Crypto Exchange OKEx To Roll Out New Derivative Product Perpetual Swap

Announcements, News | December 4, 2018 By:

Malta-based cryptocurrency exchange OKEx will be offering a new derivative product that will enable traders to speculate the direction of the price of cryptocurrencies.

Called Perpetual Swap, the new product is a virtual derivative product that is settled in digital tokens, such as bitcoin. It has a mechanism very similar to futures contract, but with no expiry, and settlement occurs daily. Each swap contract has a face value of $100. Traders can long a position to profit from the increase of a digital asset’s price, or short a position to profit from the decline of a digital asset’s price. The available range of the leverage is 1-100x.

The new product, which will be available on OKEx on December 11, has also adopted a funding mechanism to ensure the price of perpetual swap is anchored to that in the spot market.

“Funding occurs every 24 hours right after the daily settlement at 10:00am CET,” the company said. “A funding fee is only charged/received for open positions, based on the funding rate updated at 09:59am 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.”

In addition to the funding mechanism, the product features a tiered margin system that enables traders to adjust their leverage level according to their risk appetite and market condition.

“Large-scale forced-liquidation and clawback are the last things most users want to see in the market. So, when the trading mechanism needs to take on improvements, the same for our risk management measures,” OKEx said. “As such, we decided to implement a new Tiered Maintenance Margin Ratio System. The maintenance margin ratio is the lowest required margin ratio for a user to maintain an open position(s). When the margin ratio of an account is lower than the required maintenance margin ratio, forced liquidation would take place.”

Lennix Lai, OKEx’s Financial Market Director, said that the launch of Perpetual Swap demonstrated their continuous commitment to build a complete financial ecosystem on blockchain and crypto.

“With the new offering, investors and traders can select the products which best fit their trading and hedging strategies,” Lai said. “However, we would like to remind our users that due to its highly leverage nature, implementing risk control strategies are equally crucial in trading.”