How Do Futures Exchanges Fund and Replenish Their Insurance Funds?

Insurance funds are primarily funded by collecting a portion of the liquidation fees from liquidated positions. When a position is closed at a price better than the bankruptcy price, the surplus is also contributed to the fund.

Some exchanges may also contribute a small portion of their trading fees. This continuous stream of contributions helps the fund grow and stay robust against market shocks.

The goal is to ensure the fund can handle large, sudden losses.