CME's Terry Duffy on the Disconcerting State of Finance Regulation

Terry Duffy said CFTC oversight has expanded from principles-based rules focused on agricultural products to markets spanning financial futures, equity indexes, cryptocurrencies, and other new products. Yet 16 years after Dodd-Frank, regulators are still working out parts of the law. Since the second Trump administration began, the CFTC has received 2,500 self-certifications, and Duffy said it has denied none. He warned that some agency rules circumvent acts of Congress and could be reversed by a future administration, making them unsustainable. In his view, markets need a balance of regulation: “no regulation” is on borrowed time.

Duffy opposes prediction-market contracts that are susceptible to manipulation under Commodity Exchange Act core principle 3, but said he is not against all such markets. He pointed to contracts on Joey Chestnut’s hot-dog count and whether George Santos would attend the State of the Union; Santos bet against attending and then did not go. Duffy also rejected the claim that insider trading on prediction markets is broadly useful because it can reveal information. People who lack that information, he argued, are unlikely to regard the advantage as beneficial. Technology should give all participants simultaneous access to information, even if they have different amounts of capital, and giving paying subscribers early access to market-moving information undermines market credibility.

Duffy argued that perpetual contracts’ funding rates, through which parties pay each other, make them swaps under the swap definition rather than futures. That classification carries different requirements, including ordinary-income tax treatment, clearing-margin requirements, and swap-dealer registration. He said he testified more than 30 times on the distinction between swaps and futures during the Dodd-Frank process. CME did not list the perpetual contract; Duffy instead proposed a small, 10-barrel oil contract that would trade 24/7. Perpetuals have no expiration date, which complicates risk management for institutions that need a set date for positions. He opposes them as currently drafted and said that, if listed as swaps, they should meet the qualifications established for swap markets after the 2008 crash. He sees their U.S. appeal as primarily about leverage, rather than avoiding expirations or rolls or using funding rates.

Duffy said Trade XYZ accounts for 98% of Hyperliquid’s business, while Hyperliquid lists only crypto and Trade XYZ lists other products. He called Hyperliquid founder Jeff Yan brilliant but criticized the platform’s lack of KYC, auto-liquidations, and highly leveraged products. Leverage on some products ranges from 10–15% to 250%, he said, creating the risk that liquidations could cascade and move markets even when relatively few dollars are involved. Duffy said the proposed model does not comply with U.S. law, while adding that he did not know what leverage limits were being proposed. He said Kalshi’s Bitcoin leverage was kept broadly in line with CME’s.

Duffy said 24/7 markets are inevitable, but rates and equities would need a 24/7 banking system to support them. He expects U.S. cash equities to move to 23-hour, five-day trading by year-end, while warning that round-the-clock markets could have pockets of illiquidity. The $76 trillion U.S. equity market, he argued, could not be fully prefunded on a Friday while banks were closed. He also said the GPU market already exceeds $1 trillion and projected it to become multiples of crypto’s size by 2030. He sees GPU and component futures as useful for AI and data-center businesses seeking to hedge risk, and said he does not understand the national-security rationale for holding back GPU futures.

Duffy said he will move from CEO and Chairman to Executive Chairman next year, help Lynn Fitzpatrick through the end of the year, and remain available if needed. He has spent 46 years at CME, served as Chairman since 2002, and took the company public.