The introduction of perpetual futures into regulated markets has sparked concerns about systemic risk. However, the risk is not inherent to the contract, but rather a result of the venue's design, including leverage limits, margin rules, and default handling.
The real question is how a given venue is built, with regulatory requirements providing a baseline for security. The debate surrounding perpetual futures is not about their presence in regulated markets, but about how they are handled. Institutions may not want perpetuals as a replacement for regulated futures, but they can be used for delta hedging due to their liquidity. The design of perpetuals draws in retail flow, concentrating liquidity and creating a deep, durable pool of liquidity.
The key to safe usage is institutional-grade default management, which contains systemic risk. The question is not whether perpetuals are dangerous, but how a venue handles defaults under stress.
Regulated clearing has established a standard for decades, and Bullish is working towards this standard. By containing defaults at their source, rather than transmitting them, perpetuals can become infrastructure that institutions can use.