How Is the Final Settlement Price Determined for a Traditional Cash-Settled Futures Contract?

The final settlement price is typically determined by calculating a volume-weighted average price (VWAP) of the underlying asset's spot market price during a specific, short window of time near the contract's expiration. This method, often using prices from multiple exchanges (an index price), is designed to prevent market manipulation around the exact settlement moment and ensure a fair final valuation for the cash transfer.