Perpetual swaps are a cornerstone of the cryptocurrency derivatives market, allowing traders to speculate on future price movements of assets like Bitcoin and Ethereum without an expiry date. A common and crucial point of inquiry for traders is the timing of the funding rate settlement, which directly impacts the cost of holding a position.
This guide provides a clear breakdown of the settlement mechanics for perpetual swap contracts.
What Are Perpetual Swaps?
Unlike traditional futures with a set expiration date, perpetual swaps are designed to mimic a spot market but with leverage. They track the underlying index price of an asset closely through a mechanism called the funding rate.
This funding rate is a periodic fee exchanged between long and short traders. If the rate is positive, traders holding long positions pay those holding short positions. This mechanism helps tether the contract's trading price to the spot price.
Key Perpetual Swap Settlement Times
The funding rate settlement for many major exchanges, including OKX, typically occurs every eight hours. The most common settlement times across the industry are:
- 00:00 UTC
- 08:00 UTC
- 16:00 UTC
It is essential to verify the exact times directly on the exchange's official website, as these can be subject to change and may vary slightly based on your time zone and daylight saving time. The settlement process is automatic and is reflected in your account balance.
👉 Check the official settlement schedule here
Why Settlement Time Matters for Traders
Understanding and monitoring these times is a critical part of risk management and trade strategy.
- Cost of Carry: The funding rate represents the cost of maintaining a leveraged position. A consistently high positive rate can significantly erode profits for long holders.
- Predicting Market Moves: Some traders attempt to anticipate shifts in market sentiment around funding times. A high funding rate might suggest the market is overly long, potentially leading to a price correction.
- Position Management: Active traders may choose to open or close positions just before or after a settlement to capitalize on or avoid a particular funding payment.
Perpetual Swaps vs. Quarterly Futures
It's helpful to distinguish perpetual swaps from another common derivative: quarterly futures.
- Perpetual Swaps: No expiry date. Use a funding rate mechanism to track the spot price. Ideal for long-term hedging or speculation without the hassle of rolling over contracts.
- Quarterly Futures: Have a fixed expiry date (e.g., end of March, June, September, December). The contract price converges with the spot price at expiry. Often used for trading specific future events or when a trader wants a known, fixed cost of carry.
Frequently Asked Questions
How often is the funding rate applied?
The funding rate is typically calculated and exchanged between traders every eight hours. This is when the "settlement" occurs, and the fee is either paid or received.
Do I need to manually pay the funding fee?
No, the entire process is automated. The exchange's system will automatically deduct or credit the funding amount from your account balance at each settlement time if you hold an open position.
What happens if I close my position before the settlement time?
If your position is closed before the scheduled funding time, you will not pay or receive that specific funding fee. You are only responsible for the funding fees for the periods during which your position was actively open.
Can the funding rate be negative?
Yes. A negative funding rate means that short-position holders must pay long-position holders. This typically occurs when the perpetual swap is trading at a discount to the spot price, indicating bearish sentiment.
Where can I see the next funding time and predicted rate?
Most exchanges, including OKX, display this information prominently on the trading interface for each perpetual swap contract. You can see the countdown to the next funding and the current rate.
Is the funding rate the same as a trading fee?
No. The funding rate is a fee exchanged between traders, not with the exchange. You will still pay a separate taker or maker trading commission to the exchange for opening and closing the position itself.