SGX’s bitcoin and ether perpetual futures have gained significant traction since their launch two weeks ago, indicating an influx of new liquidity into the market, said Michael Syn, president of SGX’s holding company.
The products, which are cryptocurrency derivatives allowing institutional traders to speculate on asset prices without a set expiration, saw nearly 2,000 lots traded on Nov. 24, translating to around $32 million in notional value. This figure has surged to $250 million in cumulative trading so far.
A crucial aspect for the exchange is that the trading volume appears to represent new investments rather than funds being shifted from other investments. The futures are gradually enhancing liquidity and price discovery rather than siphoning volumes away from competitors such as over-the-counter trading.
“Similar to the rupee/CNH futures launches, this creates new markets without disrupting OTC,” Syn mentioned in an interview, adding that initial volume patterns reveal interest from institutional-grade hedge funds experienced in futures, as well as active involvement from crypto-native players.
Perpetuals, or perps, enable investors to speculate on future asset prices without the inconvenience of needing to roll over their positions when a contract expires. This strategy has been a favorite among crypto traders for years; however, inadequate regulated markets, particularly in Asia, have kept institutions at bay.
“We are aiming to launch an Asian-time-zone mother contract,” Syn stated.
This means that the exchange seeks to position its BTC/ETH perps as the standard contract during Asian trading hours, serving as a key reference for pricing, settlement, and liquidity in the region.
Institutions are pursuing arbitrage
Syn indicated that the perpetual products were launched to cater to the rising institutional demand for regulated contracts related to basis trading, also known as cash-and-carry arbitrage.
“It all starts with customer feedback … Institutional interest is now geared towards basis trading— acquiring spot/ETFs followed by hedging with futures. Up to 90% of Bitcoin ETF interest comes from basis traders, not those going long,” Syn shared with CoinDesk. “Customers prefer short-dated perps on a regulated exchange like SGX, avoiding the noisy 90-day futures.”
The basis trade is a two-legged strategy aimed at capitalizing on the price differential between spot and futures/perpetual futures prices, achieved by simultaneously purchasing the cryptocurrency (or the relevant ETF) in the spot market while selling futures.
This arbitrage has attracted crypto-native traders for years — perps were introduced by BitMEX around 11 years ago, yet the absence of regulated perpetual futures markets, especially in Asia, kept institutions from engaging.
Now SGX is seeking to enhance institutional participation, asserting that its compliant contracts offer a reliable venue for executing basis trades without offshore risks.
Risk management
Futures continue to be one of the most favored crypto products; however, their reputation has become contentious since the crash on Oct. 8, when platforms like Hyperliquid, a decentralized exchange for perpetual futures, auto-deleveraged positions, erasing profitable trades and socializing losses to protect exchanges.
One theory posits that basis traders, who experienced auto-deleveraging of their short futures legs on Oct. 8, likely turned into sellers in the spot market, contributing to the price decline observed in November.
SGX maintains that its regulated perps utilize different risk management methodologies.
“There are no high-leverage auto-liquidations involved here — that’s characteristic of an OTC structure lacking proper clearing. We apply conservative margining, with brokers providing top-ups on behalf of clients,” Syn clarified.
“Positions remain stable for basis trades (long $1 spot = short $1 perpetual), a model proven effective in treasury and FX basis markets.”
Regarding plans for additional products like options or altcoin perpetuals, Syn highlighted that the immediate objective is to foster liquidity and trust in BTC and ETH perps before branching out.
Options, he noted, necessitate deep underlying liquidity to operate efficiently, while client interest in S&P 500 and interest rate perpetuals is also rising. The broader product roadmap aligns with what is available in unregulated markets, but at this moment, the focus remains squarely on successfully launching the core contracts.
