This guide explains how BitMEX swap contracts function, covering key concepts like funding rates, premium indices, and position management.
What Are Swap Contracts?
BitMEX swap contracts allow investors to exchange interest payments while gaining exposure to underlying asset volatility. Buyers profit when the asset price rises, while sellers profit when it falls.
Daily Funding Fees
Every 8 hours (04:00, 12:00, and 20:00 UTC), swap buyers pay funding fees in the quote currency and receive fees in the base currency. Sellers do the opposite.
Base Currency vs. Quote Currency Funding Rates
Funding Base Index: Reflects the base currency's borrowing rate from third-party sources.Funding Quote Index: Reflects the quote currency's borrowing rate.
Funding Rate Formula
Funding Rate = Quote Currency Rate - Base Currency Rate
Calculated using 8-hour trailing data, this rate determines payments due after each interval. Maximum rate caps:
- Per-interval limit:
75% × (Initial Margin - Maintenance Margin)
(Example: 1.125% if initial margin is 2% and maintenance is 0.5%) - Change limit:
75% × Maintenance Margin
(Example: ≤0.375% change per interval)
Payment Timing
Fees are applied at designated intervals. Positions closed before these times avoid payments.
Position Value
Position Value = Total value of holdings at payment time.
Total Funding Cost
Total Funding = Funding Rate × Position Value
| Total Funding | Action |
|---|---|
| Positive | Pay |
| Negative | Receive |
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Premium Index Adjustment
When contract prices deviate significantly from the mark price, the premium index recalibrates funding rates to restore equilibrium.
.XBTUSDPI Calculation
.XBTUSDPI adjusts rates based on:
- Funding rate
- Bid/ask depth relative to mark price
Formula: .XBTUSDPI = Funding Rate + (Max(0, Depth-Weighted Bid - Mark Price) - Max(0, Mark Price - Depth-Weighted Ask)) / Spot Price
Threshold: Rates adjust only if the premium index differs by >0.05% from the funding rate.
Underlying Asset Positions
- Buyers: Long exposure → Profit from price increases.
- Sellers: Short exposure → Profit from price declines.
Leverage
Each contract specifies maximum leverage (see individual terms).
Mark Price Calculation
Funding Rate Indicator = Funding Rate × (Time Elapsed / Payment Interval) Mark Price = Spot Price × (1 + Funding Rate Indicator)
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Example: Long ETHXBT Trade
Day 1, 10:00 UTC
- Open 1,000 contracts at 0.02 ETH/XBT.
Position Value: 20 XBT.
Day 1, 12:00 UTC (Payment Interval)
Funding Rate: 0.50% (1.00% quote - 0.50% base).Total Funding: 20 XBT × 0.50% = +0.1 XBT (paid).
Day 1, 18:00 UTC (Close Position)
- Sell at 0.025 ETH/XBT.
- Profit:
(0.025 - 0.02) × 1,000 = 5 XBT - Net gain:
5 XBT - 0.1 XBT = 4.9 XBT.
Example: Short ETHXBT Trade
Day 1, 10:00 UTC
- Sell 1,000 contracts at 0.02 ETH/XBT.
Position Value: -20 XBT.
Day 1, 12:00 UTC (Payment Interval)
Total Funding: -20 XBT × 0.50% = -0.1 XBT (received).
Day 1, 18:00 UTC (Close Position)
- Buy back at 0.015 ETH/XBT.
- Profit:
(0.015 - 0.02) × -1,000 = 5 XBT - Net gain:
5 XBT + 0.1 XBT = 5.1 XBT.
Key Notes
- Funding fees are excluded from Dynamic Profit Equalisation (DPE).
- Unrealized profits cannot cover funding payments—ensure adequate margin.
- BitMEX may force-close positions during Market Disruption Events (MDEs) with 24-hour notice.
FAQ
Q: How often are funding fees applied?
A: Every 8 hours at 04:00, 12:00, and 20:00 UTC.
Q: What happens if I close my position before a funding interval?
A: You avoid paying/receiving that interval’s fees.
Q: How is the premium index determined?
A: It combines funding rates with depth-weighted bid/ask spreads relative to the mark price.
Q: Can funding rates turn negative?
A: Yes, if the quote currency rate is lower than the base currency rate.
Q: Are there limits to funding rate changes?
A: Yes—both per-interval and absolute caps apply (see "Funding Rate Formula" section).