Cryptocurrency exchange FTX has announced the launch of quarterly futures on stocks, allowing users to trade with up to 100x leverage on Tesla, Google, Netflix, Amazon, Apple, Pfizer, and Alibaba stock futures. The exchange partnered with CM-Equity, a German financial services provider, to offer the service, and will require users to submit their KYC information to the company.
Users can now trade quarterly futures on stocks with 100x leverage
Cryptocurrency exchange FTX, which gained prominence earlier this year with its leveraged token offering, has listed quarterly futures on tokenized stocks. Enabling users to trade tokenized futures comes just two weeks after the exchange first ventured into the world of tokenized stock trading.
— SBF (@SBF_Alameda) November 10, 2020
According to the company’s announcement, the tokenized stock futures will track FTX spot markets as their index and will work the same as futures on other FTX products. However, there are several exceptions to this rule, the first of which being that the futures won’t have any adjustments in the case of an ordinary dividend. The company also said that any corporate actions such as stock splits and spinoffs will see the futures adjust, either by changing denominators or by turning into a future on the whole basket in the case of spinoffs.
How trading tokenized stocks will work
To provide brokerage services for tokenized stock trading, FTX partnered with CM-Equity AG, a financial service provider registered in Germany, and Digital Assets AG, a tokenization solutions provider based in Switzerland. As the company is a licensed financial institution permitted to offer these products, FTX users who trade tokenized stocks might be required to come customers of CM-Equity.
This means that users will have to pass through the company’s own KYC and compliance measures, as well as have their trading activity monitored by CM-Equity. However, it’s important to note that CM-Equity doesn’t custody the equities being traded as tokens itself, but keeps it at a third-party brokerage firm. It’s CM-Equity, not FTX, that then goes on to provide those brokerage services.
The exchange said that FTX and CM-Equity may also collect further information from prospective users, and may require passing a test in order to trade. Further compliance measures may also be applied to trading at a later date, FTX noted in its announcement.
Users that want to trade both tokenized stocks and futures on tokenized stocks must be at least KYC level 2, the exchange said, adding that the service will not be available in certain jurisdictions, which includes the United States.
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