What is Settlement (Funding)?

A funding settlement is the discrete moment the exchange debits one side of the market and credits the other by the current funding rate. Only positions open at that instant pay or receive.

Settlement cadence varies by venue — every 1, 4, or 8 hours. A backtester must sum funding per settlement (not per data poll) to compute true PnL; counting intra-interval price snapshots would massively overstate the result.

For arbitrage, what matters is being on the right side of each settlement on both legs — the spread is realised one settlement at a time, not continuously.