Futures’price must be close to price of spot market as to be a meaningful investment tool. This is guaranteed by Price Convergence Mechanism. In traditional market, as the futures get closer to expiry, the prices of the futures contract and the spot contract will naturally converge due to settlement. BXB Perpetual Futures adopts a different Price Convergence Mechanism. Everyday at 4:00:00, 12:00:00 and 20:00:00 (UTC+8) known as Funding Timestamps, for each perpetual contract BXB will calculate it’s premium rate (a rate measuring the spread between spot contract and perpetual futures) and fundings may happen to traders.

 

premium rate = Marking Price of Futures / Marking Price of Spot - 1

 

If the premium rate of the contract is within ± 0.1%, no fundings of traders’ balance are needed; otherwise, fundings corresponding to the exceeded part would take place and it will drive the prices of perpetual futures and spot contract to convergence.

 

1. If the premium rate of the contract is above 0.1% at funding timestamps:

 

Traders holding positive/negative positions will be charged of/receive fundings. For each contract held, traders would be charged of/receive abs (Funding Unit)

 

Funding Unit = ((1+0.1%) * Marking Price of Spot - Marking Price of Futures) * Contract Size

 

2. If the premium rate of the contract is below -0.1% at funding timestamps:

 

Traders holding positive/negative positions will receive/be charged of fundings. For each contract held, traders would receive/be charged of abs (Funding Unit)

 

Funding Unit = ((1-0.1%) * Marking Price of Spot - Marking Price of Futures) * Contract Size

 

Notice: Funding Unit must be within the range of [-0.25% * Marking Price of Spot * Contract Size, 0.25% * Marking Price of Spot * Contract Size]. If out of the range, we will set the closest boundary as Funding Unit.

 

See tables below.