8 minute read
Does MEXC Exchange Charge Interest on Futures?
from MEXC Exchange
by XM Blog
If you are considering trading futures on MEXC Exchange, one of the first questions you might have is whether the platform charges interest on futures positions. The short answer is: MEXC Exchange does not charge “interest” in the traditional sense on futures positions, but it does have a funding fee mechanism for perpetual contracts and certain trading fees that traders must be aware of. These costs are not interest-based like borrowing fees in spot margin trading but are instead a function of the perpetual swap market structure.
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Understanding exactly what you will pay, when you will pay it, and how it’s calculated is crucial for managing your trading risk and profitability. In this article, we will break down how MEXC handles futures costs, explain the difference between interest and funding fees, and walk you through everything you need to know before trading.
Understanding Futures Trading on MEXC
MEXC Exchange offers two main types of futures contracts:
Perpetual Futures Contracts – These have no expiry date and are the most popular type of futures instrument on MEXC. They rely on a funding fee mechanism to keep the contract price close to the underlying spot market price.
Standard Futures Contracts – These have a set expiration date and may have different fee structures, usually embedded in the spread or settlement price.
When traders talk about "interest" on futures, they often refer to ongoing costs like margin borrowing interest in spot margin trading. However, futures contracts—especially perpetual contracts—work differently. You don’t technically borrow funds from the exchange, so there’s no interest rate in the usual banking or loan sense.
The Key Difference: Interest vs Funding Fees
In traditional finance, if you borrow money to buy assets, you pay an interest rate. In crypto spot margin trading, you borrow coins from the exchange and pay an interest rate for holding them.
In futures trading, especially perpetual contracts, you are not borrowing funds directly from the exchange. Instead, MEXC uses a funding rate mechanism to keep the perpetual futures price close to the spot market price. This funding fee is periodically exchanged directly between traders—longs and shorts—not paid to the exchange itself.
Here’s the difference:
Interest in Margin Trading: Paid to the exchange for borrowing funds.
Funding Fee in Futures: Paid between traders to maintain price stability; MEXC acts only as the intermediary.
How MEXC’s Funding Fee Works
The funding fee is calculated based on the funding rate and your position size. Funding occurs periodically—commonly every 8 hours on MEXC’s perpetual contracts. The rate can be positive or negative:
If the funding rate is positive, traders holding long positions pay traders holding short positions.
If the funding rate is negative, traders holding short positions pay traders holding long positions.
This means:
You could pay or receive funding fees depending on your position and the market conditions.
The funding rate changes in real time based on supply and demand in the futures market.
Importantly, the funding fee is not a fixed “interest” rate. It fluctuates and is usually displayed in the contract details on MEXC before the funding period.
Why Funding Fees Exist
Perpetual futures contracts are designed to trade close to the underlying spot price. However, because there is no expiry date, traders could theoretically keep positions open forever without any natural price convergence. The funding fee incentivizes the market to stay balanced:
If the perpetual contract price is higher than the spot price, the funding rate is usually positive, so long traders pay shorts, encouraging more shorts and fewer longs.
If the perpetual contract price is lower than the spot price, the funding rate is usually negative, so shorts pay longs, encouraging more longs and fewer shorts.
This self-correcting mechanism helps keep the contract price tethered to the spot market.
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Example of Funding Fee on MEXC
Let’s say you have a $10,000 long position in BTC/USDT perpetual contracts. The current funding rate is +0.01% for the next funding interval:
Funding Fee = Position Size × Funding Rate
Funding Fee = $10,000 × 0.0001 = $1
If you are long, you will pay $1 to the shorts at the funding time. If you were short, you would receive $1 from the longs. This happens every funding interval as long as you keep the position open.
If the rate changes in the next interval, your fee or payment amount will change accordingly.
What About Leverage?
Leverage in futures trading allows you to control a larger position with less capital. For example, with 10x leverage, you could open a $10,000 position with only $1,000 in margin.
However, leverage magnifies both potential profits and costs. Your funding fee is calculated based on the full position size, not just your margin. That means if you use 10x leverage on $1,000 to open a $10,000 position, your funding fee will be calculated on the $10,000 figure.
This is why high leverage traders should pay close attention to funding rates—they can add up quickly and impact profitability, especially in volatile markets.
Does MEXC Charge Any Other Fees for Futures?
Yes, aside from funding fees, MEXC charges trading fees on opening and closing positions:
Maker Fee: This applies when you add liquidity to the order book (limit orders that don’t execute immediately).
Taker Fee: This applies when you take liquidity from the order book (market orders or limit orders that execute immediately).
MEXC’s maker and taker fees for futures are competitive compared to other exchanges, and they can be reduced by holding MX tokens or by reaching higher VIP trading levels.
Unlike funding fees, these trading fees go directly to the exchange.
Interest in Cross-Margin or Isolated Margin Modes
Some traders confuse MEXC’s margin trading interest with futures costs. In margin trading (spot with borrowed funds), MEXC charges interest on the borrowed coins, which works like a traditional loan interest rate. But in futures trading, whether cross-margin or isolated margin mode, you are not paying interest to MEXC—only funding fees and transaction fees apply.
So to be clear:
Margin trading: Interest is charged.
Futures trading: No interest, only funding fees and transaction fees.
Funding Fee Timing on MEXC
On MEXC, perpetual contracts generally have three funding times per day, every 8 hours. For example:
00:00 UTC
08:00 UTC
16:00 UTC
If you close your position before the funding time, you avoid paying or receiving the funding fee for that period. This timing strategy is sometimes used by short-term scalpers who don’t want to incur extra costs.
How to Check the Current Funding Rate on MEXC
Before opening a futures position, you can check the current funding rate directly on the trading interface:
Select your desired perpetual futures contract.
Look for the “Funding Rate” section, which shows the current rate and the time until the next funding.
Rates are updated regularly and can be positive or negative.
This transparency helps traders make informed decisions about when to enter or exit positions.
Can You Avoid Paying Funding Fees?
Technically, you can’t avoid the funding fee system entirely if you hold positions during the funding time. However, you can minimize it by:
Closing Positions Before Funding Time – This ensures you don’t participate in the funding payment for that period.
Trading in the Direction of Negative Funding Rates – If you hold the position that receives funding, you can turn funding fees into a small income stream.
Short-Term Trading – Enter and exit trades within a funding interval to avoid fees.
Why MEXC’s System Is Fair to Traders
MEXC’s futures cost structure is standard in the crypto industry. Exchanges like Binance, Bybit, and OKX all use a similar funding fee model for perpetual contracts. This structure benefits traders because:
You are not paying fixed daily interest to the exchange.
The fee system naturally balances the market.
You can actually receive funding payments if market conditions favor your position.
Risk Management and Funding Fees
Funding fees might seem small compared to your overall position size, but they can add up over time, especially for highly leveraged positions. A series of high positive funding rates while you’re holding a long position could significantly eat into your profits or increase your losses.
Smart traders incorporate funding fees into their risk management by:
Tracking the historical funding rates for the asset.
Factoring in the cost when calculating potential returns.
Adjusting position size to limit exposure.
Final Answer: Does MEXC Charge Interest on Futures?
No, MEXC Exchange does not charge interest on futures positions in the traditional sense. Instead, it uses a funding fee mechanism for perpetual contracts, where the payment is exchanged directly between traders based on market conditions. You will also pay regular trading fees when opening or closing positions, but these are separate from funding fees. If you are trading standard futures with expiration, the cost structure may vary, but it still doesn’t involve daily interest charges.
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