Last Updated: December 4, 2019
- What is the Tiered Margin Ratio System?
The tiered margin ratio system permits higher leverage if a user borrows relatively lower amounts. Larger borrows require a higher maintenance margin ratio, limiting user leverage. The maintenance margin ratio is the minimum margin requirement to maintain a position. If a user’s margin falls below the maintenance margin ratio, liquidation will occur under the tiered liquidation system. Partial liquidations take place if conditions permit, so that unaffected positions are retained when a large position reaches its liquidation trigger.
The following is the tiered margin ratio table for BTC/USD margin trading:
For information on all positions, please see our complete margin borrowing position tiers.
For example, a user borrows 12 BTC (base currency), which falls within Tier 3 (10 – 15 BTC), and also USD 10,000 (quote currency), which falls within Tier 1 (USD0 - 50,000). His tier is determined by the higher tier, which is Tier 3 in this case. Therefore, his maintenance margin ratio is 7%, and the maximum leverage available is 8.69x.
- Partial Liquidation System
Our partial liquidation system is a risk control system used to lower the risk of market fluctuation and margin call loss caused by the liquidation of large positions. For example, if a user’s tier is Tier 2 or above, and his margin is lower than required by the maintenance margin ratio of the tier, partial liquidation will occur. Our system will partially reduce his position size to that of Tier 1. After bringing the user’s tier down by one tier, if the amount of his margin can meet the maintenance margin ratio of the new tier, partial liquidation will stop. If not, partial liquidation will continue.
- Full liquidation system
If a Tier 1 user’s margin is lower than the maintenance margin ratio of the tier, or a Tier 2 or above user’s margin is lower than the maintenance margin ratio of Tier 1, full liquidation will occur. Our full liquidation system is employed to minimize the risks of cascading liquidations and margin call losses.