Trading Rules: Liquidation Process (Unified Trading Account)

    bybit2023-10-19 09:03:03


     

    Bybit now supports the Isolated Margin mode on the Unified Trading Account, alongside the existing Cross Margin and Portfolio Margin modes. 

     

    In Isolated Margin mode, the liquidation risk of a position is assessed based on the margin allocated for each position. Liquidation is triggered when the Mark Price reach the liquidation price.


    While for Cross Margin and Portfolio Margin Mode, the risk of a Unified Trading Account is assessed using the Initial Margin Rate (IM rate) and Maintenance Margin Rate (MM rate) of all positions. Liquidation is triggered when MMR reaches 100%.


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    Differences Between the Margin Modes Under the Unified Trading Account



    The liquidation process for Spot Margin Trading, USDT Perpetual, USDC Perpetual, USDC Futures and USDC Options under a Unified Trading Account differs, according to the three (3) margin modes: Isolated Margin, Cross Margin and Portfolio Margin. Within the three (3) margin modes, the parameters that affect the account IM rate and MM rate are also different. The formulas for these calculations are as follows:




     

    Isolated Margin
    Under Isolated Margin, the margin for each trading pair is calculated independently and is not affected by other orders or positions. This mode supports both One-way and Hedge (USDT-Perp Only) Modes.


    As the margin in the Isolated Margin is calculated on an independent basis, the margin calculation method for One-way and Hedge (USDT-Perp Only) modes remains consistent. For more information on margin calculation methods, refer to the following articles: 

     

     

    Notes: 

    — Unified Trading Account allows Derivatives trading in Isolated Margin, Cross-Margin, and Portfolio Margin modes. USDT Perpetual and Futures support Hedge and One-way positions, while other Derivatives contracts only allow One-way positions. 

    — The Isolated Margin mode is not applicable to Spot Margin Trading and Options Trading.

    — Supports both manual margin adjustment and auto margin replenishment.



     

    Liquidation Process
    In the Isolated Margin mode, when the Mark Price hits the Liquidation Price, liquidation will be triggered. To avoid immediately triggering a full liquidation, Bybit utilizes partial liquidation to reduce the required maintenance margin. For the specific liquidation process of USDT Perpetual, USDC Perpetual and Futures, please refer to the following articles:

     

     

     

     

    Cross Margin
    Under the Cross Margin mode of the Unified Trading Account, Bybit supports One-way and Hedge modes. Please note that the Hedge mode is only available for USDT Perpetual contracts.


    Cross Margin is based mainly on margin balance, initial margin, maintenance margin and active order(s) value loss (depending on the conversion rate of different assets).     Both One-way and Hedge modes use the same formula to calculate the Account IM Rate and Account MM Rate under the Cross Margin mode. However, the formula for deriving the initial margin for open positions differs in the two modes.

      

    Account IM Rate = Initial Margin/ (Margin Balance − Haircut Loss + Order Loss) × 100%

    • Initial Margin = Sum (Initial Margin on Borrowed Asset + Initial Margin for Active Order(s) + Initial Margin for Open Positions)

    • Initial Margin on Borrowed Asset = Borrowing Amount  × Initial Margin Rate on Borrowed Asset

    • Borrowing Amount = ABS [Min ( 0, Asset Equity − Positive Option value − Asset Frozen)]

    • Initial Margin Rate on Borrowed Asset

    — When the Spot Margin trading function is turned off, the value defaults to 10%.

    — When the Spot Margin trading function is enabled, the calculation formula for this value is: Max (1 / Max Leverage, (1 + 1 / Selected Leverage) / Collateral Value Rate − 1 )

    • Initial Margin formula for opening a position in the One-way mode under UTA is similar to that of the Isolated Margin mode. 

    • Initial Margin formula for opening a position in the Hedge mode under UTA:

    — Position IM with a Higher Position Value = (Total Position Value/Leverage) + [Hedged Position Value × (1 − 1 / Leverage)  × Taker Fee Rate  × 2] + [Unhedged Position Value × (1 − 1 / Leverage)  × Taker Fee Rate]

    — Position IM with a Lower Position Value = Hedged Position Value × (1 + 1 / Leverage)  × Taker Fee Rate × 2
    — Detailed formulas can be found in the Glossary (Unified Trading Account).

    Trading Rule 01.png

    • Margin Balance = Wallet Balance + Unrealized P&L of the Perpetual & Futures Contract

    • Order Loss: If the price of a buy order is higher than the mark price or a sell order price is lower than the mark price, the order loss generated from the order execution will need to be considered during the IM rate or MM rate calculations. For example, if the current mark price is $2,000 and the trader submits a buy order of 2 BTC perpetual contracts, the order price is $2,050.  Order Loss = (2,050 - 2,000) × 2 =$100

     

    Account MM Rate = Maintenance Margin/ (Margin Balance − Haircut Loss + Order Loss) × 100%

    • Maintenance Margin = Sum (Maintenance Margin on Borrowed Asset + Maintenance Margin for Open Positions)

    • Maintenance Margin on Borrowed Asset = Borrowing Amount × Maintenance Margin Rate on Borrowed Asset

    • Maintenance Margin Rate on Borrowed Asset

    — When the Spot Margin trading function is turned off, the value defaults to 4%.

    — When the Spot Margin trading function is enabled, the calculation formula for this value is: 1.04 / Collateral Value Ratio − 1

    • Maintenance Margin formula for opening a position in the One-way mode under UTA is similar to that of the Isolated mode. 

    • Maintenance Margin formula for opening a position in the Hedge mode under UTA:

    —  Position MM with a Higher than Position Value =  (Unhedged Position Value × Maintenance Margin Rate) + [Hedged Position Value × (1 − 1 / Leverage)  × Taker Fee Rate  × 2] + [Unhedged Position Value × (1 − 1 / Leverage)  × Taker Fee Rate]

    — Position MM with a Lower than Position Value = Hedged Position Value × (1 + 1 / Leverage)  × Taker Fee Rate  × 2
    — Detailed formulas can be found in the Glossary (Unified Trading Account).

    • Margin Balance = Wallet Balance + Unrealized P&L of the Perpetual & Futures Contract

     

    Maintenance Margin on Borrowed Asset may occur in the following scenarios:

    1. The borrowing generated during your Spot Margin trading.

    2. Negative equity arising from transaction fees and/or funding fees paid in Derivatives transactions.

    3. Negative equity generated by closing positions that record losses.

    4. Negative unrealized profit and loss generated by Derivatives positions.

    5. Decrease in value of USDC Options positions

     

    Note: The potential liabilities no longer occupy the margin in your unified trading account, including the initial margin and maintenance margin occupied by Derivatives active orders and positions.

     

    The IM rate and MM rate of the Unified Trading Account calculations are based on the initial margin and maintenance margin of the account. Please note that maintenance margin here means the minimum amount of margin required to keep an account in a safe state.



     

    Liquidation Process

    The liquidation process of the Unified Trading Account under the cross margin is as follows: 

     

    Margin Rate Level

    Derivatives

    Spot 

     

    Account IM Rate

    ≥ (Selected Leverage − 1) / Selected Leverage

    Margin trading does not allow any borrowing.


     

    ≥ 100%


     

    New orders that would occupy margin cannot be placed


     

    • New margin orders cannot be placed

     

    • It is not allowed to place an order to buy lower conversion rate assets with high conversion rate assets.













     

    Account MM Rate

    ≥ 85%

    Auto repayment will be triggered if there are liabilities according to the process stated here. Simultaneously, cancel all orders for Spot and Spot Margin that occupy costs.
     

    (View the liquidity sequence for the order of liquidity of Margin Assets)



     

    = 100%

     

     

    One-Way Mode

    The system will first reduce the risk limit of all Perpetual & Futures positions in the UTA to the tier that matches the position value. 

    After this, if the MM rate falls below 100%, the account will return to a safe state, and the liquidation process will end. Otherwise, the below liquidation process will be conducted:

     

    a) Derivatives: All orders that would increase the position size will be canceled.

    Spot Margin: Cancel all Spot Margin orders, and orders to buy lower conversion rate assets with high conversion rate assets.


    b) If the MM rate is still at 100% or above, all orders will be canceled and
    the system will calculate the amount of margin that needs to be released to reduce the MM rate to 90% or below. Then, according to the liquidity order of the trading pairs, determine which trading pair positions need to reduce their risk limit tiers, and to which level the required margin amount can be released. After this, if the MM rate falls below 100%, the account will return to a safe state, and the liquidation process will end.

    (View the table in the References section below for the order of liquidity of trading pair)

     

    c) If the MM rate is still at 100% or above, partial liquidation of USDC Options.

    Hedge Mode

    The system will first reduce the risk limit of all USDT Perpetual positions that are not hedged in the Unified Trading Account to the tier that matches the position value. 

    After this, if the MM rate falls below 100%, the account will return to a safe state, and the liquidation process will end. Otherwise, the below liquidation process will be conducted:

     

    a) Derivatives: All orders that would increase the position size will be canceled.

    Spot Margin: Cancel all Spot Margin orders, and orders to buy lower conversion rate assets with high conversion rate assets.


    b) If the MM rate is still at 100% or above, all orders will be canceled and hedged positions enter the liquidation process based on the ordering of contract liquidity. Liquidated positions will be settled at the mark price. If the MM Rate falls below 100%, the account will return to a safe state and the liquidation process will end.

     

    c) If the MM rate is still at 100% or above after the liquidation process, all your USDT and USDC Perpetual and Futures positions will be closed until the MM rate falls below 90%. If not, or taken over by the system.
     
    d) Partial liquidation of USDC Options.

    = 90%The liquidation process ends.

    ≥ 160% 

    The liquidation system will take over USDC Options positions on the account.

     

     

     


    Portfolio Margin

    Portfolio margin is based mainly on equity, initial margin, maintenance margin and active order(s) value loss (depending on the conversion rate of different assets).

     

    Account IM Rate = Account IM /(Account Equity − Haircut Loss + Order Loss) × 100%

    • Account IM = USDC Derivatives IM (in USD) + USDT Derivatives IM (in USD) + USDC Spot IM (in USD) + USDT Spot IM (in USD)

    • Equity = Margin Balance + USDC Options Value

    • Order Loss: If the price of a buy order is higher than the mark price or a sell order price is lower than the mark price, the order loss generated from the order execution will need to be considered during the IM rate or MM rate calculations. For example, if the current mark price is $2,000 and the trader submits a buy order of 2 BTC perpetual contracts, the order price is $2,050.  Order Loss = (2,050 - 2,000) × 2 =$100

     

    Account MMR = Account MM / (Account Equity − Haircut Loss + Order Loss) × 100%

    • Account MM = USDC Derivatives MM (in USD) + USDT Derivatives MM (in USD) + USDC Spot MM (in USD) + USDT Spot MM (in USD)

    • Equity = Margin Balance + USDC Options Value

     
    To learn more about margin calculations for Portfolio Margin mode, please refer to     here.


    Liquidation Process

    The liquidation process of the Unified Trading Account under the portfolio margin is as follows:

     

     

    Margin Rate Level

    Derivatives

    Spot 






     

    Account IM Rate

    ≥ (Selected Leverage − 1)/ Selected Leverage

    Margin trading does not allow any borrowing.

    ≥ 100%

    New positions that would increase margin cannot be placed

    -













     

    Account MM Rate

    ≥ 85%

     

    Auto repayment will be triggered if there are liabilities according to the process stated here. Simultaneously, cancel all orders for Spot and Spot Margin that occupy costs.

     

    (View the liquidity sequence for the order of liquidity of Margin Assets)



     

    = 100%

     

     

    a) All orders will be canceled. 


    b) If the account MM rate still hits 100%, the laddered liquidation system will calculate the amount of margin that needs to be released to reduce the MM rate to 90% or below. 

     

    = 90%

    Liquidation process ends.

    ≥ 160% 

    The liquidation system will take over the position and liquidate the entire account.

     

     

     

     

     Spot Trading Rules 

    Under the Unified Trading Account, there are two scenarios worth noting for Spot Margin trading:

    1. The Spot Margin trading function is not enabled:

    • When the IM Rate exceeds 100%, it is not allowed to place an order to buy lower conversion rate assets with high conversion rate assets.

    • When there is a Derivatives position, the Spot order will comprehensively calculate the amount available for trading based on the available balance and collateral asset balance.

     

    2. The Spot Margin trading function is enabled:

    • When the IM rate reaches (Selected Leverage − 1 )/ Selected Leverage, Spot margin orders cannot be placed.

    • When the MM Rate reaches 85%, margin assets will be sold to settle all liabilities.

    • When the IM Rate exceeds 100%, it is not allowed to place an order to buy lower conversion rate assets with high conversion rate assets.

    • When the available margin in your Unified Trading Account is more than zero, the user can automatically borrow and sell more amounts when placing an order.

     

     

     



    References

    The liquidity order of trading pairs or margin assets is as follows:

     

    Derivatives 

    Order

    Trading Pairs

    1–20

    BTCUSDT, ETHUSDT, SOLUSDT, XRPUSDT, BTCPERP, GMTUSDT, SANDUSDT, ADAUSDT, BNBUSDT, MATICUSDT, AVAXUSDT, APEUSDT, LINKUSDT, LTCUSDT, TRXUSDT, UNFIUSDT, NEARUSDT, GALAUSDT, DOTUSDT, ATOMUSDT

    21–40

    AXSUSDT, SHIB1000USDT, USDCUSDT, UNIUSDT, LUNA2USDT, BCHUSDT, WAVESUSDT, AAVEUSDT, DOGEUSDT, STORJUSDT, MANAUSDT, ZILUSDT, RUNEUSDT, FTMUSDT, SNXUSDT, KNCUSDT, ETCUSDT, XTZUSDT, THETAUSDT, OPUSDT

    41–60

    EOSUSDT, OGNUSDT, CHZUSDT, MTLUSDT, CRVUSDT, XLMUSDT, XMRUSDT, FTTUSDT, BELUSDT, EGLDUSDT, FLMUSDT, 1INCHUSDT, SUSHIUSDT, COMPUSDT, BATUSDT, SRMUSDT, ZRXUSDT, TRBUSDT, FITFIUSDT, OMGUSDT,

    61–85

    IOSTUSDT, CROUSDT, ENSUSDT, LRCUSDT, KAVAUSDT, BLZUSDT, ENJUSDT, ALGOUSDT, BITUSDT, BNXUSDT, MKRUSDT, FILUSDT, YFIUSDT, ZECUSDT, ALICEUSDT, DYDXUSDT, ARPAUSDT, GALUSDT, VETUSDT, API3USDT

    81–100

    BSWUSDT, ARUSDT, KSMUSDT, HNTUSDT, ONEUSDT, ONTUSDT, OCEANUSDT, ICPUSDT, CTSIUSDT, HBARUSDT, DASHUSDT, SXPUSDT, 1000XECUSDT, PEOPLEUSDT, WOOUSDT, NEOUSDT, BANDUSDT, XEMUSDT, CTKUSDT, C98USDT

    101–120

    AUDIOUSDT, LITUSDT, RENUSDT, COTIUSDT, CHRUSDT, SKLUSDT, GRTUSDT, LINAUSDT, MASKUSDT, GSTUSDT, BAKEUSDT, ANKRUSDT, IOTXUSDT, QTUMUSDT, DARUSDT, AKROUSDT, BALUSDT, CVXUSDT, GLMRUSDT, AGLDUSDT

    121–140

    IOTAUSDT, ALPHAUSDT, HOTUSDT, JSTUSDT, ICXUSDT, REQUSDT, ROSEUSDT, RSRUSDT, KDAUSDT, YGGUSDT, BSVUSDT, TOMOUSDT, DENTUSDT, REEFUSDT, RAYUSDT, ZENUSDT, DODOUSDT, CELRUSDT, STMXUSDT, CELOUSDT, GTCUSDT

    141–160

    PAXGUSDT, FLOWUSDT, LOOKSUSDT, IMXUSDT, ILVUSDT, ASTRUSDT, SLPUSDT, SFPUSDT, TLMUSDT, RSS3USDT, DUSKUSDT, STXUSDT, ANTUSDT, CVCUSDT, FXSUSDT, MINAUSDT, KLAYUSDT, 1000BTTUSDT, XCNUSDT, SUNUSDT

    161–185

    LPTUSDT, 10000NFTUSDT, DGBUSDT, RNDRUSDT, RVNUSDT, ACHUSDT, JASMYUSDT, SCRTUSDT, BOBAUSDT, SPELLUSDT, CTCUSDT, CKBUSDT, CREAMUSDT, SCUSDT, BICOUSDT, ETHPERP, SOLPERP, GMTPERP, ADAPERP, AVAXPERP, XRPPERP, ..... (new released symbols)

     

    • In the event of liquidation, Futures position that is nearer to the settlement date will be liquidated first. 

     

     

     

    Margin Assets

    For the liquidity order for Margin Assets, please refer to here.

    The liquidity order of trading pairs or margin assets is as follows:

    Derivatives 

    Order

    Trading Pairs

    1–20

    BTCUSDT, ETHUSDT, SOLUSDT, XRPUSDT, BTCPERP, GMTUSDT, SANDUSDT, ADAUSDT, BNBUSDT, MATICUSDT, AVAXUSDT, APEUSDT, LINKUSDT, LTCUSDT, TRXUSDT, UNFIUSDT, NEARUSDT, GALAUSDT, DOTUSDT, ATOMUSDT

    21–40

    AXSUSDT, SHIB1000USDT, USDCUSDT, UNIUSDT, LUNA2USDT, BCHUSDT, WAVESUSDT, AAVEUSDT, DOGEUSDT, STORJUSDT, MANAUSDT, ZILUSDT, RUNEUSDT, FTMUSDT, SNXUSDT, KNCUSDT, ETCUSDT, XTZUSDT, THETAUSDT, OPUSDT

    41–60

    EOSUSDT, OGNUSDT, CHZUSDT, MTLUSDT, CRVUSDT, XLMUSDT, XMRUSDT, FTTUSDT, BELUSDT, EGLDUSDT, FLMUSDT, 1INCHUSDT, SUSHIUSDT, COMPUSDT, BATUSDT, SRMUSDT, ZRXUSDT, TRBUSDT, FITFIUSDT, OMGUSDT,

    61–80

    IOSTUSDT, CROUSDT, ENSUSDT, LRCUSDT, KAVAUSDT, BLZUSDT, ENJUSDT, ALGOUSDT, BITUSDT, BNXUSDT, MKRUSDT, FILUSDT, YFIUSDT, ZECUSDT, ALICEUSDT, DYDXUSDT, ARPAUSDT, GALUSDT, VETUSDT, API3USDT

    81–100

    BSWUSDT, ARUSDT, KSMUSDT, HNTUSDT, ONEUSDT, ONTUSDT, OCEANUSDT, ICPUSDT, CTSIUSDT, HBARUSDT, DASHUSDT, SXPUSDT, 1000XECUSDT, PEOPLEUSDT, WOOUSDT, NEOUSDT, BANDUSDT, XEMUSDT, CTKUSDT, C98USDT

    101–120

    AUDIOUSDT, LITUSDT, RENUSDT, COTIUSDT, CHRUSDT, SKLUSDT, GRTUSDT, LINAUSDT, MASKUSDT, GSTUSDT, BAKEUSDT, ANKRUSDT, IOTXUSDT, QTUMUSDT, DARUSDT, AKROUSDT, BALUSDT, CVXUSDT, GLMRUSDT, AGLDUSDT

    121–140

    IOTAUSDT, ALPHAUSDT, HOTUSDT, JSTUSDT, ICXUSDT, REQUSDT, ROSEUSDT, RSRUSDT, KDAUSDT, YGGUSDT, BSVUSDT, TOMOUSDT, DENTUSDT, REEFUSDT, RAYUSDT, ZENUSDT, DODOUSDT, CELRUSDT, STMXUSDT, CELOUSDT, GTCUSDT

    141–160

    PAXGUSDT, FLOWUSDT, LOOKSUSDT, IMXUSDT, ILVUSDT, ASTRUSDT, SLPUSDT, SFPUSDT, TLMUSDT, RSS3USDT, DUSKUSDT, STXUSDT, ANTUSDT, CVCUSDT, FXSUSDT, MINAUSDT, KLAYUSDT, 1000BTTUSDT, XCNUSDT, SUNUSDT

    161–180

    LPTUSDT, 10000NFTUSDT, DGBUSDT, RNDRUSDT, RVNUSDT, ACHUSDT, JASMYUSDT, SCRTUSDT, BOBAUSDT, SPELLUSDT, CTCUSDT, CKBUSDT, CREAMUSDT, SCUSDT, BICOUSDT, ETHPERP, SOLPERP, GMTPERP, ADAPERP, AVAXPERP, XRPPERP, ..... (new released symbols)

     
    • In the event of liquidation, Futures position that is nearer to the settlement date will be liquidated first. 

     

     

    Margin Assets

    For the liquidity order for Margin Assets, please refer to here.

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