Risk on leveraged futures trading on the platform is managed via Forced Liquidation process in the Instant Margining System.
Liquidation occurs on the margin account level (of which multiple Contracts can be trading in) when the required Maintenance Margin across contracts exceeds the Equity (Portfolio Value). Upon liquidation, any and all Contracts using margin from that margin account are impacted.
The entire process works in summary as follows:
- Margin Account equity, valued at the Mark Prices on Contract Level, falls below maintenance margin for the Margin account for given client. This kicks off liquidation process.
Note: Multiple contracts can share the same margin account and mark price can and does differ across maturities.
- The system executes an Immediate or Cancel (IoC) close order for any and all contracts in the margin account, at the 0-equity imputed price for each position.
- The orderbook of the given contract(s) may not be liquid enough to absorb the full position size being closed, resulting in unfilled liquidation.
- The unfilled liquidation is then assigned to liquidity providers (LPs) / market makers who essentially have open ended offers to accept any unfilled liquidations (always respecting price time priority, AFTER the orderbook has been swept up to the price that the LP is assigned). This assignment procedure is meant to form a backstop of liquidity to prevent system losses that other platforms address using an insurance fund.
- If the unfilled liquidation can't find a new counterparty in neither the orderbook nor in the PAS assignment, then unwind occurs, which reduces the OI by the remaining size.
The following table shows margin requirements and resulting price move protection and leverage for each instrument.
|Bitcoin-Dollar Futures||Ether-Dollar Futures||Litecoin-Dollar Futures||Bitcoin Cash-Dollar Futures||Ripple-Dollar Futures|
|Instrument Type||Inverse Futures||Inverse Futures||Inverse Futures||Inverse Futures||Inverse Futures|
|Mark-to-Market Formula||The permissible band beyond the Mark-to-Market Instrument is a function of how many days are remaining to expiration of the contract. It is 1% for 1 day up to 10% at 180 days, interpolated linearly. This means shorter maturity contracts are ensured to be valued closer to spot than longer maturities.|
|Minimum Initial Margin||1 / Entry Price * Position Size * 2.00%||1 / Entry Price * Position Size * 2.00%||1 / Entry Price * Position Size * 2.00%||1 / Entry Price * Position Size * 4.00%||1 / Entry Price * Position Size * 5.00%|
|Minimum Maintenance Margin||1 / Entry Price * Position Size * 1.00%||1 / Entry Price * Position Size * 1.00%||1 / Entry Price * Position Size * 1.00%||1 / Entry Price * Position Size * 2.00%||1 / Entry Price * Position Size * 2.50%|
|Max Leverage (1/IM)||Up to 50x in most contracts, see Margin Schedule|
|Margin Requirements||Note that each Contract Type has its own risk profile with respect to volatility, liquidity and volume and as such there are higher margin requirements for bigger positions, the levels of which vary across pairs. See the margin schedule for details.|