1. How is settlement price determined?
Our system will take the last traded price before settlement as the settlement price.
All tokens' settlement prices are different, and do not affect each other.
2. What is settlement?
Every Friday, all futures contracts, except weekly contracts, undergo settlement at 16:00 (Hong Kong time).
When settlement occurs, all transactions will be suspended. Matching will resume after settlement is completed.
The UPL will be calculated from the settlement price, standard settlement price of your holding positions and the number of your holding positions. The RPL and UPL of each contract will be transferred into the account balance after clawback.
Under cross-margin mode, after settlement, the standard settlement price will be adjusted to the same as the latest settlement price. The UPL will be settled with the new standard settlement price.
Under fixed-margin mode, during settlement, if the UPL calculated based on the settlement price is a negative number, the fixed-margin will be deducted accordingly. After settlement, the standard settlement price will be adjusted to the same as the latest settlement price, and the UPL will be calculated based on the new standard settlement price.
If new positions are opened after settlement, the standard settlement price will change.
After settlement, the RPL, UPL and the cost of holding positions of a user will change. However, the equity of the account remains the same.
For example, a user opens a long position at $300. The equity and the margin of the account are 10 BTC. After the price falls to $280, the UPL becomes -1BTC, the balance is still 10BTC, however the equity is reduced to 9BTC. The 1BTC lost is caused due to the price drop.
Now settlement takes place. The standard settlement price is adjusted to $280. All the UPL is transferred to the account balance, and therefore the value returns to 0. Account balance becomes 9 BTC after the transfer. However, equity of the account is still 9 BTC which is the same as the value before the settlement happens.
In short, settlement transfer the profit and loss in to the account balance, allowing users to make use of the profit (if any). However, it does not affect the equity of the account.
3. Delivery rules
a. At the time of contract delivery, the system will execute to close the positions on all opened weekly futures. The price will be the arithmetic mean value of the index of the preceding one hour before delivery. The profit and loss obtained after closing the position through delivery will be added into the realized profit and loss line item.
b. If at the time of delivery, there are outstanding forced-liquidated positions unfulfilled, those positions will be delivered at their delivery prices. Any margin call losses, and the losses caused by the positions being traded at a price lower than the bankruptcy price, will be socialized through our full-account clawback system after the delivery of the week’s futures contract and the clearing of bi-weekly and quarterly contracts, so as to compensate for the margin call losses.
c. Delivery is completed when all RPL is added into the account balance.
d. If market anomalies occur before or after settlement and delivery, which results in wide fluctuation of futures index or abnormal clawback rate, we may postpone settlement and delivery as the case may be. We shall post an announcement regarding detailed rules.