Collateral Currency
Single-Collateral inverse contracts are margined in the USD value of the base currency.
Asset | Index | Haircut | Margin Wallet |
|---|---|---|---|
BTC | BRTI | N/A | FI_BTCUSD |
ETH | ETHUSD_RTI | N/A | FI_ETHUSD |
LTC | LTCUSD_RTI | N/A | FI_LTCUSD |
XRP | XRPUSD_RTI | N/A | FI_XRPUSD |
BCH | BCHUSD_RTI | N/A | FI_BCHUSD |
For each margin account, we calculate your Portfolio Value by adding the Available Margin to the profit or loss of open positions. We then calculate the margin requirement for open positions and open orders. The Portfolio Value is the value of the marginable collateral. If the portfolio value is greater than the margin requirement, the account is fully collateralized. The formula is displayed below:
Portfolio Value = Available Margin + Total Unrealised Profit/Loss in USD
Margin Netting
Margin netting only applies when trading perpetual and fixed maturities on the same Single-Collateral pair. Margin netting occurs between long and short positions in the same wallet(i.e. the same pair instrument type) but there is no margin netting across positions in different wallets (i.e. BTC and ETH).
For instance, there is margin netting between a long Bitcoin-Dollar Derivatives position in one maturity and a short Bitcoin-Dollar Derivatives position in another maturity.
The Total Margin Requirement will then be calculated as:
Total Margin Requirement = Max(Margin Long Positions, Margin Short Positions)
This means that the margin requirement of only long or short positions is counted, whichever is greater. This applies to all margin parameters (i.e. Initial Margin and Maintenance Margin).
Margin netting allows traders to efficiently exploit price differences across maturities. For instance, if you think that the price of Derivatives A is too high compared to Derivatives B, you could open a short position in A and a long position in B. This will turn a profit if the difference decreases. Margin netting ensures that margin requirements for this position are not excessive.
Liquidations
A liquidation occurs when the Portfolio Value falls below the required maintenance margin for all open positions in a Derivatives margin wallet. Funds in other wallets (e.g. Holding or Multi-Collateral) would not be affected by a liquidation in a Single-Collateral margin wallet.
- •Standard liquidation: All positions’ equity in an SC wallet falls below the required maintenance margin:
Portfolio Value < Maintenance Margin for all positions
Account Balance = $50,000
Long monthly position 50,000 @ $3000
System set aside Initial Margin = $15000 (50*3000/10)
Maintenance Margin = 50x$3000x2% = $300
BTC Cross Position 20 BTC @ 40,000
Initial Margin = 40,000 * 20 * 4% = $32,0000
Maintenance Margin = 40,000 * 20 * 2% = $16,0000
Mark Price ETH = $2,000 → UPL = -$50,000
Mark Price BTC = $40,000 → UPL = $0
Account Margin Equity ($0) < Maintenance Margin for all positions (300 + 16,000) → Account wide liquidation
Long monthly position 50,000 @ $3000
System set aside Initial Margin = $15000 (50*3000/10)
Maintenance Margin = 50x$3000x2% = $300
BTC Cross Position 20 BTC @ 40,000
Initial Margin = 40,000 * 20 * 4% = $32,0000
Maintenance Margin = 40,000 * 20 * 2% = $16,0000
Mark Price ETH = $2,000 → UPL = -$50,000
Mark Price BTC = $40,000 → UPL = $0
Account Margin Equity ($0) < Maintenance Margin for all positions (300 + 16,000) → Account wide liquidation
Liquidation Scenarios
Different scenarios can cause liquidations:
- •Price movements:Price moves against your position(s), causing your portfolio value to fall below maintenance margin
- •High premium variation:Portfolio value falls below maintenance margin in a position due to the a high premium/discount on a Fixed contract
- •Margin netting/premium variation:A long and short is held in different maturities and the Perpetual funding rate brings the portfolio value below the required maintenance margin or premium changes on the fixed maturity position brings portfolio value below maintenance margin
For more information on liquidations, see Liquidation FAQ.For information on Multi-Collateral liquidations, see Margining & Liquidations - Multi-Collateral Derivatives.