Deribit – Bitcoin Futures and Options Exchange
deribit.com
deribit.com
Wait what? I've seen way more than 10%/day volatility on *coin/USD markets often enough. Has anyone else read through the 'tos'?
https://www.deribit.com/docs/terms-of-service-and-privacy-po...
Unlike a cash exchange, a derivatives exchange with "leverage" (which means they loan customers money) takes on financial risk. They cannot play in this game unless they have enough financial strength to pay off when they lose. And, no, they don't get to use the customer's deposits. Those belong to the customer.
With "leverage", it's quite possible for a customer to have a negative balance. Then the broker/exchange has to collect from the customer, or cover the loss.
They're trying to escape this situation by using an "auto liquidation" approach, which means that when a customer balance approaches zero, they start closing out customer positions. This allows customers to game the system. Take a position, leverage it, and keep a near-zero balance. If the customer wins, they collect; if the customer loses, Deribit closes out the contract. This adds a special kind of counterparty risk when buying a contract - even if you win, your position may be closed out in favor of the counterparty before you can gain anything.
Deribit makes their own private price for Bitcoin, which is a 30 minute moving average. This makes the "auto liquidation" thing workable. If the price changed too fast, and especially if it changed discontinously, auto liquidation would break. But this creates an arbitrage situation between Deribit and everybody else.
From the terms: "In no event will Deribit, or its suppliers or licensors, be liable ... for any amounts that exceed the fees paid by you to Deribit under this agreement during the twelve (12) month period prior to the cause of action." Financial services do not work like that. They have much larger obligations to their customers.
Pony lang is looking at competing with Erlang, and to be just as fast if not faster.
Maybe their hoping to just trade on IEX, 'The Flashboys Exchange' that has the wire coiled up in a shoebox (I know it's not a shoebox!), so even hackers can't circumvent the intentional delay it causes.
From the QCon London site: "Sylvan Clebsch is the designer of the Pony programming language. He has worked in industry for 24 years, on fintech, milsims, video games, peer networking, VOIP, identity management, crypto, and embedded OSes. He is currently working on distributed Pony and writing up his PhD at Imperial College London." [1]
Personally, it looks good, but I am not an OOP person. I prefer Erlang's, or LFE's (Lisp Flavored Erlang) syntax.
Explain? How does hiding the delay hinder hackers?
http://www.nytimes.com/2014/04/06/magazine/flash-boys-michae...
Crypto Facilities is building a trusted BTC index with CME, so I guess there is interest in crypto derivatives
The other major players are mostly Chinese. In China, there's OKCoin, BTCC (previously BTC China), 796, and BitVC, as well as a few minor players. In the rest of the world, there's us, CryptoFacilities, Coinpit, and now Deribit.
We've been in contract with the Deribit team since 2014 - they appear to be a solid tech team and they certainly understand the underlying finance.
Do you have a training program that can help me go from 0 to full-time derivatives trader?
As for a training program, I usually suggest babypips.com - condescending domain name aside, the content is really great.
"The exchange is built from the ground up to deliver extreme performance and is built entirely in the programming language Erlang. This gives us big technological advantages being able to handle huge amounts of requests with ultra low latency (<1ms). Erlang is a programming language used to build massively scalable soft real-time systems with requirements on high availability."
And their API console page took 7.02 seconds (on FIOS connection) to fully load the DOM.
Are they even subject to those rules?
Derivative trading is regulated by https://www.lb.lt
That's always cute
The CFTC is nice, the SEC will come down hard
If you make a reasonable [and effective] effort to not conduct business with US citizens then they will leave you alone. The mere fact that I can access Deribit undermines their exemption.
But I've seen the SEC charge people with thinner rationale. For example, a eastern european guy in an alleged insider trading ring only traded CFDs on a European CFD exchange. The SEC claimed that he would know that the exchange would have to make corresponding trades and hedging trades in US equities and therefore he is culpable.
If it makes you feel any better, that particular case hasn't reached a verdict yet and was insider trading, so if you feel comfortable dealing with extradition hearings to establish case law in a foreign country or simply not insider trading on US equities, then you'll be fine.
The majority of the SEC's compliance statutes are levied on businesses that offer any product labelled a security. This is a well distinction defined and quite broad and very difficult to play wordgames with. Its just unfortunate that registration is so expensive.
Good luck staying off the radar. I think it's an insurmountable chicken-and-egg problem. If you are going to have enough money to fight your way through the inevitable jurisdictional battles you would have had to start this pre-Mt. Gox to get big enough to survive.
On another note - no one actually wants to hedge their Bitcoin. They are buying it as a highly speculative instrument already, even the players with supposedly large transactional demand for it.