The Misguided Debate Over Perpetual Futures and Systemic Risk
The introduction of perpetual futures into regulated markets has sparked concerns about systemic risk, driven by high-leverage retail trading. However, the criticism is misplaced, as the risk is inherent to the venue's design, not the contract. The venue's choices, such as leverage caps, margin rules, and default management, determine the level of risk. The recent deleveraging episodes in crypto,…
