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    Trading Rules: Liquidation Process (Unified Trading Account)
    bybit2024-04-04 08:38:54





    Bybit now supports the Isolated Margin mode for Unified Trading Accounts (UTA), along with 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 reaches the liquidation price.

     

    In Cross Margin and Portfolio Margin modes, the risk of a Unified Trading Account is assessed using the Initial Margin Rate (IMR) and Maintenance Margin Rate (MMR) 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 IMR and MMR are also different. The formulas for these calculations are as follows:






    Isolated Margin

    Under Isolated Margin, the margin for each trading pair or contract 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: 

     

    Spot Margin Trading and Options Trading are not supported in Isolated Margin mode.

     




    ​​​​​​​Liquidation Process

    In Isolated Margin mode, liquidation will be triggered when the Mark Price hits the Liquidation Price. To avoid immediate full liquidation being triggered, 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

    Cross Margin mode in UTA is based mainly on margin balance, initial margin, maintenance margin, and active order(s) value loss (depending on the collateral value ratio of different assets). Liquidation will be triggered when the account’s MMR reaches 100%. 

     

    In Cross Margin mode, One-way mode and Hedge mode (only for USDT Perpetual) are supported. Both modes utilize the same formula to calculate the Account IM rate and Account MM rate. However, the formula for deriving the initial margin required for open positions differs between the two (2) modes. For the detailed formula to calculate the margin, please refer to the Glossary (Unified Trading Account).




    Liquidation Process

    The liquidation process of the Unified Trading Account under Cross Margin is as follows: 

     

    Margin Rate Level

    Account Initial Margin Rate

    (IMR)

    ≥ (Selected Leverage − 1 / Selected Leverage )

    • Margin trading does not allow any borrowing.

    ≥100%

    • Active orders for Options will be canceled, whereas Spot, Perpetual, and Futures Trading orders will be retained.

    • New Derivatives orders that would occupy the margin, cannot be placed.

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

    Account Maintenance Margin Rate

    (MMR)

    = 100%

    Step 1: Cancel Active Orders

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


    b) Spot: Cancel all Spot and Spot Margin orders, as well as orders to buy lower conversion rate assets with higher ones.



    Step 2: Auto Repayment

    Auto repayment will be triggered if there are liabilities in your UTA,  according to the process stated here.


    (View the liquidity order of margin assets)



    Step 3: Cancel All Orders



    Step 4: Close Fully Hedged Position (Hedge Mode)

    This step will only be applied to fully hedged positions in Hedge mode. The fully hedged positions will be settled at the Mark Price to free up the margin. If there are multiple fully hedged positions, the sequence of liquidation will be based on the contract liquidity order stated below.



    Step 5: Liquidation of Unhedged Position

    The system will calculate the amount of margin that needs to be released to reduce the MMR to ≤ 100%. Then, according to the liquidity order of the trading pairs, determine positions to reduce risk limit tiers based on liquidity order to release the required margin amount through liquidation.



    Step 6: Liquidation of Short Options Position

    If account MMR remains at 100% or above, all short Options positions will be liquidated. The liquidation engine will prioritize orders that can be filled in the order book. If the liquidity of the order book is insufficient, Bybit will engage OTC Market Makers to square off the positions to reduce the MMR. In such cases, a liquidation fee is imposed to sustain the insurance pool, covering risk factors.


    Any scenario in which the above steps result in bringing MMR to below 100% will halt the liquidation process, and further steps will not be executed. 


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

    = 90%

    Liquidation process ends.

    ≥ 160%

    The liquidation engine will take over the position and the entire position will be liquidated. Buy Options will be excluded and will not be liquidated.






    Portfolio Margin

    The 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). Similar to Cross Margin mode, liquidation is triggered when the account MM rate hits 100%. For the detailed formula to calculate the margin, please refer to the Glossary (Unified Trading Account).

     

    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

    Account Initial Margin Rate (IMR)

    ≥ (Selected Leverage − 1 / Selected Leverage)

    • Margin trading does not allow any borrowing.

    ≥ 100%

    • New positions that would increase margin cannot be placed.

    Account Maintenance Margin Rate

    (MMR)

    = 100%

    Step 1: Cancel All Orders



    Step 2: Auto Repayment

    Auto repayment will be triggered if there are liabilities in your UTA, according to the process stated here. Assets or borrowings involved in Spot Hedging will not be used for repayment or repaid.


    (View the liquidity order of margin assets)



    Step 3: Liquidation of Assets involved in Spot Hedging and Derivatives Positions 

    If the account's MMR remains at 100%, the system will perform laddered liquidation by managing the user’s assets and positions in different currencies in the following order:


    (A) Assets exclusively used for Perpetual contracts settled in USDC or Perpetual contracts settled in USDT.

    (B) Assets outside of Category A are categorized under Category B, which includes spot, futures, and options investment portfolios. It's important to note that portfolios for USDC perpetual and USDT perpetual also fall under this category.


    a. The system will prioritize liquidating the assets falling under category (A), according to the liquidity order of the trading pairs until the account's MMR ≤ 90%, or no more eligible currencies remain.


    b. If a user’s assets fall under category (B), the system will sequentially evaluate each derivative's position to simulate the impact on the account's MMR after partially closing each Derivative position and selecting the position with the greatest reduction in MMR for liquidation. 


    c. If users have activated Spot Hedging, our liquidation simulation will also consider the combined impact of changes in Spot assets used for hedging after liquidating a Derivative position.


    d. During the simulation process for positions falling under category (B), the quantity to be liquidated for each Derivative position will be determined based on the actual market liquidity condition. However, the maximum contract quantity to be liquidated will not exceed the position's opened quantity or the maximum order size per trade on the platform.


    e. If we cannot identify a position that can effectively reduce the account's MMR during the liquidation simulation (considering an exceptionally good hedging portfolio), the liquidation process will be suspended. However, the system will continue attempting to identify suitable positions for liquidation until the account is taken over or the liquidation process ends.

    = 90%

    Liquidation process ends.

    ≥ 160% 

    The liquidation system will take over the Spot assets and Derivatives positions and liquidate the entire assets and position within your UTA.






    Spot Trading Rules 

    Under the Unified Trading Account, there are two (2) scenarios worth noting for Spot Margin trading:

    1. The Spot Margin trading function is not enabled:

    • When the IMR exceeds 100%, it is not allowed to place an order to buy lower conversion rate assets with higher ones.

    • 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 IMR reaches (Selected Leverage − 1 / Selected Leverage), Spot margin orders cannot be placed.

    • When the MMR reaches 100%, margin assets will be sold to settle all liabilities.

    • When the IMR exceeds 100%, it is not allowed to place an order to buy lower conversion rate assets with higher ones.

    • 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

    Contracts

    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 the nearest 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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