Citadel Securities Urges SEC to Lead Oversight of Equity-Linked Derivatives

Citadel Securities has filed policy comments with the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, arguing that the SEC should serve as the primary regulator for financial derivatives tied to U.S.-listed companies and their underlying securities. According to ChainCatcher, the firm said this would help prevent market participants from using regulatory gaps to repackage stock-linked products as commodities and weaken disclosure and investor protection standards. Citadel Securities also called on the SEC to modernize internal processes so new financial products can be reviewed and approved more quickly. It criticized exchanges for using CFTC self-certification to bypass SEC oversight, saying some platforms have used the process to launch contracts linked to specific stocks or corporate events. The firm urged the two regulators to clarify the status of equity-linked event contracts and perpetual derivatives. It said event contracts tied to company financial metrics, management changes, or stock performance should be assessed as security-based swaps, while perpetual derivatives should be assigned a clear regulatory framework covering settlement, margin requirements, and market-making rules.