Overview
In the cross-currency cross margin and portfolio margin modes, the risk of the unified trading account is assessed using the Initial Margin Rate (IMR) and Maintenance Margin Rate (MMR) of all positions. When the MMR reaches 95%, liquidation will be triggered.
During the liquidation state, you cannot operate your trading account. The platform will perform risk-reducing operations in the most efficient manner. Once the liquidation is complete and the account returns to a safe state, you can resume using your trading account.
Forced Liquidation of Cross-Currency Full Margin
In the cross-currency cross-margin model, positions and orders require margin on a transaction-by-transaction basis. Profits and losses on different derivatives positions can be offset against each other. When the account's maintenance margin ratio reaches 95%, forced liquidation is triggered.
Liquidation Process
Margin Condition | Rule | |
Account Maintenance Margin Rate (MMR) | 40% <= MMR <= 80% | 40%–60%: First risk warning 60%–80%: Second risk warning |
80% <= MMR <= 95% | Cancel contract opening orders, leveraged borrowing orders, and spot trading orders for buying assets with lower collateral rates. Subscription to Cash Treasure (cash management product) is not allowed. Contract position reduction orders and spot trading orders for buying assets with higher collateral rates are permitted. | |
MMR > 95% | If MMR still exceeds 95%, the liquidation process is triggered. | |
Step 1: Cancel All Pending Orders Cancel all orders and strategy orders; prohibit placing any new orders. | ||
Step 2: Redeem Cash Treasure Redeem the entire Cash Treasure balance. If the user’s redemption fails, the insurance fund will pay the equivalent amount of Cash Treasure (excluding uncollected interest) to the user, and the user will transfer the Cash Treasure shares to the insurance fund. This will generate two transaction records for the Cash Treasure swap. | ||
Step 3: Forced Debt Repayment During forced debt repayment, liabilities are sorted by currency liquidity (based on discount rate, with USDT liabilities prioritized). Liabilities with better liquidity are liquidated first. Calculate the amount of each liability currency to be bought. Positive assets are sorted by liquidity from best to worst, prioritizing the liquidation of positions in assets with better liquidity. Calculate the amount of each positive asset to be sold to repay liabilities, promptly reducing the margin rate. Both assets and liabilities are subject to a liquidation fee but not a trading fee. However, if either the asset or liability is in USDT, no liquidation fee is charged. The liquidation fee is charged at a fixed rate. | ||
Step 4: Contract Liquidation To release margin as efficiently as possible while minimizing impact on other positions, prioritize liquidating positions with higher maintenance margins. Contract liquidation will first attempt to process orders in the market. If liquidity is insufficient and liquidation fails, the platform will take over the positions requiring liquidation. Orders executed in the market will incur a taker fee based on the user’s rate, while positions taken over by the system account will not incur a trading fee. The total liquidation fee charged will not exceed the maintenance margin released after market closure, to ensure account safety. | ||
Step 5: Forced Debt Repayment After contract liquidation, if USDT liabilities remain, the same forced debt repayment process as in Step 3 will be followed. | ||
MMR <= 90% | During the above steps, if the account’s Maintenance Margin Rate drops to 90%, liquidation will cease, and the account will return to a normal state. | |
Account Equity <= 0 | The user’s account experiences a margin call and is taken over by the platform. |
The contract liquidation fee formula for cross-currency margin is:
Liquidation Method | Order Placement Price for Liquidation | Liquidation Fee Formula |
Market Liquidation | Buy Order: Mark Price * (1 + Percentage%) Sell Order: Mark Price * (1 - Percentage%) | min[max(Maintenance Margin Released from Liquidation - Actual Slippage of Transaction, 0), Transaction Value * (Liquidation Fee Rate - Taker Fee Rate)]; Actual Slippage of Transaction = (Transaction Price - Mark Price) * Transaction Quantity * Order Direction; (Buy Order = 1, Sell Order = -1) |
Platform Takeover | Takeover Price = Mark Price | min(Maintenance Margin Released from Liquidation, Transaction Value * Liquidation Fee Rate) |
*The transaction fee rate is linked to your user level
Forced Liquidation of Portfolio Margin
Portfolio margin assesses the risk of the entire portfolio. When the Maintenance Margin Rate (MMR) reaches 95%, liquidation is triggered. During contract liquidation, the position with the largest loss in the risk matrix is partially liquidated. Liquidation ends when the MMR drops to 85%.
Liquidation Process
Margin Condition | Rule | |
Initial Margin Rate (IMR) | >= 100% | Unable to place orders that increase margin occupation (including spot leverage and derivative orders). Subscription to Cash Treasure (cash management product) is not allowed. |
Account Maintenance Margin Rate (MMR) and Account Equity | 40% <= MMR <= 80% | 40%–60%: First risk warning 60%–80%: Second risk warning |
85% <= MMR <= 95% | Cancel all orders that are not marked as risk-reducing (with the backend "risk reduce" tag), including spot leverage, derivative orders, and RFQ orders that have started settlement. | |
MMR > 95% | If MMR still exceeds 95%, the liquidation process is triggered. | |
Step 1: Cancel All Pending Orders Cancel all orders and strategy orders; prohibit placing any new orders. | ||
Step 2: Redeem Cash Treasure Redeem the entire Cash Treasure balance. If the user’s redemption fails, the insurance fund will pay the equivalent amount of Cash Treasure (excluding uncollected interest) to the user, and the user will transfer the Cash Treasure shares to the insurance fund. This will generate two transaction records for the Cash Treasure swap. | ||
Step 3: Forced Debt Repayment During forced debt repayment, liabilities are sorted by currency liquidity (based on discount rate, with USDT liabilities prioritized). Liabilities with better liquidity are liquidated first. Calculate the amount of each liability currency to be bought. Positive assets are sorted by liquidity from best to worst, prioritizing the liquidation of positions in assets with better liquidity. Calculate the amount of each positive asset to be sold to repay liabilities, promptly reducing the margin rate. Both assets and liabilities are subject to a liquidation fee but not a trading fee. However, if either the asset or liability is in USDT, no liquidation fee is charged. The liquidation fee is charged at a fixed rate. This process is consistent with the forced debt repayment process in cross-currency margin. | ||
Step 4: Derivative Liquidation First, identify the worst-case scenario in the risk matrix (i.e., the scenario with the largest loss). Then, identify the contract with the smallest profit/loss (i.e., the one contributing the most to the margin) in this scenario and partially liquidate that contract. To ensure efficiency and fairness, for perpetual and delivery positions, the platform will place an Immediate-or-Cancel (IOC) order in the market once. Any remaining unliquidated positions will be taken over by the platform. For positions liquidated in the market, the platform will charge a liquidation trading fee. After each partial liquidation, the risk matrix is refreshed, and the algorithm will target the contract contributing the most to the risk matrix at that point for further processing. The liquidation proportion for a single contract follows system configurations. If the remaining position is less than the minimum liquidation amount, the entire position will be liquidated. | ||
Step 5: Forced Debt Repayment After contract liquidation, if USDT liabilities remain, the same forced debt repayment process as in Step 3 will be followed. | ||
MMR < 85% | During the above steps, if the account’s Maintenance Margin Rate drops to 85%, liquidation will cease, and the account will return to a normal state. | |
Equity <= 0 | The user’s account experiences a margin call and is taken over by the platform. |
Liquidation fee formula for portfolio margin:
Liquidation Method | Liquidated Contract | Order Placement Price for Liquidation | Liquidation Fee Formula |
Market Liquidation | Perpetual and Delivery | Buy Order: Mark Price * (1 + Percentage%) Sell Order: Mark Price * (1 - Percentage%) | Liquidation Fee = min { Account Effective Margin, max [Transaction Value * (Liquidation Fee Rate - Taker Tier Fee) - max(Transaction Price - Mark Price) * Transaction Quantity * Direction, 0] } |
Platform Takeover | Perpetual and Delivery | Takeover Price = Mark Price | min(Account Effective Margin, Transaction Value * Liquidation Fee Rate) |
*The transaction fee rate is linked to your user level
FAQ：
- What is the difference between forced liquidation with cross-currency cross margin and forced liquidation with portfolio margin?
A. The maintenance margin thresholds for forced liquidation differ. Portfolio margin will exit when MMR <= 85%; cross-currency cross margin will exit when MMR <= 90%.
B. Both utilize partial liquidation to gradually liquidate derivative contracts. The steps for forced liquidation of derivative contracts differ: cross-currency margin will liquidate the position with the highest maintenance margin requirement; it will take over any open positions after three IOC orders have been liquidated in the market; portfolio margin will directly identify the position with the largest current loss based on the worst-case scenario in the risk matrix and partially liquidate it. Each liquidation will only be conducted after one market order has been liquidated.
C. Cross-currency margin does not support options trading and does not involve forced liquidation of options; portfolio margin liquidation directly takes over positions when forced liquidating options.
- Derivatives clearing fees are calculated differently:
For perpetual futures contracts, the liquidation fee rates for both margin models are the same. However, the liquidation fee charged for cross-currency margin will not exceed the release of the budgeted maintenance margin; the liquidation fee charged for combination margin will not exceed the current effective margin of the account.
3. How are Cash Treasure shares handled during the forced liquidation process?
Both margin models handle Cash Treasure shares in the same manner. Cash Treasure redemption will be performed first. If the user's redemption fails, the insurance fund will pay the user the corresponding amount of Cash Treasure (excluding unearned interest), and the user will pay the Cash Treasure shares to the insurance fund. This will generate two Cash Treasure exchange transactions.
View forced liquidation records
Your forced liquidation orders can be viewed in your fund flow; filter "Forced Exchange Expenses", "Forced Exchange Income", and "Liquidation Fees" to filter out transaction records for spot debt repayment and contract forced liquidation.
Meaning | Description | |
Forced Exchange Expenditure | Quantity of positive assets sold | Measured in units of positive assets (including the quantity of liquidation fees for positive assets). |
Forced Exchange Income | Quantity of negative assets bought | Measured in units of negative assets (excluding the quantity of liquidation fees for negative assets). |
Liquidation Fee | Liquidation fee for contracts | Includes liquidation fees incurred from market liquidation and platform takeover. |