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What Is the Risk of “Exchange Isolation” for a Single-Exchange Spot Price?

A single exchange's price can disconnect from the global market, leading to manipulation and unfair liquidations.
Greeks.Live24.11.25

What Is the Risk of “Exchange Isolation” for a Single-Exchange Spot Price?

Exchange isolation refers to a scenario where a single exchange's price becomes significantly disconnected from the broader market due to internal issues, network problems, or localized manipulation. Relying on this isolated Spot Price for derivatives settlement or liquidation creates a high risk of market abuse and unfair outcomes for traders, which is why multi-exchange Index Prices are standard.

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