Chairman & Chief Executive Officer, CME Group Inc
Perpetual futures incite bad behavior, says CME CEO Terry Duffy
CME Chairman and CEO Terry Duffy joins 'Fast Money' to share his take on the use of perpetual futures in trading and why he is cautious on them.
About Terrence Duffy
Terrence Duffy, Chairman and CEO of CME Group, has been publicly critical of the Commodity Futures Trading Commission (CFTC) regarding its approval of perpetual futures contracts. In June 2026, Duffy stated that CME Group plans to sue the CFTC over the matter, arguing that under the Dodd-Frank Act, perpetuals are swaps, not futures, and that the CFTC has misrepresented facts about the rules. He described perpetuals as "not a credible product" and a "leveraged product" that "incite[s] bad behavior" due to their funding rate mechanism, and he compared the situation to "2007 for retail." Duffy also said he is "always up for a good battle" and that the lawsuit is about "stating the law," not a personal fight. Separately, Duffy has overseen the launch of new products and initiatives at CME Group. In May 2026, he announced a partnership to create a futures market for computing power, calling it a unique product with no close precedent. During earnings calls, Duffy highlighted record revenue and volume in the first quarter of 2026, citing "unprecedented engagement" across asset classes and the growing need for risk management amid high U.S. debt and geopolitical uncertainty. He also discussed plans to launch 24/7 trading of cryptocurrency futures and options, a central limit order book for U.S. Treasuries, and a partnership with Google Cloud to develop tokenization technology, which he said could provide "upward of 80%" savings for clients.
Transcript (7 segments)
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Melissa Lee0:02
Going to bring those rules that are going on in the European Union today to the United States and allow that? If so, you're going to follow your own regs to the government.
I just want to take a pause here, Terry, because we did speak to the CFTC. They gave us this statement. The agency has long analyzed the issue of perpetual contracts in U.S. derivative markets. The CFTC's mission is to promote responsible innovation and fair competition, and the commission will not hinder lawful innovation as we understand it to. They sought comment from the industry back in April of 2025, and the CME actually provided perspective on this. And that was, you know, a while ago. So I didn't want to put that out there. But I'm going to take the other side because you were able to explain your side of it for a while. Some might say, you know, exchanges like yours, you're afraid of this being a competitor product. I mean, that's what we saw in the stock market. Your stock had was under pressure because of the concern that this would draw volume away from other products that you've launched recently that are very popular, like zero DTE options, for instance. What do you say to that? I mean, do you think that this will be an impact?
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Terrence Duffy1:07
I hear about the impact. It's hard for me to say, but if you think this is a self-dealing thing or a complaint that CME doesn't want this type of competition, I spent 30 years of my career bringing incredible markets to the United States and growing them exponentially. And we have done that. All of us have done that collectively, together. We are going backwards now. We are creating a regulatory framework for leverage. This is 2007 for retail. So think of 2007 for homes. This is 2007 for retail. They have so many products that they're going to have leverage to the auto liquidation process. That works with perpetuals that could trip over and then cause cascading effect going down exponentially. They have their own market makers that keep this. This is not too dissimilar that when I called Sam Bankman-Fried a criminal, I went through the process of testifying with Sam, saying that his model could be very disruptive to the financial system. This is no different. This is absolutely no different, Melissa. So it's not self-dealing. I don't want casinos in exchanges. I want to have products that people need to trade. The question is because a perpetual does not expire, makes it more valuable, is ridiculous. It does not lend to the credibility of pricing. I clearly outlined how a perpetual works. It works by a funding rate which ties it to spot, which means you cannot forward hedge that product with any credibility of a future date of delivery or cash settlement process. So it's not a credible product. It's a leveraged product. That's all it is.
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Guy Adami2:39
These are sounds. And first of all, full disclosure, Terry's been a friend for many decades. And you know, my view on you have talked about it on the show. I think he's one of the great CEOs in the country. And with that said, I mean, you've had competition like this come around many times over the decades you've been at CME. You welcome that competition, but you also realize that you're in a position. So explain to the folks at home the difference between products that help people hedge risk and these products, because your products are actually helping the farmers and the bankers and the, all those things hedge the, the risks that they find in their day to day business.
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Terrence Duffy3:14
So I always say, Guy, that whether you trade CME or not, it's critically important. These products are out there. The great late Milton Friedman said to me before he passed away. He said, Terry, if we did not have futures contracts, we would need to invent them to move forward. That's a pretty powerful statement by one of the smartest men ever to grace the earth. And what I think is important, Guy, is these products for farmers, for energy, for interest rates. If you don't use them, your mortgage is dependent on it. Your gas price, your gasoline is dependent on it. And if in fact you don't have risk management tools, then the cost gets passed on to the consumer. The U.S. debt is a great way to look at it. We have $39 trillion of debt. We have a $28 trillion GDP. You don't need to be a math wizard to see where this is going. So in order for us to continue to sell debt, we need a place, a forward market to lay off that risk. You cannot lay off risk in the cash market, in the forward Treasury and the Treasury market. It's not a forward market. So that's why it's important because your mortgage is depending on it and your credit card bills are depending on it. All this is a part of that 10-year curve. So you need to have futures markets whether you participate or not, in order to run your life more efficiently.
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Melissa Lee4:22
There might be an argument out there that says, you know, if you're a retail investor and you want to use perpetual futures, that's on you, that's your decision. But it sounds like you're saying that there's actually a ripple effect, potentially negative effect that goes well beyond that one trader that decided to engage and use perpetual futures. What is that risk?
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Terrence Duffy4:43
There are multiple risks. But think of it this way. The way perpetuals are set up, they incite bad behavior. Why? Why? Because of the way the funding rate works. So if you're short a market and I'm long in the market, I'm right. I still have to pay you even though you're wrong. So that could incent you to trade even more because, you know, if it goes against you, I have to fund your bad position. That is not a pure market. You know, I know Tarek tried to come on and say that these are the purest way of doing