Commodity exchanges are urging US regulators to withhold approval of Kalshi Inc.’s proposed perpetual oil futures contract and close a loophole that gives retail traders access to offshore platforms.

The Commodity Markets Council, which represents derivative exchanges including CME Group Inc. as well as trading houses, told the Commodity Futures Trading Commission that perpetual futures pose significant risks to market integrity.

Earlier this month, Kalshi debuted a 24-hour, five-days-a-week contract linked to West Texas Intermediate oil futures with a 10-year expiry. The prediction market platform made an even bolder move Tuesday when it sought approval of a fully perpetual oil futures contract, which would also trade five days a weeks but never expire.

Futures contracts typically expire monthly, requiring investors to either accept physical delivery of the underlying commodity or roll their positions forward, depending on the terms of the contract. For retail participants, however, failure to roll ahead of expiration has historically meant navigating thin liquidity at precisely the wrong moment.

There’s now a growing demand for oil exposure that sidesteps the constraints of a fixed expiration schedule, while also allowing investors to react to events such as developments in the Iran conflict when traditional markets are closed.

US-regulated exchanges are looking to compete with offshore venues whose lighter regulation allowed them to capitalize on that interest. But the pace of innovation has sown anxiety in some corners of the commodity and trading world.

“The practical question is therefore no longer whether US participants will obtain continuous, leveraged exposure to physical commodity prices,” the CMC wrote in a letter to the CFTC Wednesday. “The question is whether that exposure will be governed by one consistent set of standards, and whether those standards will be enforced.”Although the CMC didn’t mention Kalshi by name, contract filings and dates highlighted in the letter are consistent with actions taken by the company.

“We reached out to every party that submitted comments on the CFTC’s request for comment on WTI contracts,” Kalshi said in a statement. “We designed our WTI perpetual to trade during hours similar to traditional futures. Some trade associations invited us to meet with their members, and those conversations were constructive. Others chose not to engage and have not raised any specific issues with the contract. Our door remains open.”

In recent weeks, CME shelved plans for its own round-the-clock oil contract following industry pushback. Its proposal had initially been blocked by the CFTC and prompted a months-long review of whether weekend trading is compatible with the physical oil market, where reliable benchmarks are critical to pricing cargoes.

The council also raised concerns about US-based traders using virtual private networks, or VPNs, to circumvent geographic restrictions and access offshore trading platforms. It urged the CFTC to work with foreign regulators to curb access for US traders.

“If contracts are not suitable onshore, the CFTC must ensure that US customers are not accessing them offshore,” the CMC wrote.

CME Chief Executive Officer Terry Duffy echoed that sentiment in a Bloomberg Television interview Tuesday, calling it “troublesome” that some domestic traders are using VPNs to access markets beyond the reach of US regulators.