VII Force Partial or Full Liquidation

A Forced Partial Liquidation system is introduced to avoid large amount of liquidation orders due to Forced Full Liquidation impacting the market.

1. Forced Partial Liquidation：

For position at Tier 2 or above (Number of contracts on hold>=2,001, e.g. 3,000), Forced Partial Liquidation occurs when the current Margin Ratio is lower than the required Maintenance Margin Ratio + Rate of the transaction fee of forced liquidation. In the above example, the number of contracts to be liquidated = The current number of contract(s) on hold - Current Tier Number - Maximum contracts allowed for Tier 1 = 3,000 - 2,000 = 1,000.

For fixed margin model, the system will conduct forced liquidation on the volume of contracts required to be liquidated according to market price plus IOC. During the forced partial liquidation process, all relevant contracts of relevant users will be frozen, and the relevant users will not be able to conduct any operations on their relevant contracts. After finishing relevant liquidation process, the system will check and verify whether all forced partial liquidation processes are settled effectively or not. If all relevant orders are settled successfully, and that after the settlement, the relevant users’ margin ratios are greater than the maintenance margin ratios + the rate of transaction fees of liquidation of the number of contracts after the settlement, the forced partial liquidation will then be terminated, and the relevant users may then conduct normal operations on their positions.

If any of the relevant orders are not settled, or that after the process of settlement mentioned above, the relevant margin ratios are still lower than or equal to the maintenance margin ratios + rate of transaction fees of liquidation of the number of contracts after the settlement, the forced partial liquidation process mentioned above will be conducted repeatedly.

In Cross Margin Mode, if there is only long position or short position, the Forced Partial Liquidation process will be the same as above.

In Cross Margin Mode, if there are both long and short positions, the pairs of long/short positions will be closed immediately. If Margin Ratio reaches the required Maintenance Margin Ratio, liquidation will stop; if it is not reached, the liquidation will continue.

2. Forced Full Liquidation：

Fixed Margin Mode:When a user's maintenance margin ratio tier is 1, and his maintenance margin ratio falls below the tier's required level + the rate of transaction fees of liquidation, or when a user's maintenance margin ratio tier is 2 or above and his maintenance margin ratio is less than the requirement of tier 1 + the rate of transaction fees of liquidation, the position will be closed at its bankruptcy price (at which all margins are lost) and taken over by the forced liquidation engine.

Cross Margin Mode: When a user's maintenance margin ratio tier is 1 and his maintenance margin ratio falls below the tier's required level, or when a user's maintenance margin ratio tier is 2 or above and his maintenance margin ratio + rate of transaction fees of liquidation is lower than the requirement of tier 1, the position will be closed at its bankruptcy price (at which all margins are lost) and taken over by the forced liquidation engine.