Announcement on liquidation risk management

To enhance risk management, when a user closes a position, the system will access its liquidation risk. If closing the position will result in liquidation, the request will be denied. Details are as follows:

Cross margin

We will allocate the remaining balance in the cross margin account based on the proportion of each position’s value to the total value of all positions, in order to determine the worst price for closing a position.

Position value ratio = specific position’s value ÷ total value of all cross margin positions

Worst price = mark price ÷ (1 – liquidation fee rate) – remaining funds in the cross margin account × position value ratio ÷ number of positions ÷ (1 – liquidation fee rate)

Worst price = mark price ÷ (1 + liquidation fee rate) + remaining funds in the cross margin account × position value ratio ÷ number of positions ÷ (1 + liquidation fee rate)

Isolated margin:

For long position: worst price = (position margin – position price × long position) ÷ [long position × (liquidation fee rate – 1)]

For short position: worst price = (position margin + position price × short position) ÷ [short position × (liquidation fee rate + 1)]

The liquidation fee rate is set at 0.0006.

Advance notice will be given for any future rule changes.