Institutional demand for perpetual futures remains limited, with the products largely viewed as speculative trading instruments rather than viable replacements for traditional derivatives, according to a Monday report from Wall Street bank JPMorgan.
Based on conversations with clients and market participants, the bank said institutional interest in perpetuals has waned. While the contracts offer 24/7 trading and eliminate futures roll costs, most activity is driven by traders seeking leveraged directional exposure rather than producers, consumers or other participants hedging the underlying market risk.
“Our due diligence within JP Morgan suggests there is no/limited institutional demand as seen by our desks,” the bank’s analysts said in the Monday report
“The consensus view appears to be that perp activity is more akin to speculative use cases by traders versus hedging by producers/consumers or those players with real exposure to the underlying,” the analysts added.
The report argued that perpetuals offer few incremental advantages over legacy derivatives for institutional investors. On-chain perpetuals are unlikely to appeal to US institutions because they lack traditional clearing protection, while off-chain products reduce rolling risk but retain other structural disadvantages.
