In line with BTSE’s dedicated focus on growth and improvement, today’s quick update is to announce that our futures funding rate will now be updated every hour rather than every 8 hours, as has been the case up until now.
For those not sure how the future funding rate works in the first place, let’s take a quick look at how this rate is worked out and its implications for traders.
We implemented the funding fee mechanism to ensure market fairness by keeping the perpetual futures market price as close to the average market price as possible.
Whenever there is a difference between BTSE’s perpetual futures market price and the index price, the system will take funding fees from those who gained a profit because of the market price devaluation at every 8-hour settlement. This works in reverse by crediting funding fees to traders who lost profit due to price discrepancy.
To put this into a simple example: a scenario where the market price is much lower than the index price would see traders going Short being charged funding fees. Those going Long would receive the funding fees. If the opposite was true and the market price was much higher than the index price, Long would be charged, and Short receive.
Funding Fee Settlement Conditions
Funding fees will only be charged/paid when both of the following conditions are met:
- Funding rate is not equal to 0% (if funding rate = 0, no funding fees will be charged/paid)
- The status of your position must be Open during the system’s funding fees settlement (if the position is closed prior to the funding fees settlement, no funding fees will be charged/paid)
Funding Fee Calculation
Funding Fee = Notional Value x Funding Rate
Funding Rates will be updated every minute. When settling the fee, the system will use every minutes’ average results in the past 1 hour to calculate the fee.
- Minimum funding rate for long positions: 0.001%
- Minimum funding rate for short positions: -0.001%
- Notional Value = Mark Price x Position Size x Contract Multiplier
- Funding Rate = [Max (0, Impact Bid-Perp Index) – Max (0, Perp Index-Impact Ask)] / Perp Index / 24
When the funding rate is positive, Longs pay Shorts; when the funding rate is negative, Shorts pay Longs.
- Impact Bid Price: The average buy price of the first 10,000 highest bid orders in the Order Book
- Impact Ask Price: The average sell price of the first 10,000 lowest ask orders in the Order Book
The most crucial point is that we have now cut the settlement time from 8 hours to 1 hour. We’ve put in this extra work to make your trading experience a better and more seamless one.
The entire BTSE Team appreciates you choosing to trade with us. We promise that we will not stop working on new ways to show that appreciation by continually striving to provide you with the very best trading conditions.
As always, if you have questions about this change or anything else BTSE related, please feel free to reach out via any of our social media channels that are linked below.
Our aim is to create a platform that offers you the most enjoyable trading experience. If you have questions or suggestions, please don’t hesitate to reach out to us at email@example.com or DM us on Twitter: @BTSEcom.