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Why Is Using a Single Exchange’s Price for Settlement Considered Risky?

A single price source is vulnerable to manipulation or technical glitches, leading to an unfair settlement price.
Greeks.Live28.10.25

Why Is Using a Single Exchange’s Price for Settlement Considered Risky?

Relying on a single exchange's price for settlement exposes the contract to the risk of price manipulation or temporary technical glitches on that specific platform. A large trader could intentionally execute trades to artificially inflate or deflate the price on a single exchange just before settlement, leading to unfair gains.

An index price mitigates this by averaging multiple sources.

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