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The launch of SGX perpetual futures on Bitcoin (BTC) and Ethereum (ETH) aims to reshape institutional access to one of crypto’s most controversial derivatives markets.
Summary
What is Singapore Exchange (SGX) planning with perpetual futures?
The Singapore Exchange Ltd. will soon introduce Bitcoin and Ether perpetual futures on its derivatives platform, targeting professional investors seeking regulated access to leveraged crypto exposure. The move is designed to challenge lightly supervised offshore venues, often dubbed crypto bucket shops, that currently dominate this corner of the market.
Perpetual contracts, commonly called perps, are derivative instruments with no expiry date. They track the underlying asset through a funding-rate mechanism that keeps prices in line with spot markets. Moreover, they are among the most heavily traded products in digital assets, frequently used by traders to place directional and hedging bets around the clock.
Why are Bitcoin and Ether perps so influential?
Bitcoin and Ether contracts are the backbone of perpetual futures trading, as they concentrate the deepest liquidity and attract both retail and institutional flow. However, their popularity has also amplified systemic risk across crypto derivatives markets, where high leverage and thin risk controls can trigger cascading liquidations during periods of stress.
That said, demand for products such as bitcoin perpetual futures remains high because they allow traders to gain or hedge exposure without rolling traditional expiry-based futures. In practice, these instruments have become a core tool for market-makers, arbitrage desks, and high-frequency trading firms that rely on them to manage inventory and basis trades efficiently.
How did perps contribute to the October crypto crash?
Perps played an outsized role in a major digital-assets selloff in October, when at least $19 billion worth of futures positions were wiped out across exchanges. According to derivatives data providers, a significant share of that notional loss was linked to forced liquidations as prices slid sharply within a short window.
Moreover, many offshore exchanges operate aggressive auto-deleveraging systems that socialise losses across traders when insurance funds are insufficient.
This perps auto-deleveraging risk can magnify volatility, as large positions are rapidly unwound into already thin markets. The October event highlighted how concentrated leverage in perpetual markets can spill over into spot prices and broader sentiment.
Can SGX challenge offshore bucket shops?
Singapore Exchange is positioning its new contracts as a safer alternative to unregulated platforms that critics describe as crypto bucket shops. By listing these derivatives on a major Asian exchange, SGX hopes to attract institutions that require strong governance, transparent margining, and robust clearing frameworks before participating in crypto derivatives.
However, SGX will need to compete with established crypto-native venues that already offer deep liquidity, 24/7 access, and a wide range of altcoin contracts. While those exchanges carry higher perceived risk, they remain attractive for traders prioritising leverage and breadth of instruments over traditional market protections.
What could this mean for crypto futures regulation?
The arrival of these SGX crypto products may add momentum to ongoing discussions on crypto futures regulation in major financial hubs. Regulators have been watching the derivatives segment closely after repeated boom-and-bust cycles fuelled by leverage and opaque risk models. Moreover, global watchdogs are increasingly focused on ensuring that retail traders understand margin requirements and liquidation rules.
In Asia, policy approaches vary widely, ranging from permissive regimes to tighter controls on leveraged trading. Singapore has historically taken a cautious, supervisory stance toward retail access to digital assets, even as it encourages institutional participation. As a result, SGXs move could serve as a test case for how traditional exchanges can integrate crypto derivatives within existing regulatory frameworks.
How do perpetual contracts actually work?
Perpetual futures trading relies on a funding-rate mechanism that periodically transfers payments between long and short positions. When the contract trades above the spot price, longs typically pay shorts; when it trades below, the reverse occurs. This structure encourages convergence with the underlying asset and supports continuous price discovery.
That said, during extreme market moves, funding can spike and exacerbate stress for highly leveraged traders. Exchanges risk engines may then trigger mass liquidations, which can push prices further away from fundamentals. For this reason, institutional desks often monitor funding curves and open-interest data closely to gauge crowding and latent instability.
Will SGX’s launch change institutional participation?
Institutional investors that were previously reluctant to use offshore venues may view sgx perpetual futures as a more acceptable gateway into crypto derivatives. The contracts could provide a bridge between traditional finance and the digital-asset ecosystem, especially for funds that must trade on regulated, onshore platforms.
However, adoption will depend on liquidity, fee structures, and how quickly large market-makers are willing to quote tight spreads on the new order books. If critical mass develops, the Singapore Exchange’s Bitcoin and Ether listings could gradually chip away at the dominance of offshore platforms and reshape flows in the global perps market.
In summary, the planned launch of Ether and Bitcoin derivatives on SGX underscores how mainstream exchanges are moving deeper into crypto markets. While the products aim to offer a more regulated alternative to offshore platforms, their success will hinge on liquidity, robust risk management, and investors’ appetite for leveraged exposure.