Perpetual CFD vs perpetual futures — what's the difference?
Verdict
- A perpetual CFD is an over-the-counter contract with a licensed broker such as Pepperstone, our pick; a perpetual future is a contract listed on a trading venue, most often a crypto exchange.
- Both never expire and both use funding to stay near the underlying price, but who sets the funding, who your counterparty is and what you post as margin are different.
- Pepperstone's perpetual CFDs cover indices, gold, oil and stocks, need no crypto wallet, and fix the funding rate a week ahead.
- Australians at Pepperstone contract with an ASIC-licensed company (AFSL 414530); check the licence of any exchange you use for perpetual futures.
The two share a name and a mechanism, which is why they get confused. They differ in structure, and the structure decides what can go wrong.
Which to choose, and why we start with Pepperstone
If you want continuous exposure to the Nasdaq 100, the S&P 500, gold, oil or a handful of large stocks inside a regulated broker account, a perpetual CFD is the more practical tool, and Pepperstone is the provider we would use. If you specifically want crypto perpetuals traded on an order book, you are looking at exchange-listed perpetual futures, which Pepperstone does not offer.
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Side by side
| Perpetual CFD (Pepperstone) | Perpetual future (typical crypto exchange) | |
|---|---|---|
| Where it trades | Over the counter; Pepperstone is your counterparty | On the exchange's order book, against other traders |
| Underlyings | Indices, gold, oil, single stocks | Mostly cryptocurrencies |
| Funding | Rate set weekly by Pepperstone, applied daily at 5 pm New York | Set by the exchange's formula from market prices, usually reset more than once a day |
| Margin currency | Your account currency (AUD, USD and others) | Often crypto or stablecoins |
| Wallet needed | No | Usually |
| Oversight for Australians | ASIC, AFSL 414530 | Depends on the exchange |
| Entry cost | 0.015% per side (0.03% on GOLD and MSTR) | The exchange's trading fee |
Funding: same idea, different setter
On an exchange, funding typically moves between traders: when the contract trades above the spot price, longs pay shorts, and the reverse when it trades below. The rate follows the market and can swing quickly in a crowded trade. At Pepperstone, the broker publishes each contract's rate for the coming week and applies it once a day. You give up a market-driven rate and gain a cost you can calculate in advance.
Counterparty and protection
With a perpetual CFD at Pepperstone, your contract is with the broker. Retail client money is held in segregated accounts at top-tier banks, and a retail balance that goes negative is restored to zero. No compensation scheme is named, and Pepperstone notes that under the Corporations Act there is no guarantee all funds would be returned if it failed. With an exchange, protection depends entirely on the venue and where it is licensed, so read its rules on liquidations and losses before you deposit.
Which suits which trader
- Index, gold, oil or stock exposure, with AUD funding and an AFSL-licensed counterparty: perpetual CFD.
- Crypto exposure with order-book trading and crypto collateral: perpetual future, at an exchange whose licence you have checked.
- Crypto exposure through a regulated broker: Pepperstone's ordinary crypto CFDs, capped at 1:2 for retail clients in Australia.
Sources
Pepperstone terms as published.
Can I trade crypto perpetuals at Pepperstone?
No. Its perpetual list has no cryptocurrencies; crypto is offered as ordinary CFDs, at 1:2 retail leverage in Australia.
Do both products close positions when margin runs out?
Yes, both close out positions that no longer have enough margin. At Pepperstone, retail clients are also covered by negative balance protection.
Which is cheaper?
It depends on the exchange's fee tier and the funding in force. Compare Pepperstone's 0.015% per side and its published weekly rate with the exchange's fee schedule and recent funding history.
Leveraged products such as CFDs carry a high risk of rapid losses and are complex to understand. Consider whether you can afford that risk. This article is for information only and is not personal financial or investment advice.