What Is the Difference between a “Closing Auction” and a “Settlement Window”?
A closing auction is a specific, short period at the end of a trading day where all market orders and remaining limit orders are executed simultaneously at a single price to determine the closing price. A settlement window is a longer, defined period (e.g.
30-60 minutes) leading up to expiration, during which prices are sampled and averaged to calculate the final cash settlement price. The closing auction is a price-discovery mechanism, while the settlement window is a price-averaging mechanism.
Glossar
Closing Price
Benchmark ⎊ The closing price represents the final traded price of a financial instrument at the end of a standard trading session, serving as a crucial benchmark for daily performance evaluation.
Settlement Window
Finality ⎊ The settlement window, within cryptocurrency derivatives, options trading, and broader financial derivatives, represents the discrete period during which the obligations arising from a contract are definitively resolved.
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.