How Does the “Last-Trade Price” on a Single Exchange Differ from the “Mark Price” on a Derivatives Platform?

An exchange's insurance fund acts as a financial buffer to cover losses that occur when a liquidated position cannot be closed out in the market at a price better than its bankruptcy price. In an isolation-induced liquidation, the insurance fund absorbs the deficit, preventing the loss from being passed on to other solvent traders through an auto-deleveraging (ADL) system.