Professional Crypto Derivatives Exchange/Clearing Services by Wall St./Chicago’s Directors & Seniors with Most Attractive Referral Program
On Dec. 11th, FOTA.com a.k.a Futures & Options Trading Application, built by a team of directors and senior members from Goldman Sachs, Credit Suisse and the OCC, is officially online.
FOTA.com’s proprietary STAMP (System for Theoretical Analysis and Margin Portfolio) is currently the only portfolio cross-margin system in the crypto industry. STAMP’s mechanisms and risk frameworks are designed to integrate those of the SPAN system of CME and the STANS system of the OCC.
Designed to serve both retail and institutional investors, STAMP allows its clients to
* maximize margin utilization rate (given specific risk tolerances),
* reduce the overall chance and/or impact of liquidations,
* withdraw or make use of realized & unrealized p&l 24*7,
* never incur negative margin and socialized loss.
More futures and option contracts are scheduled for the next few months.
40% of trade commissions will be shared to FOTA holders. Up to 50% of trade commissions from referred accounts will be given to the referrers. Referred accounts enjoy 10% off on trade commissions. Also if you would like to to be part of the “Influencers Referral Program”, please contact us (support@fota.com) for an even higher bonus rate.
- Futures Contract Specs
Futures vs. Perpetual Swaps
Futures contracts with expiration dates have intrinsic values since they will eventually be settled, either physically or by cash. They do not need costly exogenous mechanisms to maintain their prices and control their basis (difference between futures prices and underlying prices). At the same time, futures allows investors to precisely hedge their underlying position in the dimension of time. The drawback of futures contracts vs perpetual contracts is that investors may have to roll over their positions if they intend to hold beyond the expiration of the longest contract.
Perpetual swaps can be held indefinitely as long as they are not liquidated. The disadvantages of perpetual swaps are also obvious: they are never settled and thus have no intrinsic value. Therefore, exchanges of such contracts must introduce exogenous mechanisms such as funding fee, to limit the basis to a reasonable range. These mechanisms usually come with costs. In the case of the funding fee mechanism, for example, funding fee introduces another factor of stochasticity and thus make investment strategies such as precise hedging more difficult, if not impossible.
- Margin Risk Management（Margin System and Clearing System）
Portfolio Margin
FOTA.com is currently the only derivative exchange that supports portfolio margin, with which the overall margin utilization rate is significantly higher than cross or isolated margin (given the same risk measures).
First of all unrealized profits and losses from all outstanding positions can offset each other, no matter the derivative type or the underlying asset. Since a diversified portfolio reduces the overall risk, this mechanism also reduces the overall margin requirement thus increasing margin utilization. It also reduces the overall chance and impact of forced liquidations.
Also, both positions and orders may offset margin requirements of positions/orders on the opposite end (long/short), reducing unnecessary margin requirement. Offsets are calculated real-time based on price and other factors.
- Trading（Liquidation Risk Management）
Progressive Liquidation
FOTA.com adopts a progressive liquidation mechanism. When a liquidation event is triggered, FOTA clearing and risk management system first cancels all active orders of the account, and then decides the positions and the amounts to be liquidated. Liquidation may not close all positions held in the account. It also may not close the entire position if the position is to be liquidated. FOTA.com calculates and decides which positions and how many of each of them shall be liquidated, based on factors such as the account’s margin account balance, outstanding positions and real-time market conditions, in order to minimize the impact of liquidation.
Furthermore, while other exchanges retain users’ remaining margin after a liquidation for “Insurance Fund” or to reduce “Socialized Loss”, FOTA.com does not keep any remaining margin.
Auto-Deleverage (ADL) V.S. “Socialized Loss”
Under the so-called “Socialized Loss” mechanism, for each contract, accounts with overall positive p&l share the total loss to the exchange incurred by negative margin at the end of each clearing period. The amount shared by each profiting account is proportional to the account’s total profit. The advantage of a socialized loss system lies in its simplicity, especially for fresh investors to understand. Its drawbacks include its reliance on clearing periods, thus eliminating the possibility of real-time clearing. Not allowing real-time withdraw of realized or unrealized profit is one of the examples of delayed clearing. e.g. Okex only lets clients withdraw profits after Friday’s clearing, meaning a client may have to wait 1 week in order to actually withdraw his/her profit. On the other hand, socialized loss may reduce the effectiveness and accuracy of many investment strategies in that the actually result of loss sharing is unpredictable.
With Auto-Deleverage (ADL), when a client is liquidated and the current market depth does not allow it to liquidate the desired positions at the desired prices immediately, his/her remaining positions will be closed with counter parties chosen by the system. More aggressive positions would have higher priorities of being deleveraged. Aggressiveness is measured by the account’s effective leverage and the positions pnl%. In other words, clients with very high risk and profit have a better chance to be deleverage to prevent potential large draw-down.
The disadvantage of ADL is that it may take time for first-time users to understand. ADL’s major advantages compared to socialized loss include its compatibility with real-time margining and clearing, and that it does not let users share loss indifferently but rather choose counter parties based on their aggressiveness.
Compared to one in a socialized loss world, a client in an ADL world
- receives real-time notification and can check deleverage details including ADL amount and price, instead of having to wait till the end of each clearing period to have any idea;
- if choosing to continue his/her aggressive investment, he/she can reopen the positions immediately after being deleveraged;
- is chosen to be deleveraged based on the risk and profit (aggressive) of a position rather than indifferently (as a matter of fact, statistics show that in a market such as the crypto market with high volatilities and high leverages, deleveraging a position with high profit and high leverage often increases the overall profit of the account by reducing likely large draw-down).
- Referencing Indices
Simple Real-Time Indices vs. Real-Time Indices vs. Settlement Referencing Indices
Like other major crypto futures exchanges, FOTA.com currently uses simple real-time indices as references. Simple real-time indices are calculated as the average of prices from major spot exchanges.
In the near future, FOTA.com will introduces two professional index types, one for real-time referencing and the other for settlement.
Settlement referencing indices are calculated by taking the time-segmented VWMP (volume-weighted median price) of executed transactions, to create a smooth and accurate curve difficult to manipulate.
Real-time indices are calculated by taking the VWAP (volume weighted average price) of merged order books, adjusted by the integrated price-volume curve, to create a curve fairly and accurately reflecting real-time price movements.
50% of Commissions Shared
Meanwhile, FOTA.com will launch the ‘Most Attractive’ referral program in near future. Users can earn up to 50% of trade commissions by inviting friends to sign up while referred accounts receive a 10% trade fee discount. Commissions will be distributed on a daily basis in BTC.
Furthermore, 40% of FOTA.com‘s total futures trading commissions income are given away daily in BTC.
