On 24 November, Singapore will take a pioneering step in the reshaping of cryptocurrency trading by the introduction of Bitcoin and Ether perpetual futures. This expected move will give the country the title of being the first in Asia to provide exchange-cleared perpetual futures for both digital assets. Besides the reduction of risks linked with offshore exchanges, the introduction strengthens oversight as well. It also opens up institutional access in the ever-growing global market for cryptocurrency derivatives.
The futures contracts based on the two assets will be cleared through the Singapore Exchange’s regulated clearing framework. This model prohibits the auto-liquidation systems used by an offshore exchange. Instead, it uses structured margining processes like those in traditional derivatives markets, which are lower risk. Under strict local regulations, only institutional and accredited investors will be allowed to invest in the new products.
Singapore introduces Asia’s first exchange-cleared Bitcoin and Ether perpetual futures.
What Are Bitcoin Futures Singapore Introducing?
On 24 November, Singapore will take a pioneering step in the reshaping of cryptocurrency Perpetual futures for Bitcoin and Ether are some of the new products coming in. The Bitcoin contract is 0.2 BTC, and at the same time, the Ether contract is 5 ETH. The contracts are all quoted in USD. The minimum trade increment is US$1 for both. The products are priced according to recognised crypto benchmarks that institutional traders typically use.
The futures will be subject to a capped funding model. This financing mechanism will prevent extreme pressures on prices during times of volatility. Additionally, the exchange will conduct separate trading sessions such as morning-afternoon and overnight periods. The structure is intended to accommodate global trading patterns and thus facilitate continuous participation.
Why Has Singapore Advanced Regulated Crypto Trading?
Singapore has set its objectives to reduce the risks associated with unregulated international futures trading platforms to a minimum. Disruptions have occurred in the offshore market during times of very strong trading. At least US$19 billion in futures positions were lost due to auto-deleverage events.
Such incidents have revealed weaknesses within the offshore liquidation systems. Singapore, by using an exchange-cleared model, provides institutions with the opportunity to control the risks through the use of proper risk management techniques.
The revamped system not only gives the traders a clearer picture of what their margin responsibilities are but also decreases the liquidation shocks. This process not only builds up the market confidence but also attracts and brings in new players who are looking for safe access.
Singapore targets safer trading after offshore disruptions erased US$19 billion positions.
Regulated Structure Brings Stability And Transparency
The new system of clearing transfers the risk to the clearing members. These members take care of client margins, manage positions, and supervise the risk. Thus, a better and safer environment for derivatives of cryptocurrencies is created than that of the offshore platforms.
This strategy is in line with the global standards applied to futures in commodities and equity indices. Moreover, the model has a significant degree of accountability. It is not only the participants in the market who have full visibility of their obligations, but also the members of the public.
They are not subjected to sudden internal liquidation triggers that have caused enormous losses worldwide. The transparency is expected to have a positive impact on the trading outcomes of professional investors.
How Large Is The Market For Cryptocurrency Derivatives?
The global digital asset markets are mainly composed of perpetual futures. The daily turnover of these markets increases to US$187 billion, which is approximately AU$286 billion.
The volumes are higher than the spot market and crucial for hedging and leverage strategies. The approval of a regulated perpetual futures market in Singapore marks a significant new access point. Institutional investors in Asia have been relying on offshore locations with little supervision that do not comply with the highest standards.
The new product will allow funds to enter a more restricted environment while deploying needed capital. This is in agreement with international asset management regulations and the ever-growing compliance standards.
Perpetual futures dominate crypto, with daily turnover hitting US$187 billion.
What Impact Will This Have On Crypto Trading in Singapore And Asia?
The launch further establishes Singapore as a digital-asset hub with regulation. It also increases the availability of Bitcoin futures in Singapore and reinforces the entire derivatives market.
The move has put Singapore ahead of major exchanges, which are also examining similar products. Among them are the leading global groups that are getting ready to make a move into the perpetual futures market.
There is a continuous rise in demand for regulated structures from the side of institutions. The new products might be able to lure capital from global funds that are looking for stable exposures. The shift could also promote more exchanges to switch to regulated clearing for cryptocurrency derivatives.
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FAQs
Q1: Who can access the new perpetual futures?
Trades can only be done by institutional, accredited, and expert investors.
Q2: What are the contract specifications?
The Bitcoin contract is 0.2 BTC, and the Ether contract is 5 ETH, with a tick size of US$1.
Q3: How does the regulated model differ from offshore platforms?
It replaces the practice of auto-liquidation with margining and supervises clearing by licensed members.
Q4: Why is the US$187 billion market significant?
It indicates the tremendous global demand for perpetual futures and institutional hedging tools.
