Paradigm Files Comment Letter on Perpetual Contracts for Energy Markets
Publishing Date: September 4, 2026
Paradigm filed a comment letter with the Commodity Futures Trading Commission on its request for comment on extending standard futures contracts to 24/7 trading and on perpetual contracts referencing physically delivered or storable energy commodities. The Commission is asking whether the two core features that define modern digital asset derivatives markets—continuous trading and the absence of an expiration date—are applicable to the trading of oil.
We would argue yes, they are. To manage the continuous exposure to energy markets that is a staple of virtually every aspect of our society, a trader using traditional dated futures is required to close expiring positions only to immediately reopen it in a later month. As a result, traders pay for transactions they did not want, forfeit liquidity they would prefer to keep, and expose themselves to a predictable schedule others can extort. This is more than an inconvenience; it was directly responsible for the April 2020 oil price dislocation, the most severe in the history of energy markets, where expiring oil contracts settled at negative $37.63 per barrel. In other words, the expiry and delivery requirements of a dated future–neither of which exist with a perpetual–literally forced traders to pay for someone to take oil off their hands.
Our letter focuses on three areas:
Market integrity: Simply stated, nearly every abuse of commodity markets works by distorting the price at or around the moment of expiry, and the structure of a perpetual eliminates the clearest source of manipulation risk in traditional futures markets. Not only that, but the perpetual also concentrates all trading in one order book, thereby creating the liquidity depth that is the most reliable protection against manipulation.
Technical progress: The manual roll is an artifact of the bygone era of floor trading, and regulators building the future of this country’s financial system should not remain wedded to the past. The embedded roll of a perpetual allows hedgers to operate more cheaply, with less risk, and without a manipulable exit date, which is why traders have overwhelmingly preferred the structure where it is available. The perpetual doesn’t need a regulatory advantage, just the chance to compete in the futures markets on even ground.
Access: The perpetual market should not be off limits to the very participants who benefit most from it. While expensive and time consuming, large eligible contract participants have access to the resources required to continuously roll their exposure and mitigate their risk. Retail investors, on the other hand, frequently lack access to these resources and can become trapped in their positions, which is exactly what happened when they lost more than $1 billion during the April 2020 event. Because no rational trader would accept that risk when a product without it exists, retail demand will simply move to markets outside U.S. oversight.
Perpetuals already account for the majority of derivatives trading volume where they exist. Our letter asks the CFTC to bring this innovative product to the U.S. listed oil markets, applying the same analysis it already published for digital assets. We appreciate the Commission taking these questions up directly, and you can read our full comment [here].