How Does the “Reference Rate” Concept Address Exchange Volatility in Index Calculation?

A reference rate, such as the CME CF Bitcoin Reference Rate (BRR), is a standardized price for a cryptocurrency calculated over a specific time window, typically a one-hour period. By calculating the rate as an average of prices from multiple exchanges during this window, it smooths out the minute-to-minute volatility and temporary price spikes that occur on individual exchanges, providing a stable, reliable benchmark for settlement.