System Liquidation Mechanism

To improve the transaction efficiency of liquidated Futures positions, with no effect on the market liquidity, OKX develops the following methodology.

1.Glossary

a.Forced-liquidation Price: When the mark price reaches the forced-liquidation price and a user’s margin is lower than the required level, force-liquidation will be triggered.

b.Bankruptcy Price: The price at which a user loses all margin

c.Entrusted Price of Liquidated Position: The price at which a liquidated position is put into the market by our forced-liquidation engine after forced-liquidation

d.Trading Price of Liquidated Position: The actual transaction price of the liquidated position in the market

2.Liquidated Futures Position Price Calculation

a.Objective:

Creating a more reasonable entrusted price, instead of using bankruptcy price, for reselling liquidated positions taking account of factors such as market depth, basis and mark price, so as to minimize market impact, and lower the systematic risk.

b.Rationale

When a position is forced-liquidated and taken over by the forced-liquidation engine, it will not be put into the market at the bankruptcy price directly. Instead, the entrusted price will be calculated based on current market depth, basis, and mark price to increase transaction efficiency and return to cover the loss.

3.Inquiry for Liquidated Positions and Margin Call Loss

a.After the price change, some positions may be transacted at lower prices than their bankruptcy prices(for closed long positions) or higher(for closed short positions). The margin call losses caused by the difference between the bankruptcy price and transaction price will be shown in the forced-liquidation list.

b.The margin call losses caused by liquidated positions after price changes will be cleared with the margin call losses from unfulfilled liquidated positions altogether. The total loss will be compensated by the security fund.

c.The total margin call loss can be checked on the forced-liquidation page:

= Margin call losses of fulfilled liquidated positions + Margin call losses of unfulfilled liquidated positions

Disclaimer:

This content is provided for informational purposes only and may cover products that are not available in your region. It does not constitute investment or financial product advice, not it is a recommendation or solicitation to buy or sell financial instruments or to engage in any specific trading strategy.

Trading in financial instruments involves a significant risk of loss and may not be suitable for all investors. If you invest in X-Perps or other derivatives you may lose some or all of the money you invest. X-Perps are leveraged instruments; leverage can amplify both gains and losses. The value of investments and any income derived from them can go down as well as up, and you may not recover the amount originally invested. Past performance is not a reliable indicator of future results. You should carefully consider your investment objectives, level of experience, and risk appetite before engaging in any trading activity.

OKX Europe Markets Ltd ("OEM"), which is authorised and regulated by the Malta Financial Services Authority (MFSA) under the Investment Services Act (Chapter 370 of the Laws of Malta) as a Investment Services Licence Holder (Licence No. OEML-15905).

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