Trading Execution Keeps Moving Toward Futures

As the crypto market evolves, trading execution keeps moving toward futures, with a focus on automated execution and derivatives trading. This shift is driven by the benefits of futures contracts, including standardized and margin-based trading.

The Rise of Futures in Trading Execution

The use of futures contracts in trading execution is becoming increasingly popular, with over 90% of global crypto derivatives trading volume accounted for by perpetual futures. This is due to the ease of execution and the built-in margin mechanics of futures contracts.

Benefits of Futures Contracts

• Standardized contracts
• Margin-based trading
• Marked to market continuously
• Long and short exposure are symmetric by design

Automated Execution and Derivatives Trading

Automated execution is becoming increasingly important in derivatives trading, with CFTC Chairman Michael Selig announcing plans to create a framework for crypto perpetual futures. This move is expected to bring onshore a trading instrument that has until now existed almost entirely on offshore exchanges.

Key Players in the Market

Exchanges such as OneBullEx are building their platforms around futures execution, with a focus on automated execution and strategy development tools. This infrastructure is optimized for perpetual contracts and futures execution, providing a single infrastructure layer with no third-party API dependencies.

Market Structure and Trading Execution

The market structure of futures contracts makes them ideal for automated execution, with position sizing and risk limits becoming controllable parameters tied to margin rather than full notional ownership. This allows for finer granularity of risk and position management, making it easier to operationalize execution automation.

Key Takeaways

• Trading execution is shifting toward futures, with a focus on automated execution and derivatives trading.
• Futures contracts offer benefits such as standardized and margin-based trading, making them ideal for automated execution.
• Automated execution is becoming increasingly important in derivatives trading, with key players in the market building their platforms around futures execution.
• Market structure is a key factor in the shift toward futures, with the built-in margin mechanics and contract-level standardization of futures contracts making them easier to execute.

Frequently Asked Questions

What is driving the shift toward futures in trading execution?

The shift toward futures is driven by the benefits of futures contracts, including standardized and margin-based trading, as well as the ease of execution and the built-in margin mechanics of futures contracts.

How is automated execution changing the derivatives trading market?

Automated execution is becoming increasingly important in derivatives trading, with key players in the market building their platforms around futures execution and focusing on strategy development tools and automated execution systems.