ETF Perpetual Contracts on Binance Futures: Able to trade traditional indices such as QQQ and SPY

In traditional financial markets, ETFs have always been a tool used by many people to diversify their allocation to stocks, bonds or commodities. Now Binance Futures has brought such products into the crypto trading environment, launching a number of USDT margined perpetual contracts that track well-known ETFs. You can directly trade familiar targets such as QQQ, SPY, EWY, and EWJ without opening a traditional brokerage account or waiting for the U.S. stock market to open.

This type of contract is called a "perpetual contract". It has no expiration date and can theoretically be held forever. It relies on the funding rate mechanism to pull the contract price up to the spot price, and the funding fee is settled every 8 hours. For this batch of ETF contracts, the upper limit of the funding rate is +2.00% / -2.00%, and is not affected by the regular funding rate interval adjustment rules - even if the rate hits the upper or lower limit, the interval is still 8 hours.

Let’s look at a few specific contracts first. QQQUSDT tracks the Invesco QQQ Trust Series 1, the Nasdaq-listed QQQ. This ETF tracks the 100 largest non-financial companies on the Nasdaq, with a heavy weighting in technology stocks. If you want exposure to the U.S. technology sector, this contract may be more to your liking. SPYUSDT tracks the SPDR S&P 500 ETF Trust, also known as SPY. It tracks the S&P 500 Index and is often used as a benchmark for the overall performance of U.S. stocks. For broader coverage of the U.S. stock market, the SPY contract is an option.

Asian markets are also covered. EWYUSDT tracks the iShares MSCI South Korea ETF, which tracks Korean large-cap and mid-cap stocks, including semiconductors, automobiles, and consumer electronics. EWJUSDT tracks the iShares MSCI Japan ETF, which similarly tracks Japanese large- and mid-cap stocks. The Japanese stock market is very large, and this contract allows you to access the Japanese equity market around the clock.

These contracts have several common characteristics. In terms of trading hours, traditional stock markets have fixed opening and closing times, but these perpetual contracts can be traded 24/7. People in different time zones can operate at their own convenience and respond to global events in a timely manner. USDT is used for settlement, and Binance Futures supports a multi-asset model. You can use other crypto assets such as BTC as margin collateral, and of course there will be a corresponding discount rate. The maximum leverage is 10 times, which means you can use the initial margin to open a position that is ten times your principal. Leverage amplifies gains while also amplifying losses. A slight movement in the price in an unfavorable direction may cause large losses or even liquidation.

It’s important to emphasize: trading these perpetual contracts does not mean you own a share of the underlying ETF. You are just betting on the rise and fall of the price of the tracking asset, without holding any stocks or fund shares. This is different from buying ETFs directly.

The risks must be clearly stated. Leverage is a double-edged sword. Under 10x leverage, small reverse fluctuations may cause you heavy losses or even be liquidated. Market risks cannot be avoided. The value of these contracts follows the traditional financial market. Economic data, geopolitics, and market sentiment will all affect prices. If you hold a position for a long time, you have to continue to pay capital fees. The fees will accumulate and eat up part of the income. In addition, Binance may adjust contract specifications, such as funding rates, minimum price changes, leverage and margin requirements, based on market risk conditions.

If you plan to touch this type of product, first understand the concepts of perpetual contracts, funding rates, and leverage, and then evaluate your risk tolerance. They are not capital-guaranteed financial management, nor are they substitutes for stocks, they are just an additional trading tool.

Reference: Binance Academy Original link: https://www.binance.com/en/academy/articles/etf-contracts-you-can-trade-on-binance-futures

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