The traditional Friday afternoon mindset on commodity trading desks is shifting, as traders are no longer limited by the constraints of weekday trading hours. With the emergence of perpetual futures contracts, also known as 'perpetuals' or 'perps', traders can now hedge their positions and react to market developments over the weekend. This development has significant implications for the trading landscape, as it allows traders to capture profits and manage risk in real-time, rather than being forced to wait until markets reopen on Sunday evening.
According to Mustafa Al Niama, former head of digital assets at Goldman Sachs, 'From about lunchtime, the desk basically stops thinking about making money and starts thinking about what they can live with for roughly forty-eight hours until the Sunday evening reopen.' The rise of perps has also led to a shift in the way traders approach risk management, with many now using these contracts to gauge market direction and adjust their positions accordingly. As Terry Duffy, chairman and CEO of CME Group, noted, 'Risk, geopolitical or not, does not know what day of the week it is.' The growth of perps has been driven in part by the increasing popularity of crypto exchanges, which offer traders the ability to trade derivatives contracts around the clock.
Decentralized exchanges such as Hyperliquid have seen significant growth in perps trading volume, with the total value of active contracts reaching a record $1.2 billion on March 8. While traditional finance has been slow to adopt perps, there are signs that this is changing, with some traders beginning to use these contracts to hedge their positions and capture profits over the weekend.
As one trader noted, 'You have more touch points for picking up and laying off risk over the weekend than you had before. You had zero [places to hedge] before, and now you have more than zero.' The rise of perps has also led to a shift in the way traders approach market analysis, with many now using these contracts to gauge market direction and adjust their positions accordingly. As Hein Tibosch, head of digital assets OTC and product at Flow Traders, noted, 'The perps...
will be a pretty good indicator of where the market is heading.' While the adoption of perps is still in its early stages, it is clear that these contracts are having a significant impact on the trading landscape. As CME's Duffy noted, 'I think that markets will be 24/7 down the road. All markets.'