2.5.1 Forced Liquidation Using Fair Price
The platform uses Mark Price to avoid unnecessary liquidations and to combat market
Calculation Formula of Forced Liquidation
Independent position under vanilla contract:
Long Lp=[Hp *Vol *S*(1+R)-(IM-MM)]/(Vol * S)
Short Lp=[Hp *Vol *S*(1-R)+(IM-MM)]/(Vol * S)
Cross position under vanilla contract:
Long Lp=[Hp *Vol *S*(1+R)-(Available+IM-MM)]/(Vol * S)
Short Lp=[Hp *Vol *S*(1-R)+(Available+IM-MM)]/(Vol * S)
Lp: Liquidation Price ；Hp: Holding Price；Vol: Volume（pcs） ；S: Contract Face Value；IM:
Initial Margin；MM: Maintenance Margin R: Taker Fees
2.5.2 The Risk Limit Requires a Higher Margin for a Larger Position
When the position is large and triggers force liquidation, there is a risk that it causes congestion
which might cause an impact on the market, and this platform contract's liquidation engine can
use more margin to effectively close positions.
If a position is forced to liquidation, platform’s system will cancel all unfilled orders for the
contract to release the margin and maintain the position. The orders of contracts are not
The planform uses a partial liquidation method that automatically attempts to reduce the
maintenance margin requirement and avoids all positions being force liquidated.
2.5.3 Users with the Low-Risk Limit
The platform cancels all unfilled orders for this contract.
If the maintenance margin requirement is not met at this time, the position will be liquidated.
2.5.4 Users with High-Risk Limits
The platform’s system will attempt to reduce the user's risk limit in the following ways, thereby
reducing the margin requirement:
1) Canceling any open orders and then attempting to bring down the user ’s risk limit
associated with their current position.
2) Submitting a FillOrKill order of the difference between the current risk limit position size and
the position size to satisfy the margin requirement to avoid liquidation.
3) If the position is still in liquidation then the entire position is taken over by the platform and a
limit order to close the position is placed at the liquidation price.