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Why Is a Multi-Exchange Index Price Preferred over a Single Spot Price for Calculating Margin Requirements?

A multi-exchange Index Price is preferred because it is more resistant to temporary price swings and single-exchange manipulation, providing a stable and reliable reference. Using a volatile single Spot Price for margin and liquidation could lead to unfair or premature liquidations during brief, localized price dislocations, increasing systemic risk for the exchange and traders.

Why Is Using Only the Spot Price for Liquidation in Perpetual Futures Considered Risky?
What Is the Advantage of Using a Median Price over an Average Price in Data Aggregation?
Why Is a Volume-Weighted Average Price (VWAP) Often Used in Reference Rates?
Why Do Exchanges Use a Mark Price Instead of the Last Traded Price for Liquidations?