Understanding the Adjustment of Index Calculation Rules

To enhance market liquidity and index price stability across our margin, futures, and perpetual swap trading services, while also strengthening market risk controls, we are implementing adjustments to the composition of certain reference indices.

These updates are designed to improve the accuracy and reliability of index pricing, offering users a more robust trading environment.

Summary of Index Component Adjustments

The adjustments involve modifications to the constituent exchanges and their corresponding weightings for specific trading pairs within several indices. The goal is to better reflect global market conditions and mitigate the impact of anomalous price movements on any single trading venue.

The table below outlines the specific changes made to the indices.

Comparison of Index Components Before and After Adjustment

How Index Prices Are Calculated

An index price is not sourced from a single exchange. Instead, it is derived by taking a weighted average of the latest prices from all its valid constituent exchanges. This methodology helps create a more stable and market-wide fair price, reducing the influence of temporary price dislocations on any single platform.

This calculated index price is crucial as it forms the basis for the mark price used in derivatives trading, helping to prevent unnecessary liquidations caused by illiquid or manipulated markets on one exchange. For a comprehensive breakdown of the formula and eligibility criteria for component prices, you can review the detailed index calculation rules.

Important Risk Warning for Traders

The cryptocurrency market is known for its high volatility. During the implementation of these index rule adjustments, users may observe increased volatility or "jumps" in the index price and the corresponding mark price for margin and contract positions.

It is critically important to proactively manage your risk during this period. To protect your positions from potential forced liquidation triggered by these temporary price movements, we strongly advise you to:

• Close positions to lock in profits or losses.
• Reduce your position size to lower exposure.
• Add more collateral to your margin account to increase your margin ratio.

Taking these steps will effectively lower your leverage and provide a stronger buffer against market fluctuations.

We are committed to continuously improving our product offerings and providing a secure, reliable, and professional trading experience for all our users.

Frequently Asked Questions

Q1: What is a crypto index price, and why is it important?
A crypto index price is a composite value calculated from the prices of an asset across multiple major exchanges. It is vital for derivatives trading because it provides a fair value mark that is resistant to manipulation or liquidity issues on any single exchange, ensuring a more stable and accurate pricing mechanism.

Q2: Why would an exchange change the components of its index?
Exchanges periodically review and adjust index components to reflect changes in the broader market landscape, such as the liquidity and reliability of other trading venues. These adjustments help maintain the index's accuracy, stability, and representation of the global market price, which is essential for effective risk management.

Q3: How could this update affect my open leverage or futures positions?
The adjustment could cause short-term volatility in the mark price of your contracts. If your position is highly leveraged and near its liquidation price, this temporary price jump could increase risk. It is prudent to monitor your positions closely and consider reducing your leverage beforehand.

Q4: What specific actions should I take to manage my risk?
You should actively monitor your account's margin ratio. To de-risk, you can deposit additional funds as collateral, partially close your position to reduce its size, or close it entirely. These actions increase your safety cushion against volatility. For advanced methods on calculating your precise risk, you can explore more risk management strategies.

Q5: Will these changes affect the spot trading market?
No, these adjustments are specifically for the indices used to calculate mark prices in derivative products like perpetual swaps and futures contracts. Trading on the spot market will not be directly affected by this update.

Q6: Where can I find the most current information on index rules?
The most detailed and up-to-date information regarding index calculation methodologies, including constituent exchanges and their weights, is always available in the official help documentation and announcements section of the exchange's website.