OKX Enhances Perpetual Swap Funding Fee Mechanism

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To provide a better trading experience and improve the efficiency of funding fee settlements, OKX is updating the order cancellation logic during funding fee collection for all perpetual swaps. This update will be rolled out in four phases. The core calculation method for funding rates remains unchanged.

Key Changes to Funding Fee Collection

The primary adjustment involves how the platform handles order cancellations when collecting funding fees. Previously, OKX would only collect fees up to the liquidation threshold. Now, the platform will collect the full amount of pending funding fees, even if this causes the margin level to fall below 100%, potentially triggering liquidation.

Isolated Margin Mode Changes

Before the Update:
Funding fees were primarily deducted from the transferable balance in your cross margin account. If this balance was insufficient, open orders for that isolated margin instrument were canceled. The fee would then be taken from the position's margin.

After the Update:
Funding fees are now deducted directly from the margin balance of your isolated positions. Orders will no longer be canceled during the collection process. If the margin is insufficient, partial or full liquidation may occur afterward.

Cross Margin Mode Changes (Single-currency, Multi-currency, Portfolio)

Before the Update:
For single-currency cross margin, fees were taken from available margin. Insufficient funds led to the cancellation of pending orders (including spot and isolated margin orders). For multi-currency and portfolio margin, fees were deducted from adjusted equity, with similar order cancellations for net equity issues.

After the Update:
Funding fees are now deducted directly from your cross margin capital. Order cancellation during collection has been eliminated. If capital is insufficient, partial or full liquidation may follow.

Key Changes to Funding Fee Distribution

The method of distributing collected funding fees to users receiving payments has also been refined for greater predictability.

Before the Update:
The amount distributed was proportional to the position value of recipients and was based on what the system successfully collected. All distributed fees were added to the user’s cross margin capital, regardless of the position type.

After the Update:
The platform will now distribute the full intended amount during settlement.

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Phased Rollout Schedule

The new mechanism will be applied to all perpetual swaps in four phases. After the final phase on July 1, 2024, all perpetual contracts (including those not listed or newly listed) will follow the new rules.

Phase 1: June 12, 2024, 6:00 AM UTC

Phase 2: June 17, 2024, 6:00 AM UTC

This phase includes 32 perpetual swaps, such as:

Phase 3: June 24, 2024, 6:00 AM UTC

This phase includes 103 perpetual swaps, such as:

Phase 4: July 1, 2024, 6:00 AM UTC

This final phase includes 87 perpetual swaps, such as:

Frequently Asked Questions

What is a funding fee in perpetual swaps?
A funding fee is a periodic payment exchanged between long and short traders to tether the perpetual swap's price to the spot market. It is not a fee charged by the exchange but a transfer between traders.

Why is OKX making this change?
The update aims to create a more efficient and predictable settlement process. By eliminating order cancellations during fee collection, the platform offers a smoother user experience and reduces unexpected interruptions to trading strategies.

Will this change how funding rates are calculated?
No, the actual formula for calculating the funding rate itself is not affected by this update. The change only concerns the mechanics of how the fees are collected from users and distributed to recipients.

What should I do to prepare for these changes?
Traders should ensure they maintain sufficient margin or capital in their accounts to cover funding fee payments. This helps avoid unexpected liquidations that could now occur if fees are collected when the margin level is low.

How does this benefit traders receiving funding fees?
The new distribution mechanism ensures that eligible traders receive the full amount of funding fees owed, directly into the margin balance of their isolated position or their cross margin capital, providing greater clarity.

Where can I learn more about margin and liquidation?
For a comprehensive understanding of how different margin modes work and how liquidations are managed, it's best to consult official educational resources. 👉 Get detailed risk management insights