Ladder balancing mechanism

What is a forced balancing?

Margin rate is a measure of the risk of position-guaranteed assets, and when the margin rate is close to the minimum maintenance margin rate, the position will be forced to take over by the system.

Margin ratio = (position margin + unrealized profit and loss) / position value * 100%

For users with different position sizes, a step-by-step maintenance margin rate system is implemented, that is, the larger the user's position size, the higher the maintenance margin rate, and the lower the maximum leverage multiple that the user can choose.

We will use the mark price to assess the user's position margin ratio. When the position margin ratio is less than or equal to the maintenance margin ratio + closing fee rate, the following process will be triggered.

Measure

For users with relatively small positions, when the position margin rate is less than or equal to the maintenance margin rate + closing fee rate, the system directly liquidates all positions of the user.

For users with relatively large positions, when the position margin rate is less than or equal to the maintenance margin rate + closing fee rate, but is higher than the lowest maintenance margin rate + closing fee rate, the system will not directly liquidate all positions of the user. The system will calculate the number of positions that need to be reduced to reduce the position by two gears, and perform a partial reduction. After a successful reduction, if the margin ratio meets the requirement of the new margin maintenance ratio of the new gear, the partial reduction stops; if it still does not meet the requirement of the new margin maintenance ratio of the new gear, the partial reduction process will continue to loop. During the forced partial reduction, the position is frozen and cannot be operated; in cross margin mode, during the forced partial reduction, the current currency account is frozen and cannot be operated.

For users with larger positions, we perform a loop process of partial reduction of positions to lower the margin rate to within the maintenance margin rate threshold.

Force balancing process under different positions

Let's take BTCUSDT 125x as an example:

When a position is in Gear 1 (less than 2000 contracts), the standard forced balancing margin rate is 0.50%, and when the user's margin rate reaches 0.50%, the position is forced to be balanced. When a position is in gear 2 (2001-12000 contracts), the standard force balancing margin is 0.75%. When a position is in gear 3 (12001-40000 contracts), the standard force balancing margin is 1.00%. When a position is in gear 4 (40001-100000 contracts), the standard force balancing margin is 1.25%. When a position is in gear 5 (100001-250000 contracts), the standard force balancing margin is 1.50%. When a position is in gear 6 (250001-500000 contracts), the standard force balancing margin rate is 1.75%. When a position is in gear 7 (more than 500001 contracts), the standard force balancing margin is 2.00%.

When positions are in Gear 2 and above, when the margin rate is lower than or equal to the current maintenance margin rate of the gear + closing fee rate, but higher than the maintenance margin rate of Gear 1 + closing fee rate (for example, the position is in Gear 3, when the margin rate is less than 1.0% but greater than 0.5%), the force reduction part operation is triggered.

Calculation formula:

Number of positions to be reduced = Current number of positions - Maximum number of positions in tier n-2

Example: 250001 (current position) - 40000 (maximum position in tier 3) = 210001

When a position is forcibly reduced, the process is:

1. Calculate the number of positions to be reduced, with the purpose of forcing the reduction of positions to the next gear of the net position ceiling, so that the margin rate is greater than 0%;
2. If the system calculates that the margin ratio is still not greater than 0% when the mandatory reduction factor is in 1st gear, then all positions will be strongly closed.

When there is a strong trigger, the user cannot carry out this contract-related operations.

Take BTC as an example, when the user has a large position, in gear 3 and above (i.e. the number of positions >=12001, For example: 15000), the burst engine monitors the user's current margin rate is less than or equal to the required maintenance margin rate + closing fee rate, it will not directly close all positions of the users. Instead, the implementation of the mandatory part of the reduction, the first calculation from the current number of positions to reduce the number in 2 gears required to reduce the number of positions = the current number - gear 1 maximum number of positions = 15000-2000 = 13000.

If the user is in restrictive position mode, the system will force the user to hang the number of positions required to reduce the position in accordance with the delegate price slightly better than the latest closing price. During the forced partial reduction period, the user's position in that direction of the contract will be frozen and all contract-related operations will not be possible.