Comment Text:
Imagine you could bet on whether a company's stock price will go up or down without actually buying the stock. And what if that bet never ended? That's kind of like a "forever contract," like some things called "perpetual futures" or "swaps." People use these a lot for things like Bitcoin, but if they came to the regular stock market, it could cause problems.
Because these contracts don't have an end date and let people bet with a lot of borrowed money (this is called "leverage"), it could make it easier for people to mess with stock prices. Big traders could use these forever contracts to push a stock price up or down on purpose by making big bets that last forever. This would make the prices not really show what the company is worth and make the market unfair. This isn't just a made-up worry. Something similar called "Contracts for Difference" (CFDs), which also don't end and use a lot of borrowed money, are not allowed in the U.S. because people were worried about this kind of messing around.
Besides messing with prices, these forever contracts could also make the stock market bounce around a lot more. Because of the borrowed money, even a small change in a stock's price could make the value of these contracts go way up or way down. This can make people who are just trying to make a quick buck trade more, which can make the whole market less stable. Regular people who might not really understand all the risks might be drawn to these because they seem easy and like they could make a lot of money fast. But these contracts are complicated, and people could lose even more money than they put in, which is why they're not a good idea for most regular traders. Groups that watch over money stuff, like the Financial Conduct Authority (FCA), have said that most regular people lose money when they trade things like CFDs.
It's also hard to keep an eye on these forever contracts. A lot of them are traded "over-the-counter" (OTC), which means they don't happen on the regular stock market where everyone can see what's going on. This makes it hard for the people who make the rules to watch them and make sure everyone is playing fair, especially because trading often happens in different countries with different rules. Plus, these forever contracts aren't all the same, which makes it even harder to have clear rules for them. If these kinds of contracts became common in the stock market, it could even cause bigger problems for the whole money system, like when things went bad in 2008 with some other tricky investments. Big bets with borrowed money can spread problems quickly and maybe even cause the market to crash.
So, all in all, forever contracts could be risky for the stock market. They could lead to more people messing with prices, make the market go up and down like crazy, and cause regular people to lose a lot of money. Because they're traded in a way that's hard to watch and because they could cause big problems for the whole system, we need to be really careful about letting them into the stock market. If they do come, there would need to be really strong rules to try and stop bad things from happening and to keep the market fair. No more waiting around to deal with this! PAY THE DAMN MONEY!
