Futures’ price must be close to the price of spot market as to be a meaningful investment tool. This is guaranteed by Price Convergence. 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 Funding Rate (a rate measuring the spread between spot contract and perpetual futures) and fundings may happen to traders.

The calculation of Funding Rate can be divided into the following 2 steps:

  1. Calculate Spread Rate of the contract

 Spread Rate = (Marking Price of Futures / Marking Price of Spot) -1

       2. Calculate Funding Rate

    • If the Spread Rate of the contract is above 0.1% at funding timestamps, traders holding buy/sell positions will be charged of/receive funding.

                                                                           Funding Rate = min(Spread Rate - 0.1%, 0.25%)

    • If the Spread Rate of the contract is below -0.1% at funding timestamps, traders holding buy/sell positions will receive/be charged of funding.

Funding Rate = max(Spread Rate + 0.1%, -0.25%)

                  c. If the Spread Rate of the contract is between ± 0.1% at funding timestamps, no funding would happen.

        Funding Rate = 0

Notice: Funding Rate can be either positive or negative.

When we have the Funding Rate, traders can calculate the exact amount he/she will receive or be charged at  timestamps.

Funding Amount = abs(Position Size * Contract Size * Marking Price of Spot * Funding Rate)

Fundings in different scenarios.

Funding Rate > 0.1%

 Funding Rate within±0.1%

Funding Rate < 0.1%

Holding Buy Positions

Be charged of Funding Amount

No Fundings

Receive Funding Amount

Holding Sell Positions

Receive Funding Amount

No Fundings

Be charged of Funding Amount