The Misguided Debate Over Perpetual Futures and Systemic Risk
The introduction of perpetual futures into regulated markets has sparked concerns about systemic risk, with critics warning that these high-leverage instruments will destabilize the market. However, this criticism is misplaced, as the risk is not inherent to the contracts, but rather a result of the venue's design. The venue's choices, such as leverage caps, margin rules, and default management, …