Settlement price — The official closing price an exchange assigns to a contract each session, used for daily mark-to-market and margining.
How settlement price works in prop trading
The settlement price is not simply the last trade. Exchanges compute it from activity in a defined closing window — typically a volume-weighted average over the final seconds or minutes — so a single late print cannot set the official mark. It is the number used for margining, for daily P&L, and for the chart's official close.
Prop traders meet it in two places. Firms with end-of-day drawdown key their calculation to the settle rather than to your last fill, so the drawdown reference and the exchange's official close are the same number. And the settlement window itself is often volatile and thin, which is why most firms require accounts to be flat before it.
Key points
- Computed from a closing window, not from the final trade.
- Used for daily mark-to-market, margin calculation, and the official session close.
- End-of-day drawdown rules generally reference the settle.
- The settlement window is frequently volatile, which is one reason flatten deadlines precede it.
Also known as
- settle
- daily settlement price
- official close
Frequently asked questions
What time do futures settle?
CME equity index futures settle at 4:00 p.m. Eastern with the trading session closing at 5:00 p.m., and other products have their own schedules. Prop firms usually set a flatten deadline shortly before the session close rather than the settle itself.
Is the settlement price the same as the closing price?
Close, but not identical. The settlement is calculated from a defined closing window rather than being the last trade, which is why a chart's last print can differ slightly from the official settle.
Settlement price is described here as a plain-language educational definition. Firms, platforms, and account programs may apply different conditions or calculations. Verify the current official terms before using this definition to make an account decision.