Risk Control Mechanism for Portfolio Margin Account

Announcements Risk Control Mechanism for Portfolio Margin Account

2022-11-13 11:53:07 UTC 33278 Read

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Gate.io uses Portfolio Initial Margin Level and Portfolio Maintenance Margin Level to evaluate the risk level of the Portfolio Margin Account. Our system will perform the following risk control measures based on the relevant thresholds.
### 1.	Auto-Cancel
When the Portfolio Initial Margin Level is below 100%, the system will auto-cancel all pending orders in USDT-M, BTC-M Perpetual Futures that are not to reduce positions to ensure more margin is available in the account. When there are positions in different markets, the system will start to cancel pending orders from the market occupying the smallest amount of margin. Auto-cancel will not stop until the Portfolio Initial Margin Level is no less than 100%.
### 2. Forced Repayment
When the Portfolio Maintenance Margin Level is no more than 110%, the system will auto-repay the debt with assets in the account to ensure more margin is available. Only loans borrowed with the same coins that are available in your account will be repaid. The net assets (total assets – debt) in your account will not be sold for repayment.
### 3. Liquidation
Portfolio Maintenance Margin Level ≤ 100% will trigger liquidation.

The liquidation will start from cancelling all pending orders in Spot Margin Trading and Perpetual Futures and will not stop until the Portfolio Maintenance Margin Level is above 100%.

Next, we will liquidate futures positions and then repay liabilities.

For USDT Perpetual and BTC Perpetual positions, those with better liquidity will be liquidated first. The system will liquidate maximum 10000 contracts every time. Liquidation will not stop until the Portfolio Maintenance Margin Level is above 100%.

For Spot Margin Trading, the system will repay the loans with the biggest loan amount first, followed by the smaller ones. When selling assets, the coin with the biggest USD value will be sold first. After selling the assets, the system will take an equivalent of 2% of your liabilities and put it into the insurance fund pool to cover unexpected position loss. During the repayment process, the liquidation will not stop until the Portfolio Maintenance Margin Level is above 100%.

![](https://gimg2.gateimg.com/image/article/1669795310风控机制en1.png)

### Example: Auto-Cancel
![](https://gimg2.gateimg.com/image/1709302981650778376_81a484093e56e013e6c9ad921fdc0468.png)
First, among the pending orders, the position value in BTC/USD and ETH/USD markets will be compared.
The position value in the BTC/USD market = 100 x 51000 x 0.0001 = 510 USD
The position value in the ETH/USD market = 200 x 1900 x 0.01 = 3800 USD

The system will compare the position value in different markets and cancel orders with the less position value first, which in this case is the position in the BTC/USD market. Both the first and second pending orders require initial margin to place the order. The respective margin occupied for the two pending orders are calculated as the following:

Margin occupied by the first pending order = 300 x 50000 x 0.0001 x 1% = 15 USD
Margin occupied by the second pending order = 500 x 49000 x 0.0001 x 1% = 24.5 USD

Due to market volatility, the Portfolio Initial Margin Level is below 100%, which will trigger auto-cancel. As the first pending order occupies less margin, cancelling this order will cause less impact on the user’s expectation. The system will cancel the first pending order. After this, if the Portfolio Initial Margin Level is still below 100%, the following pending orders with more margin occupied will be cancelled until the Portfolio Initial Margin Level is no less than 100%.

### Example: Forced Repayment

Suppose user A have 1 BTC and 3000 USDT in the account and borrowed 1.5 BTC and 1 ETH.

A’s total assets = 2.5 BTC + 3000 USDT + 1 ETH

A sold the borrowed 1 ETH. However, due to market volatility, A’s Portfolio Maintenance Margin Level fell to or fell below 110%, which would trigger forced repayment. The system will auto repay the borrowed 1.5 BTC with 1 BTC. As A has no ETH, the borrowed 1 ETH will not be auto repaid.

Gate.io reserves the final right to interpret the product.

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