In light of news about the Philippine Securities and Exchange Commission (SEC) exploring the possibility of a futures trading market, BitPinas reached out to locally licensed exchanges and traders to gather their insights on the development.
- GCash’s spot crypto trading platform GCrypto and well-known trader Joseph Lejarde, also known as Whizkid Trader, shared their perspectives.
Worth Reading: Could Crypto Futures Be Next? SEC Prepares for Derivatives Market
Impact on the Local Capital Market and Trading Community
GCrypto stated that the SEC’s initiative to develop a futures market could expand the variety of financial instruments accessible to investors in the Philippines.
- However, the exchange noted that it may also create a more complex regulatory landscape, necessitating traders and brokers to enhance their skills and infrastructure to manage futures contracts efficiently.
As per Whizkid Trader, the SEC’s plan could boost liquidity and participation in the crypto market, as younger generations are increasingly shifting to cryptocurrency trading for its higher yields and volatility, which may reduce the appeal and liquidity of the local capital market in the Philippines.
- But he noted that crypto futures trading may reduce liquidity in the Philippine capital market and is more vulnerable to manipulation by large players, increasing volatility.
“This will make the local capital market in the Philippines less attractive and lack liquidity. The cons here are that crypto futures trading is more prone to manipulation of whales because futures can be used for many purposes, like hedging its losses, short covering of positions, and more volatility ahead.”
Joseph Lejarde, also known as Whizkid Trader
Possibility of Crypto Futures Integration
According to GCrypto, the availability of futures trading in the crypto space in the country is not impossible in the future because of the adoption of digital assets.
“The growing interest in cryptocurrencies cannot be ignored. There is a chance that crypto futures could be integrated into the market but not in the near future. It is important to have regulatory clarity first and this would be key to start this integration.”
GCrypto, Spot Crypto Trading Feature, GCash
Meanwhile, Whizkid Trader noted that while the government is supportive of digitalization, there is optimism for future developments in the derivatives market.
There are also things that still need to be addressed:
- Integration of crypto futures in the Philippine market will take time due to platform, legal, and licensing challenges.
- The SEC must revise or amend the Securities Regulation Code (SRC) to support crypto futures.
- Defining what constitutes a “security crypto” and setting leverage limits are essential.
- Offshore crypto exchanges with futures trading pose regulatory questions for local exchanges.
- Counterparty and liquidity risks must be addressed due to leverage in crypto futures.
This article is published on BitPinas: PH Exchange, Professional Trader Weigh In on SEC’s Futures Market Plan
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