Crypto Exchange OKEx Rolls Out Virtual Coins-Tied Swaps
Digital asset exchange OKEx has become the latest financial player to bet on cryptocurrency-based derivative products as a way to widen its customer base. The trading platform launched virtual coins swaps during the OKEx NEXTGEN Conference in Seoul on Monday.
Called “perpetual swaps,” the financial instruments expanded the exchange’s existing futures offering with a timeless product as those derivatives allow clients to take a long or short position against the price of virtual coins with no expiry date. The swaps use the following funding formula: funding=position value*funding rate.
“Funding occurs every 24 hours right after the daily settlement at 10:00am CET. A funding fee is only charged/received for open positions, based on the funding rate updated at 09:59 am CET each day. When the funding rate is positive, longs pay shorts, and vice versa when it is negative. If you close your position before the daily funding time, you will not pay or receive any funding on the day,” OKEx said.
Crypto derivatives market has become very competitive in recent months as several major traditional and virtual currency players entered the market. In December 2017, Chicago’s stock exchanges Cboe and CME launched Bitcoin (BTC)-tied futures, which are not physically-delivered. The upcoming crypto market Erisx, owned by Chicago’s derivatives platform Eris Exchange LLC TD, would use the opposite practice of Cboe and CME platforms as the new player plans to give investors the underlying coins when futures contracts expire, not send their respective cash amount.
ErisX will start operations next year when the Nasdaq stock market inNew York rolls out its crypto derivatives. While Nasdaq bets on the largest crypto, BTC, ErisX will tie its futures to Bitcoin, Ethereum (ETC), Litecoin (LTC), and Bitcoin Cash (BCH). In January 2019, ICE, the owner of New York stock exchange (NYSE), will launch its Bakkt BTC futures market. New York trading venue trueEX has recently launched physically delivered BTC swaps on its cryptocurrency exchange trueDigital.
All US derivative projects are under the oversight of Commodity Futures Trading Commission (CFTC), while OKEx launched its new product through its Malta office and claimed that those instruments follow local laws.