ICE, the owner of the New York Stock Exchange (NYSE) has inked a partnership with major cryptocurrency trading platform OKX to launch perpetual oil futures contracts. These contracts will derive their price from ICE’s Brent and WTI benchmark prices.
ICE and OKX to launch oil perps for crypto traders
In a major move earlier on Friday, ICE announced an alliance with OKX to launch the so-called ‘never ending’ oil contracts. The move is seen as an attempt to replicate decentralized perp trading platform Hyperliquid’s success in the asset class.
The partnership means that OKX’s almost 120M retail traders will now have seamless access to the oil perps. It’s worth noting that ICE also holds a stake in OKX, so integration of platforms shouldn’t come as a big surprise. Commenting on the development, Haider Rafique, global managing partner at OKX said:
“Oil markets are critical to the world economy. Bringing ICE’s benchmarks into regulated perpetual futures is exactly the kind of bridge between traditional and digital markets that market participants have been asking for.”
Earlier this year in January, Hyperliquid launched never-expiring oil futures contracts, and it didn’t take long for them to become a resounding success, given the elevated interest in oil trade due to the West Asia conflict. The product has consistently generated daily trading volume of around $1.6B, and over $1.3B in open interest.
What’s never-ending about oil perps?
To explain, perps – short for perpetual contracts – are essentially a type of derivative contract that allow traders to bet on prices of the underlying asset for a set period of time. However, these ‘never-ending’ oil perps are different in that unlike traditional derivative contracts, they never really expire.
As a result, traders don’t have to face any future expiration date. It means that positions can stay open indefinitely as long as traders maintain enough margin and pay periodic funding fees.
In the U.S., perps face a lack of regulation as they are not regulated like some of the more orthodox commodity exchanges such as ICE and the Chicago Mercantile Group (CME).
However, in a recent statement, U.S. Commodities and Futures Trading Commission (CFTC) chairman, Michael Selig, stated that he will soon bring perps under the agency’s oversight.
That said, whether perp trading platforms – especially decentralized ones like Hyperliquid – would want to be governed by agencies is another matter. On May 15, Hyperliquid Policy Center explicitly rejected concerns raised by ICE and CME regarding Hyperliquid’s anonymous trading environment.