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 and retail involvement. However, the critique is misguided, as the risk is inherent to the venue's design, not the contract itself. The venue's choices, such as leverage caps, margin rules, and default management, determine the level of risk. The recent deleveraging episo…