No need for CFDs: BitMEX introduces leveraged FX perpetual swaps

Rick Steves

Previously retail FX trading was mostly possible via CFDs (contract for difference). BitMEX’s FX perps allow both retail users and institutional traders to access FX markets through an exchange-traded contract.

BitMEX has launched FX perpetual swap contracts (FX perps) as part of a wider derivatives offering, which allows retail and institutional users to trade FX perps with up to 50x leverage.

The FX perps offering currently boasts 22 contracts on some of the most popular foreign currency pairs 24/7, even when the foreign exchange (FX) market is closed.

Margined and settled in either Bitcoin or Tether (ERC-20), FX perpetual contracts are ideal for traders who want the advantage of derivatives without the difficulty of expiry dates.

Alexander Höptner, Chief Executive Officer of BitMEX, said: “The launch of our FX perpetual swap marks another step in our journey to create a vibrant crypto ecosystem for our customers. At BitMEX we are focused on facilitating trading while continuing to develop innovative new products to complement our existing range of features, ultimately providing our clients with an even more seamless experience.”

BitMEX now has 57 contracts on 24 different underlying cryptocurrencies.

FX perps are margined and settled in Bitcoin or Tether

The innovative perpetual foreign exchange swap listing brings together the unique characteristics of crypto perpetual swaps and the world’s largest and most liquid market – FX. FX perpetual contracts on BitMEX are margined and settled in either Bitcoin or Tether (ERC-20).

Traded on an orderbook-driven market, P2P, and backed by an insurance fund, the FX perpetual swap contracts blends the advantageous
attributes of both the spot and future markets. The perpetual swap offers leveraged trading, working in a similar way to traditional futures contracts but without an expiry date.

The FX perps’ funding rate is paid every eight hours to help trading prices stay in line with the underlying index price. The FX perpetual swap allows users to long or short FX pairs – e.g. EURUSD and NZDUSD – in order to capitalise on price differences in foreign currency markets.

The perpetual swap is the most popular product on the BitMEX platform and its “XBTUSD” perpetual contract is one of the most liquid cryptocurrency derivative contracts in the world. BitMEX is now bringing to market a new innovative product that could become as popular.

FX perps join the list of BitMEX’s crypto-margined contracts and is available for both retail and institutional users.

FX perps solve arbitrage issues in crypto

Daniel Egloff, Head of Quants at BitMEX, explains: “BitMEX FX perps are a transparent exchange-traded contract which allows FX traders to go long and short as a taker or maker for which we offer a 1 basis point fee rebate, which is unique in the industry. For institutional users, FX perps provide an entirely new way to create synthetic crypto pairs to arbitrage – for example, Bitcoin quoted in non-USD currencies.”

There is a significant spread between XBTUSD versus other pairs like XBTEUR, which is not easily capitalised due to the need to bridge the crypto and spot FX markets.

“This has a rather high cost due to FX transactions and FX bank transfers and is operationally challenging. This kind of arbitrage is now greatly simplified with FX perps, all within the ecosystem of crypto currencies. Another use case is to hedge the inherent USD risk that comes with long crypto exposure, as most of the liquidity is quoted in USD or stable coins tracking USD”, he added.

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