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The systemic-risk debate over perpetual futures is aimed at the wrong target
['Chris Tyrer', 'Tram Doman', 'Chris-Tyrer']
CoinDesk: Bitcoin, Ethereum, Crypto News and Price Data
Perpetual futures are entering regulated markets, and the objection to them is serious: retail-driven, high-leverage instruments will import systemic risk.
Systemic risk in a derivatives market is a property of the venue on which the perpetuals are traded, not the contract.
That is correct when it comes to the mechanics: as a substitute for dated futures, perpetuals fall short.
The liquidity institutions want already exists, drawn in large part by retail.
What lets them use it safely is institutional-grade default management, the same thing that contains the systemic risk the critics fear.