What Is a "Settlement Window" and Why Is Its Duration Important? ⎊ Path

What Is a “Settlement Window” and Why Is Its Duration Important?

A settlement window is the specific period of time, typically minutes or hours, over which prices are averaged to calculate the final settlement price (FSP). Its duration is important because a longer window reduces the impact of a sudden, brief price spike or "flash crash," making the FSP more representative of the true market price and reducing the risk of manipulation.

How Do Exchanges Typically Calculate the Final Settlement Price to Reduce Manipulation Risk?

How Does a TWAP Oracle Specifically Defend against Flash Loan Price Manipulation?

Why Is a Multi-Exchange Index Used to Calculate the FSP of Cash-Settled Futures?

Does TWAP Eliminate the Risk of “Spoofing” in the Underlying Markets?

What Is the Term for the Time Period over Which the Final Settlement Price Is Calculated?

How Does the Length of the TWAP Period Correlate with the Difficulty of Manipulation?

What Regulatory Mechanisms Are in Place to Prevent or Mitigate Flash Crashes in Traditional and Crypto Markets?

Can a Flash Loan Be Used to Attack an Oracle That Relies on a TWAP?

Glossar

Settlement Window

Finality ⎊ A settlement window, within cryptocurrency derivatives, defines the temporal boundary for transaction confirmation and irreversibility; it represents the period post-trade where a transaction’s status transitions from pending to immutable on the underlying blockchain.

Duration

Sensitivity ⎊ Duration, within cryptocurrency options and financial derivatives, represents the degree to which an instrument’s price changes in response to fluctuations in underlying variables, notably time decay and implied volatility shifts, impacting portfolio valuation and risk exposure.