Annanay Kapila – Perpetual Futures Everywhere and All the Time (S7E24)

In this episode I speak with Annanay Kapila, founder and CEO of QFEX, a 24/7 centralized perpetual-futures exchange for traditional financial markets. Before founding QFEX, Annanay worked at Flow Traders and Tower Research, where he was introduced to high frequency trading and market microstructure in both crypto and traditional markets. Insights gleaned during these experiences lead him to the conclusion that the perpetual futures model applied to traditional, so-called “real world asset” markets, like equities, was an inevitable future and one he wanted to build. In this episode, we discuss the ramifications of what that world looks like. First, we discuss what perpetual futures are and their distinguishing characteristics from traditional futures. Then we discuss how perpetual futures can work in markets – like single-name equities – where the underlying do not trade 24/7, and have unique features like corporate actions, opening and closing price auctions, and limit-up/limit-down bounds. A consistent thread throughout the entire conversation is risk management. When leverage is your key feature, it is important to think long and hard about how and when liquidations might occur and the safest way to process them. Finally, we discuss why Annanay believes why perpetual futures will succeed where spot tokenization failed and his view on the current regulatory landscape. Please enjoy my conversation with Annanay Kapila. 0:00 Introduction to perpetual futures and guest background 1:43 Perpetual futures vs. traditional market structure 3:57 Experiences in proprietary trading firms 5:19 Market intermediation and perpetual futures resistance 10:03 Characteristics and comparisons of perpetual futures 17:17 Applicability of perpetual futures in various markets 19:33 Introduction and objectives of QFX 21:25 Continuous markets and 24/7 trading debate 24:33 Weekend trading and perpetual contracts design 31:21 Price bands and liquidation risks management 39:23 Liquidation engine and insurance fund mechanisms 40:32 Funding rates and interest rate clamping considerations 45:14 Corporate actions impact on perpetual contracts 49:21 Equity market price bands and liquidity analysis 53:56 Tokenized equities and perpetual swaps comparison 57:26 Regulatory challenges and continuous funding 59:54 Leverage implications and liquidation cascade concerns 1:00:36 Annanay's engagement on Twitter and public interest in quant 1:03:18 Special market limits and content quality on social media 1:04:26 Annanay's personal interests: DJing and hobby insights 1:05:20 Prospects for equity perpetual swaps and episode wrap-up

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