Liquidity

Sphinx MTF is committed to ensuring a highly liquid trading environment through an innovative market-making strategy designed to support perpetual swaps and futures contracts. Our approach focuses on maintaining efficient price discovery, enabling tight spreads, and providing deep market liquidity across energy and commodity assets.

Market Making Approach

To ensure continuous liquidity provision, Sphinx employs a dual quoting strategy across both Periodic and Expiring Cash Settled Futures . This strategy involves quoting competitive bid and ask prices while maintaining robust risk management. This reduces trading friction for participants and fosters a vibrant trading ecosystem.

Periodic futures liquidity includes continuous two-sided markets, allowing traders to enter and exit positions efficiently without worrying about expirations. Expiring futures liquidity includes managing spreads across front-month contracts, enabling traders to hedge risk or speculate on short-term price movements.

Dynamic Spread and Depth Management

Our market-making strategy dynamically adjusts bid and ask spreads and quote sizes based on real-time market conditions.

Tight spreads in stable markets are maintained during periods of low volatility to encourage trading activity and reduce transaction costs for participants. Wider spreads in volatile conditions reflect increased risk while ensuring adequate market participation. Depth optimization scales quote sizes based on market depth and order flow, ensuring adequate liquidity without overexposing the platform to inventory risk.

Hedging for Market Neutrality

To mitigate directional exposure, Sphinx employs a delta-neutral hedging strategy. Positions in perpetual swaps are hedged using corresponding dated futures contracts. This market-neutral approach allows us to:

1. Manage price volatility effectively by offsetting directional risk.

2. Focus on profitability through spread capture rather than speculative trading.

3. Ensure liquidity in correlated instruments without compromising risk management.

Collaborations with Liquidity Providers

During periods of extreme market activity or low participation, Sphinx partners with external liquidity providers to maintain market quality. Collaborations with external providers ensure consistent quote availability, even during market stress. They improve order book depth, tighten spreads, and enable seamless execution across multiple instruments and trading venues.