CFTC and SEC seek public input to redefine swaps under Dodd-Frank

The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have issued a joint request for public comment. They aim to update and clarify the definitions of 'swaps' and 'security-based swaps'. The move addresses longstanding ambiguities in financial regulations under Title VII of the Dodd-Frank Act. CFTC Chairman Michael Selig stated the request seeks to promote fair competition and responsible innovation. SEC Chairman Paul Atkins called the clarification 'long overdue', highlighting concerns over event-based products. The comment period will remain open for 60 days after publication in the Federal Register.

The request covers the scope of exclusions from swap definitions, the treatment of mixed swaps, and novel products such as prediction-market event contracts and perpetual futures. Meanwhile, CME Group has sued the CFTC over its approval of Kalshi's perpetual futures as futures contracts. CME argues these products meet the Dodd-Frank definition of a swap and that the CFTC’s decision unfairly allows new competitors to target its retail futures customers.

The CFTC plans to seek dismissal of CME’s lawsuit, framing it as inconsistent with the Trump administration’s pro-innovation stance. The outcome of the 'swap' question—whether resolved in court or through rulemaking—will determine regulatory oversight of perpetual futures and prediction-market contracts. The joint request invites public input on key definitions that shape the US derivatives market. The resolution will decide which regulator oversees emerging products and under what rules new market entrants can operate. The process will also influence competition among existing and future market participants.