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Unlocking new possibilities in financial risk management with innovative product offerings.

Product innovation in financial derivatives is critical for managing risk and protecting businesses from the volatility of the market. Alternative Derivatives Exchange has made it their focus to bring unique products to clients through their real-time mark-to-market risk systems, pre-funded dynamic initial margin requirements and reasonable limits, auto-liquidation, and various pre-submission risk checks. These innovations allow for the trading and settlement of volatile and illiquid products in a well-organized manner. By offering a wide range of products, Alternative Derivatives Exchange creates mechanisms for hedging inherent business risks, which is a crucial component of financial stability. Additionally, the technology required to support these products is constantly evolving, requiring continued innovation to ensure the effectiveness and efficiency of the exchange.

Cash Settled Climate Futures

ADE has partnered with some of the most reputable benchmark providers in the global weather market to offer a range of cash settled climate futures contracts. These contracts aim to provide an origination curve for options pricing by creating a range of high granularity futures contracts.

The contracts available for trading will include Cooling Degree Days (CDD), Heating Degree Days (HDD), Wind/Gust Futures, and Rainfall Futures. Most of these contracts will be structured as "capped options," which means that the maximum risk is capped, such as Gust futures, while others may be uncapped, such as HDD, CDD, and Wind futures.

The type of contract used will be primarily driven by hedging needs and data availability. The capped structure will allow Market Makers to predict maximum losses on their offered Contracts while allowing the hedgers to protect themselves efficiently.

Capped futures buyers will pay a premium to the sellers, which will then be distributed over the duration of days in the contract, such as a single day, week or month. This structure ensures that both buyers and sellers have a clear understanding of their maximum risk exposure while hedging against potential weather events.

With ADE's cash settled climate futures, traders can manage their exposure to weather risk and enhance their trading strategies. The availability of high granularity contracts provides traders with the flexibility to tailor their hedging and trading strategies to their specific needs. If you would like to know more, participate in contract design and/or become one of the designated Market Makers please get in touch via  risk@alternativederivatives.com

Carbon Offset Futures

ADEX is proud to introduce markets on Futures Contracts of deliverable carbon sequestration certificates, featuring a five-year curve with the initial twelve months as serial, monthly expiries and the remaining four years as IMM dates.

The Carbon Offset market aims to secure the world's natural resources by rewarding their preservation through a transfer of wealth from the industrially developed world to countries whose natural resources remain unspoiled.

As companies are becoming increasingly conscious of ESG and related interests in improving their green credentials, the demand for a product that can help improve ESG profile is growing. ADEX's Carbon Offset Futures is a great solution for those looking to improve their green credentials. We only support Carbon capture projects that have verification from accredited verifiers such as Blue Green Future (BGF), whose academic and real-world accreditation of Carbon Sequestration is unimpeachable.

The primary security is a Carbon Sequestration capacity inherent in the underlying lease on the sequestration unit, be it sea grass, peat-bog, mangrove forests, Amazon rain forest, or anything else deemed acceptable by ADEX's accreditation partner (Blue Green World). Each project traded on ADEX is verified and certified as a Carbon Sequestration asset (either sequestration or non-production of Carbon). Certificates of good standing are a prerequisite for listing on ADEX. These include a consistently verifiable quantity with a standard unit size (i.e. tonnes per unit), a pre-agreed minimum quantity for listing, and evidence that the re-verification and accreditation of the project continue on an ongoing basis during the life-cycle of the project and outstanding derivatives in issuance.

To further increase the potential of Carbon Offset Futures, ADEX is working on introducing a secondary security - the biodiversity component of the warrant. Work is currently being done on quantifying the benefits of carbon capture in terms of various living organisms and their interactions within a given ecosystem. This biodiversity component may be made "strippable" sometime in the future, and may be tradeable in its own right.

At ADEX, we are dedicated to creating a sustainable future for generations to come. Our Carbon Offset Futures offer investors a chance to invest in preserving our planet while also supporting companies looking to improve their ESG profile.

Hash Rate Futures

Hash rate futures can offer several benefits to SHA 256 miners. Firstly, they provide a hedging tool for miners to lock in the value of their hash power output and mitigate risks associated with volatile cryptocurrency markets. This can help miners manage cash flows, reduce operational risks, and improve profitability. Additionally, hash rate futures can provide a new avenue for miners to access capital and optimize their mining operations. By selling hash rate futures, miners can secure financing to expand their operations or upgrade their equipment without incurring debt or diluting their ownership. Hash rate futures can enhance market efficiency, deepen liquidity, and offer new opportunities for miners and investors alike.

ADEX will initially offer a cash settled futures contract which will settle against the current SHA-256 difficulty. The SHA 256 Futures will then be complimented with a deliverable SHA-256 Hash Rate Futures Contracts in several sizes, all with a 1-year curve.

The 12-month contract will be comprised of serial, monthly expiries, introducing the remaining 24 months as quarterly IMM expiries soon thereafter. (Weekly expiries TBC.)

The futures contract will roll into a continuous delivery market (operated by Braiins s.r.o.) and will have a delivery period of 1 month.

The Contract design and sizing are geared towards creating "basis trading" opportunities between the yield produced through the Hash Rate and the product of the Hash Rate (once delivered to Slush Pool), i.e. Bitcoin.

Purchasers of Hash Rate Futures will also have the opportunity to choose the delivery end-point of the Hash Rate purchased, allowing them to utilise different mining pools or even maintain private blockchain networks with the same underlying algorithm.