Business Rules for Isolated Margin Trading
- Margin Trading Guide
1 General Principles
1.1 These Rules are formulated in accordance with the principles of fairness, openness and impartiality for the purposes of regulating margin trading and margin loans of digital assets, maintaining market order and protecting the legitimate rights and interests of investors.
1.2 These Rules are supplementary provisions to The Margin Trading Service Agreement.
1.3 These Rules shall apply to isolated Margin Loan and isolated margin trading conducted on this Website. Any matter for which there is no specific provision in these Rules shall be subject to the Margin Trading Service Agreement, the User Agreement and other relevant provisions of this Website.
2. Security Deposit
2.1 In the isolated margin business model, the User must provide a security deposit that meets the requirements for the Margin Loans of each trading pair (currently, the Platform accepts security deposits made in the underlying currency and the denominated currency) before they may engage in margin trading.
2.2 The system will set up different isolated margin accounts for each trading pair according to the User's Margin Loan application. Margin Users can use the net assets in each of their Isolated Margin Accounts as security deposit for related trading against isolated margin trading.
3. Loan Rules
3.1 The Maximum Amount of Margin Loans refers to the maximum amount of loans for the current margin trading currency pairs. The Platform will calculate the maximum amount of isolated margin loans that may be borrowed by a specific User according to the maximum amount of isolated margin available and the Platform’s risk control rules.
In these Rules, the Maximum Amount of Margin Loans = Net Assets in an Isolated Margin Account * (Maximum Margin Multiples - 1) - outstanding borrowed assets.
3.2 After the successful grant of a Margin Loan, the borrowed digital assets shall be transferred to the User's Isolated Margin Account immediately, and the Platform system shall begin calculating fees payable thereon immediately, upon which, the User may use the borrowed digital assets to engage in isolated margin trading in trading pairs permitted in isolated margin trading.
4. Rules for Calculating Loan service fee Rate
4.1 Fee Calculation Rules: the loan service fee shall be calculated at an hourly simple fee rate according the actual term of the loan, with each sixty(60) minutes of such term deemed as one(hour) (the term shall commence as of the time when the loan assets are delivered into the User’ Isolated Margin Account by the Platform; if the term is less than 60 minutes, it shall be deemed as one(1) hour). the service fee shall accrue at the time when the loan assets enter the User’ Isolated Margin Account, and shall accrue every one(1) hour after that.
4.2 The User may repay their loans in advance and pay the service fee payable thereon according to the number of hours for which the assets are borrowed. If the assets are borrowed for less than one(1)hour, the term thereof shall be deemed as one(1) hour and the service fee shall be calculated accordingly. The user shall give priority to the payment of service fee when repaying loans.
4.3 Outstanding loan service fee shall be included into the Risk Ratio hereunder. In the event that no service fee is deducted, if there is any long-term outstanding service fee payable by the User, the Risk Ratio of the User’s Isolated Margin Account may drop to a level below the liquidation line, and therefore give rise to the risk of forced liquidation of the account. In view of this, the User is advised to pay service fee on schedule or deposit a sufficient balance in their margin accounts.
5. Rules for Repayment/Candy and Airdrop
5.1 Rules for Currency Repayment: User can manually select the loan order to be repaid, repay the loan order that is generated the earliest, and shall give priority to the payment of service fee over the repayment of the principal. After the principal and service fee of a specific loan order are paid off, the status of the loan order shall be changed into “paid off”, and after that no service fee will be calculated for such order.
5.2 Candy and Airdrop Rules: the User is not allowed to obtain candies or airdrops from the underlying assets of any Margin Loan.
6. Risk Control
6.1 A User participating in Margin Loans may use the net assets in his/her Isolated Margin Account as the Security Deposit thereof, while the digital assets in their other accounts are not included into the Security Deposit of the Isolated Margin Account.
6.2 HTX shall have the right to monitor the Risk Ratio of the User's Isolated Margin Account on a real-time basis, and adopt corresponding measures according to the changes in the Risk Ratio thereof.
In these Rules, the Risk Ratio of an Isolated Margin Account = Total Asset Value / (Total Liabilities + Outstanding Service Fee), where:
The market value conversion shall be calculated in BTC;
Total Asset Value = Current Total Market Value of All Digital Assets in the Isolated Margin Account
Total Liabilities = the current total market value of all outstanding Margin Loans in the Isolated Margin Account
Outstanding service fee = the amount of each Margin Loan * the number of hours in loan time by the time of calculation * hourly service fee rate - deducted/paid service fee.
6.3 When the Risk Ratio of an Isolated Margin Account reaches one hundred and twenty percent (120%) ("the Warning Line"), the system will send warnings to the User according to the contact information provided by the User in advance, so as to inform the User of the trading risks. After receiving such warnings, the User shall promptly repay relevant loan or transfer a sufficient amount of Security Deposit from the currency-currency account thereof, so as to ensure that the Security Deposit conversion ratio remains above the Warning Line.
6.4 When the Risk Ratio of an Isolated Margin Account of a User reaches one hundred and ten (110%) ("the Forced Liquidation Line"), the system will automatically trigger forced liquidation, which will close the position in the Isolated Margin Account held by the User, and automatically repay all the Margin Loans of the User. If the User has multiple Margin Loans, the User will repay the loans according to the order in which such loans arise, with the loan that occurs the earliest to be repaid first. If all assets in the User's Isolated Margin Account are insufficient to repay all the loans of the User under the account (a scenario known as "negative balance"), the Platform shall have the right to continue recovering any outstanding loans from the User.
6.5 The User shall pay due attention to the risks of margin trading and timely adjust their position-holding ratio to avoid risks. All losses that arise when the User’s margin account triggers forced liquidation shall be borne exclusively by the User that owns the account, including but not limited to: losses that arise when the User fails to timely adopt corresponding measures after receiving warnings from the system, in the event that the Risk Ratio of the Isolated Margin Account reaches the Warning Line and then quickly reaches the Forced Liquidation Line, due to violent fluctuation in the digital asset prices.
6.6 The Platform will manage the total market value of Margin Loans hereunder. When the aggregate amount of Margin Loans on the Platform reaches the maximum total amount of Margin Loans set by the Platform, the system will automatically suspend Margin Loans until the total market value of Margin Loans becomes lower than such maximum total amount of Margin Loans.
6.7 The Platform will adjust the maximum total amount of Margin Loans and the Security Deposit conversion ratio according to the actual operation conditions and risk level of the market.
6.8 In the event of a negative balance after an Isolated Margin Account of a User is forcefully liquidated by the system to repay all Margin Loans of the User, the Platform shall have the right to restrict the User from transferring assets from Isolated Margin Account thereof to currency-currency account thereof, and restrict the currency withdrawal function of the currency-currency accounts thereof, and the currency withdrawal function cannot be restored unless and until the User repays all outstanding loans and relevant service fees.
6.9 In order to guarantee the security of account assets, only when the Risk Ratio of an Isolated Margin Account exceeds two hundred percent (150%) can the User transfer digital assets from the Isolated Margin Account thereof to the currency-currency account thereof, and the Risk Ratio of the Isolated Margin Account shall not be less than 150% after such transfer (150% for isolated margin trading pairs with leverage not less than 3X).