Risk Limits


When a large position gets liquidated, it may cause violent price fluctuations, and may also cause opposite side traders to be auto-deleveraged because the size of the liquidated position is larger than what the market liquidity can absorb.


To reduce market impact and number of users being affected by liquidation events, BTSE has implemented the Risk Limits mechanism, which requires large positions to provide more initial margin and maintenance margin. By doing so, when a large position is liquidated, the probability of going into auto-deleveraging is reduced, and thus minimizing off market liquidations.




Risk Limit Levels


There are 10 levels of risk limits. The larger the position, the higher the required maintenance margin and initial margin percentages.


In the BTC perpetual contract market, every 100k contracts you hold increases the threshold for maintenance and initial margin requirements by 0.5%.

(For risk limits in other markets, please refer to the risk limit panel description in the trading page)


Position Size + Order Size
Maintenance Margin
Initial Margin
100K
0.5%1.0%
200K
1.0%
1.5%
300K
1.5%
2.0%
400K
2.0%
2.5%
500K
2.5%
3.0%
600K
3.0%
3.5%
700K
3.5%
4.0%
800K
4.0%
4.5%
900K
4.5%
5.0%
1M
5.0%
5.5%


When the sum of your position size and your new order size exceeds your current risk limit level, the system will prompt you to increase the risk limit level before you can place the new order.


In the contrary, if you have closed the large position and would like to return to the normal maintenance margin and initial margin level, you have to manually adjust the risk limit level.


For example:


You have 90K BTC perpetual contracts, and would like to add another 20K contracts.

Since 90K + 20K = 110K, you already exceeded the 100K risk limit level. So when you place the 20K contract order, the system will prompt you to increase the risk limit level to 200K level before you can place the new order.


After you close the 110K position, you have to manually adjust the risk limit back to 100K level, then the thresholds for the maintenance margin and the initial margin will return to the corresponding percentage.




How to Adjusting Your Risk Limit


1. Click the Edit Button on the risk limit tab



2. Click the Level you would like to use, and then click Confirm to complete the setting