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What is the Funding Rate Payment?

A mechanism to keep the Perpetual Futures price in line with the spot market through periodic credits/debits between long and short positions.

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Mark Price

Derived from publicly available orderbook data, often as a VWAP over a specific period (e.g., 3:45–4:00 PM London Time).

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Underlying Price

Sourced from independent benchmark providers (e.g., LSEG, S&P, ICE, NASDAQ) using a transparent calculation method.

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Frequency

Funding occurs daily (or as scheduled), excluding holidays and exchange closures.

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Processing Time

At each product’s published settlement time, funding payments are applied to all open positions.

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Tracking Mechanism

  • If Mark > Underlying, longs pay shorts.
  • If Mark < Underlying, shorts pay longs.
  • The amount is proportional to the price difference, incentivizing price convergence.

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Example

EUR/USD Perpetual Future:
  • Benchmark: 1.2000 USD/EUR (ECB rate)
  • Mark Price: 1.2015 USD/EUR
  • Difference: 0.0015 USD
A trader long 100,000 contracts owes 150 USD (100,000 × 0.0015) to shorts.
This daily mechanism aligns the contract price with the underlying.