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Introduction to Futures Funding Rates

Introduction to Futures Funding Rates

2021/09/17 12:37:20

Our tutorial video provides quick access to common questions and related topics.


Here is our tutorial video:

Learn more details by reading the whole article below.

The U-futures contract adopts the funding rate to ensure that perpetual contract prices are consistent with spot prices. The funding payments are collected once every 8 hours.

Traders are only liable for funding payments if they have open positions at the pre-specified funding times. If traders do not have a position, they are not liable for any funding. If you close your position before the next funding time, you will not pay or receive any funding.

When calculating the funding fee, if the funding rate is positive, traders who are long on perpetual contracts will pay a funding fee to traders on the opposing side. Conversely, if the funding rate is negative, traders who are short on a perpetual contract will pay a funding fee to long traders.

Please note that our platform takes no fees from funding rate transfers as funding fees are transferred directly between traders.

1. Formula of Funding Fee

Funding Fee = Value of Positions × Funding Rate

Funding Rate = Clamp(MA(( (Bid Price + Ask Price)/2-spot price index)/spot price index - Interest)*100%,a,b)

*Interest is currently zero

The values of a and b are as follows:

[Information and index above can fluctuate without notice due to factors such as volatile market price.]

Funding rate will be calculated once every 8 hours at 00:00 SGT; 08:00 SGT and 16:00 SGT for all U-futures perpetual contracts to charge the funding fee.

2. Actual Funding Fee

(1) Calculation Rule of the Funding Fee

a. Funding Fee in the cross margin will be directly deducted from the trader’s account balance. Meanwhile, in the isolated margin, the funding fee will be deducted from the maintenance margin of your isolated positions.

b. If a trader’s balance margin is less than or equal to the maintenance margin after the funding fee is deducted, the system will continue to auto deleverage or liquidate until it meets the required level.

(2) The actual funding fee traders receive depends on the actual amount of funding fees that the system deducts from the opposing account.

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