1. What is Maintenance Margin Ratio?
Maintenance Margin Ratio is the lowest required Margin Ratio for a user to maintain the current open position(s). When the margin ratio of the position is less than or equal to 100%, full or partial liquidation will occur.
Isolated Margin Ratio = (Fixed Margin + UPL) / [Face Valuex |Number of contracts|x Latest Mark Price) x (Maintenance Margin Ratio + Liquidation Fee Rate)]
Single-currency Cross Margin Ratio = (Available Margin + Minimum Margin + UPL) /(swapLong Maintenance Margin – swapShort Maintenance Margin+ Face Value*Total number of contracts* Latest Mark Price* Liquidation Fee Rate)
Multi-currency Cross Margin Ratio = (Avaliable Margin+ Minimum Margin for Open Positions of Each Currency + Total UPL of Each Currency) / (Maintenance Margin of each currency + Liquidation Fee)
2. Why there are Tiered Maintenance Margin Ratio System?
This tiered Maintenance Margin Ratio system is adopted to avoid the liquidation of large positions, causing big impacts on market liquidity. Basically, the larger the positions held, the higher Maintenance Margin Ratio will be required, and the lower the Leverage will be available.
3. How to calculate user’s positions and tiers?
Under Isolated Margin Mode, the Number of contracts and Tier are calculated based on all the positions for each contract. The Maintenance Margin Ratio is calculated based on the specific position for each contract.
Under Cross Margin Mode, the Number of contracts and Tier are all calculated based on all the positions for each contract. The Maintenance Margin Ratio is calculated based on all the positions of all contracts.
4. Maintenance Margin Rate gears for each Contract
Liquidation Rationale & Insurance Funds
1. At CoinW, the forced liquidation of futures is based on the margin ratio, and when the margin ratio of the position is ≤ 100%, full or partial liquidation will occur.
2. Users could use the built-in calculator to determine the liquidation price offutures contracts.
The estimated liquidation price is for reference only and liquidation will be subject to the margin ratio. Under the cross-margin mode, if the user opens positions for multiple currency, it cannot be calculated because the estimated liquidation price is related to the price of each currency.
3. CoinW futures implements a tiered liquidation mechanism, in which the system will lower the corresponding tier to avoid your positions from being liquidated at one time. If the maintenance margin ratio requirements of the new position are still not met after the partial liquidation, it will continue to cycle through partial reduction until all positions are closed. This is a risk control mechanism that CoinW offers to avoid the liquidation of large positions, causing big impacts on market liquidity.
4.If the user is still margin deficient, the user’s position will be closed at theforced liquidationprice by way of market order and the Insurance Fund will take over the position as the user is declared bankrupt. (Bankruptcy Price: The price at which margin drops to zero for isolated margin position; The price at which account balance drops to zero for cross margin position). Bankruptcy Price does not display on the Candlestick chart.
5. Insurance Funds
Insurance Funds are set up by the platform as financial guarantees to maintain the normal operation of futures trading, and the main sources of Insurance Funds include the reserves provided by the CoinW and the liquidation remainder of forced liquidation orders.
Every day at 8:00:00 (UTC), the platform settles the insurance clearance fee caused by forced liquidation in the trading market since 08:00:00 (UTC) the previous day
In order to accommodate product optimization or other reasons for iteration, the platform may modify, add, or delete the contents of this notice. It is recommended that you regularly check this notice for the latest information, as the platform will not provide separate notifications.