Coincall uses Initial Margin Ratio (IM%) and Maintenance Margin Ratio (MM%) to evaluate the risk of trading accounts. Different risk control mechanisms are applied in different margin rate ranges.
- MM% < 80% & IM < 100%
At this point, the account is safe and users can trade and withdraw normally.
- IM% ≥ 100%
At this point, the initial margin of the account is too high, which will affect opening positions. The risk control measures include only keeping options closing orders and futures closing orders, canceling all other pending orders, prohibiting users from opening new orders, and only allowing them to close orders or cancel them actively. Users' withdrawals will also be restricted, and they will receive an email reminder that their IM is insufficient and that they should add more margin.
- MM% ≥ 80%
At this point, the user's maintenance margin is relatively high, and there is a risk of forced liquidation of current positions. However, the account is still safe and users can trade and deposit/withdraw normally. The platform will send an email reminder to users that there is a risk of forced liquidation and suggest adjusting positions or adding more margin.
- MM% ≥ 100%
At this point, the account triggers forced liquidation. The risk control engine will take over the account, cancel all pending orders, and users cannot place new orders, cancel orders, or withdraw funds. After canceling orders, the risk control engine will handle the existing positions in the account.
Since futures have better liquidity, futures positions will be handled first, specifically:
- Sort the futures positions according to certain rules to ensure that the account can better bear the risk of subsequent fluctuations after reducing positions to restore safety.
- Select a certain currency futures position and calculate the liquidation quantity based on the target MM% level and the effect of releasing MM from the position. The target MM% will be appropriately less than 100% to ensure that there will be no immediate forced liquidation after the first one.
- If the account still does not reach the target MM% after the above positions are liquidated, continue to liquidate the next futures position in the order.
- If all futures positions are liquidated and the account still does not reach the target MM%, then options positions will be handled.
For options positions, only short options positions will be liquidated, specifically:
- Sort the short options positions according to a comprehensive consideration of the liquidity of the options contracts and the effect of liquidation.
- Select a certain options position and calculate the liquidation amount, following the same logic as futures.
- If the account still does not reach the target MM% after the above positions are liquidated, continue to liquidate the next options position in the order.
The liquidated futures and options positions will enter the forced liquidation route for processing, and then MM% will be calculated again, repeating the above steps until the target MM% is reached and the forced liquidation is exited.
The above forced liquidation operations will be notified to users by email, and users can also check them in the order history.
- Special case, margin balance ≤ 0
Under normal circumstances, when futures incur losses, MM% will exceed 100% before the margin balance becomes zero, and the regular liquidation logic will be followed. In extreme market conditions, if futures generate huge losses in a short period of time, or if futures continue to incur losses during the forced liquidation process, causing the margin balance to be ≤ 0, MM% will be ≤ 0, and the indicator will fail. In this case, special forced liquidation will take over, canceling all pending orders, and users cannot trade or withdraw funds. After taking over the account, the risk control engine will first process the margin balance of the account to a positive value to restore the indicator to normal, and then follow the regular risk control measures.
Since the losses are caused by futures positions, all futures positions will be liquidated first and sent to the forced liquidation route for stop loss. However, closing futures positions will not change the margin balance, and at this point, the margin balance is still less than 0, so long positions in options will be liquidated to release the margin balance. All long options positions of all currencies will be sorted according to certain rules and sent to the forced liquidation route one by one until the margin balance reaches a certain level and MM% can be calculated normally.
After the forced liquidation of long options positions is completed, MM% and asset net value will be used to determine whether to exit the forced liquidation or enter the next regular forced liquidation.
Similarly, the forced liquidation operations will be notified to users by email, and users can also check them in the order history.
- Margin call, asset net value ≤ 0
When the market fluctuates dramatically, the account may have an asset net value less than 0, which is called a margin call. At this point, the negative asset net value and positions of the account will be taken over by the platform and processed through the forced liquidation route.
Margin call notifications will be sent to users by email.