Kraken futures settlement process

Kraken futures settlement uses a time-weighted average price (TWAP) from the final hour before expiry to ensure fairness and prevent manipulation.

Jul 22, 2025 at 11:36 pm

Understanding Kraken Futures Settlement

Kraken futures settlement refers to the mechanism by which open futures contracts on the Kraken exchange are closed or resolved at the end of their designated contract period. Unlike spot trading, futures contracts have an expiration date—typically weekly, bi-weekly, or quarterly—after which they must be settled. This process ensures that traders who hold positions until expiry are compensated or charged based on the final settlement price. The settlement price is usually derived from the time-weighted average price (TWAP) of the underlying asset over a specific window, often the last hour before expiry. This prevents market manipulation and ensures fairness.

How Kraken Determines the Final Settlement Price

Kraken calculates the final settlement price using a transparent and verifiable method. For perpetual and expiring futures, the exchange pulls price data from multiple trusted sources during the final settlement period. For instance, if a BTC/USD futures contract expires at 12:00 UTC, Kraken might use the TWAP from 11:00 UTC to 12:00 UTC. The TWAP is calculated by taking snapshots of the mark price at regular intervals (e.g., every 30 seconds) and averaging them.

• Each snapshot is recorded on-chain or logged publicly
• The average is computed automatically by Kraken’s settlement engine
• The resulting price is published on Kraken’s official futures page
  This transparency allows traders to verify the final price independently, reducing disputes and enhancing trust in the system.
  

  What Happens to Open Positions at Expiry?

  
  When a futures contract reaches its expiry, all open long and short positions are automatically closed by Kraken’s system using the final settlement price. Traders do not need to manually close positions unless they wish to exit early.
• If you hold a long position, your profit or loss is calculated as: (Settlement Price – Entry Price) × Quantity
• If you hold a short position, your profit or loss is: (Entry Price – Settlement Price) × Quantity
  These calculations are performed instantly and in real-time, with the resulting PnL credited or debited directly to your futures wallet. No action is required from the user once the contract expires.
  

  Step-by-Step: How to Check Settlement Details on Kraken

  
  To verify how your futures contract was settled, follow these steps directly on the Kraken Futures interface:
• Log in to your Kraken account and navigate to the “Futures” tab
• Click on “Trade History” or “Settlements” in the left-hand menu
• Locate the specific contract by its expiry date and symbol (e.g., BTCUSDQ3)
• Click the “View Details” button to see the exact settlement price, your entry price, and PnL breakdown
  Each settlement record includes a unique transaction ID, which can be used for accounting or tax purposes. This level of detail ensures traders can reconcile their positions accurately without relying on third-party tools.
  

  Impact of Settlement on Margin and Funding Rates

  
  Funding rates, which are paid or received every 8 hours on perpetual futures, stop applying once a contract expires. For expiring futures, no funding is charged after the final funding timestamp before settlement. After settlement:
• All margin allocated to the expired contract is released back to your available balance
• Unrealized PnL becomes realized and is reflected in your futures wallet balance
• You can transfer the settled funds to your spot wallet or use them for new futures trades
  This automatic release of margin prevents capital lock-up, allowing traders to redeploy funds immediately after expiry without delays.
  

  Frequently Asked Questions

  Can I manually close my futures position before settlement?
  
  Yes. Traders can exit positions at any time before expiry by placing a market or limit order in the opposite direction. This is often used to lock in profits or cut losses early without waiting for automatic settlement.

  Is there a fee for futures settlement on Kraken?
  
  No. Kraken does not charge any additional fees for the settlement process itself. Standard trading fees apply when you open or close a position, but no extra cost is incurred during automatic expiry.

  What happens if I’m leveraged and the settlement causes a loss larger than my margin?
  
  Kraken uses a clawback-resistant system. If your loss exceeds your available margin, the exchange covers the deficit through its insurance fund. You will not be charged beyond your initial margin—your risk is strictly limited to the funds in your futures wallet.

  Where can I find historical settlement prices for Kraken futures?
  
  Historical settlement data is available in the “Settlements” section under your Futures account. You can filter by date range, symbol, and contract type. This data is also accessible via Kraken’s API for developers building analytics tools.