual prices anticipated nearly 75% of Sunday reopening gaps, providing continuous risk transfer without disrupting traditional benchmark stabilisation times.

“Over the conflict’s first weekend, roughly two-thirds of the total move from Friday’s close through the benchmark’s reopening had already occurred onchain before the conventional markets resumed trading. Continuous price discovery means participants can respond to information in real time, adjusting positions and managing price risk as events unfold instead of waiting for a venue to open,” said HPC in the statement.

The groups also said that perpetual contracts completely eliminate the roll friction inherent in traditional dated futures.

They argued that the fixed window in traditional futures incurs double-sided venue fees, administrative overhead, and market slippage. To highlight timing risk, the filing cites a study of the April 2026 WTI crude roll window. Identical roll transactions executed just four days apart (Monday, April 13 vs. Friday, April 17) resulted in a cost difference exceeding $835,000 on a $10 million notional position.

“A perpetual contract eliminates the roll event entirely, allowing participants to maintain continuous exposure without this periodic operational and economic burden,” HPC said in the filing.

The groups also point to smaller position sizes in perpetuals as a potential advantage. While standard CME WTI futures trade in 1,000-barrel increments, off-hours perpetual trades averaged around $1,300, allowing smaller market participants targeted hedging capabilities, according to the filing.

The proposal asks the CFTC to adopt a principles-based framework that would adopt a technology-neutral, principles-based framework for evaluating energy perpetual contracts and 24/7 trading, rather than prescribing particular technologies or organisational forms.

They asked to reaffirm and build upon prior guidance by confirming that exchanges and clearinghouses may operate around the clock where they demonstrate compliance with the core principles.

The filing urged the regulator to clarify technical time-bound definitions, including "business day" applications for uninterrupted markets.

They stressed the importance of recognising stablecoins and tokenised traditional collateral as eligible margin for cleared derivatives, because a market that trades on weekends needs collateral that moves on weekends.

The groups asked to confirm that regulated markets may use on-chain infrastructure for execution, margining, clearing, settlement, and recordkeeping, where the applicable core principles are satisfied.

“The work that the Commission began in May to bring perpetual contracts into the United States points naturally to energy commodities as the next step. When another crisis breaks on a Saturday night, American businesses should not have to wait until Sunday evening to manage their risk,” HPC said in the statement.

The filing comes amid growing debate among decentralised and traditional exchanges over the regulation of perpetual futures.

The CFTC in May issued a policy statement along with a simultaneous order approving the listing of the Bitcoin perpetual futures contract.

Following that, Kalshi listed the first regulated perpetuals through the launch of the Bitcoin perpetual futures contract (BTCPERP) in May.

Terry Duffy, who will step down as CME Group’s chief executive, filed a lawsuit against the CFTC in June, arguing that perpetual futures should be treated as swaps under the Dodd-Frank Act, accusing the derivatives regulator of ‘circumventing the law’.

On the other hand, speaking at the inaugural Innovation Advisory Committee meeting at the CFTC on Thursday, Don Wilson, chief executive at DRW, backed the categorisation of perpetual derivatives as futures under US rules.

HPC on Monday submitted a response to the Securities and Exchange Commission (SEC) and CFTC urging them to classify cash-settled, equity-based perpetual contracts as "security futures".

HPC and trade(XYZ) had urged the SEC last week to consider pre-initial public offering (IPO) perpetuals as a legitimate derivatives product for continuous price exposure to firms' shares ahead of their public listings.

Meanwhile, a research paper published by the Hyperliquid Policy Center this month examining Bitcoin and crude oil markets found little evidence that perpetual futures undermine established futures exchanges, while suggesting they can expand hedging access and extend price discovery beyond traditional market hours.