How Does the Final Settlement Price (FSP) Determination Work for Cash-Settled Cryptocurrency Futures?
The FSP is typically calculated using a volume-weighted average price (VWAP) of the underlying asset across several major spot exchanges over a specified time window before expiration. This methodology is used to prevent price manipulation on a single exchange.
The resulting FSP is then used to calculate the final cash payment between the long and short parties.
Glossar
Fsp Calculation
Calculation ⎊ FSP calculation determines the final value used to settle derivatives contracts at expiration.
Final Cash Payment
Settlement ⎊ The final cash payment represents the conclusive transfer of funds to fulfill obligations arising from cryptocurrency derivatives contracts, options agreements, or broader financial derivative instruments.
Major Spot Exchanges
Platform ⎊ Major Spot Exchanges are the primary digital venues where cryptocurrencies are traded for immediate delivery, forming the foundational price discovery layer for the entire ecosystem.
FSP
Provider ⎊ In this context, an FSP denotes an entity authorized by a relevant financial authority to offer regulated financial services, including those related to crypto derivatives.
Final Settlement Price
Valuation ⎊ The Final Settlement Price in cryptocurrency derivatives represents the agreed-upon value of the underlying asset at contract expiration, crucial for determining payouts in options and futures.