Content:
1. General
2. Interest Rates & Repayment Rules
3. Repayment/ Rules for Bonus Repayment
4. Risk Control& Margin Trading Insurance Fund
5. Trading Behavior
6. Margin Trading Glossary
7. Margin Trading
8. Additional Terms
1. General
1.1 These rules are formulated under a lawful, fair and transparent way to maintain reasonable control of the loan of the digital asset and margin trading, preserve an orderly market, and protect the legal rights of all investors.
1.2 The loan and margin trading stated in this document is the investment behavior which an investor provides collateral to ETHEx.com("We", "Us", "Our platform", "Our") to borrow assets for trading.
1.3 All loan and margin trading on ETHEx.com shall comply with the rules stated in this document. Other activities not stated in this document shall comply with " ETHEx.com Terms of Service" and other rules set on ETHEx.com
2. Interest Rates & Repayment Rules
2.1 The asset in the borrower's margin account on ETHEx.com shall be deemed as the collateral.
2.2 Once the loan is successful, the borrowed asset will be delivered to the borrower's margin account on ETHEx.com immediately. The borrower can perform margin trading with the borrowed asset forthwith.
2.3 Interest rate calculation
1) Rules for interest rate: The basic daily interest rate for loans is updated every hour. The system calculates the base rate dynamically based on the demand for margin loans and supply from the deposit of Savings ates in the past 24 hours / 24. Therefore, the actual loan daily rate at every hour on the hour will be updated. If an update delay takes place on the margin loan page, please refer to the rate history page for the rate.
2) Rules for base rate allocation: The rates of each asset is divided into 10 tiers according to the proportion of the total margin lending amount and the total Reward Distribution for Savings Promotional Campaign deposit amount (B/L in the below table). See the table below. ETHEx.com reserves the right to adjust the base rate allocation in the future.
Base rate All Token
0≤B/L≤10% 0.0001
10%≤B/L≤20% 0.0002
20%≤B/L≤30% 0.0003
30%≤B/L≤40% 0.0004
40%≤B/L≤50% 0.0005
50%≤B/L≤60% 0.0006
60%≤B/L≤70% 0.0007
70%≤B/L≤80% 0.0008
80%≤B/L≤90% 0.0009
90%≤B/L≤100% 0.00098
2.4 Rules for rate maintenance:
The loan daily rate for a loan borrower locks for 24 hours after each update for the user to maintain the cost of the loan for 24 hours. The daily rate is updated every 24 hours to the latest loan daily rate. For example, if User A borrows BTC at 10:32 Nov 26, 2018, and the loan daily rate is 0.0002, the rate on every hour before 10:32 Nov 27, 2018 is 0.0002/24. At 10:32 Nov 27, 2018 when the loan daily rate of the BTC loan for User A is updated, the loan daily rate at 10:00 Nov 27, 2018 will be taken for the calculation. If the actual daily rate at that time is 0.0001, the loan daily rate for User A will be updated to 0.0001 and maintain for 24 hours. The BTC actual loan daily rate will be updated again at 10:32 Nov 28, 2018.
2.5 The loan borrower should repay the capital and interest on the loan maturity date. The interest is calculated in simple interest on an hourly interest rate (daily rate / 24). An interest-bearing hour is counted from the time the loan is made. Every 60 minutes is considered as 1 hour (counted from the borrowing time; partial hour is considered as full hour). Interest is incurred at the time the loan is made and every 1 hour afterward.
2.6 The borrower can repay the loan in advance. The interest will be accrued at hourly rate. However, time less than 60 minutes shall also be counted as 1 hour.
2.7 The borrower must repay the interest once every 7 days. Users may choose to repay the interest in advance of the deadline (the 7-day countdown will be reset immediately after the repayment) or be charged automatically by the system at the deadline. If the user does not have enough balance, our system may buy/sell, cancel, or reset orders (orders will still be placed at the minimum order size even if the interest amount is smaller than the minimum order size). We strongly recommend users to repay the interest on time to avoid their trades being interfered by our system.
2.8 Margin Asset Borrowing Amount
Each available margin asset at ETHEx.com sets its own basic borrowing amount (share by main account and its sub accounts).
3. Repayment/ Rules for Bonus Repayment
3.1 Repayment: Repayments will be used to cover the earliest loan orders, and pay off interest before principal. The repayment status will change to completed once all the debts have been paid off, then further interest will not be applied for the order. In case of a new asset being generated from an event, such as an airdrop and a fork, margin borrowers of the affected asset should repay the bonus asset all together with their margin loans. Please refer to related announcements for the handling.
3.2 Rules for Bonus Repayment:
In case of a new asset being generated from an event, such as an airdrop and a fork, margin borrowers of the affected asset should repay the bonus asset all together with their margin loans. A further announcement will be made for the details of bonus repayment.
Bonus calculation: During the snapshot of airdrop bonus, the system will calculate the ratio of the unpaid amount of margin loan and airdrop amount so as to determine the amount of repayable bonus asset. During the snapshot, the affected margin accounts will be forbidden to transfer out the assets.
Including bonus assets in risk calculation: The unpaid bonus assets will be counted as a liability when calculating a user's margin ratio. (The price of the bonus asset is determined by an index price based on the prices on major exchanges or other listed exchanges.) The asset will not be allowed to transfer out before repaying the bonus.
Bonus repayment: Users may transfer the bonus asset to their spot accounts. Please visit ETHEx.com > Margin Trading > Repay Bonus (next to Borrow / Repay) to repay the bonus. After repayment, users will be able to transfer out the asset in their margin accounts.
4. Risk Control& Margin Trading Insurance Fund
4.1 Only the asset in the margin account on ETHEx.com will be deemed as the collateral. The asset in other accounts will not be deemed as collateral.
4.2 The total value of the investor's asset = the total value of the asset in the margin account of the trading pair on ETHEx.com - the total value of interest The liabilities of the investor = the total value of the asset borrowed in the margin account of the trading pair on ETHEx.com Margin ratio = (asset- liabilities)/liabilities
4.3 The tiered margin scheme of margin trading features an alert line and a liquidation line (maintenance margin ratio).
Margin ratio of a tier’s alert line = maintenance margin ratio of the tier + 3%
When the margin ratio reaches the alert level, an alert will be sent to the user via the registered contact to notify him/her the risk.
When the maintenance margin ratio is reached, the positions will be fully/partially liquidated to repay the debts of the user. If the user has multiple margin loans, the loans will be repaid in chronological order. If the user's assets cannot fully cover the loans, the lenders have the right to collect the debts.
4.4 Investors are advised to exercise caution, beware of investment risks, and adjust the margin level when necessary. The losses caused by forced-liquidation shall be borne by the investor solely.
4.5 We hold the right to manage the value of the borrowed tokens. When the total value of the borrowed tokens has exceeded the total loan amount limit which was formulated by us, we will cease the token loan services until the total value of the borrowed tokens drops below the limit.
4.6 We will adjust the total loan amount limit depending on the market's performances and our evaluation of potential risk.
4.7 After the positions are fully forced liquidation or partial forced liquidation by the system to repay the debt, an forced liquidation fee will be charged and injected into the margin trading insurance fund, which is used to cover the margin call loss of bankruptcy positions.
(1) When a position is fully forced liquidation, the liquidation fee = liquidation amount * the minimum initial margin rate of the user’s position * 10%. After the liquidation, if the remaining assets in the account are less than the liquidation fee, all the remaining assets will be fully charged as the liquidation fee;
(2) When a position is partial forced liquidation, the liquidation fee = partial liquidation amount * the minimum initial margin rate of the user’s position * 10%;
In case of margin call loss, the remaining balance less than a tick size will be allocated to the margin trading insurance fund as liquidation fee.
4.8 ETHEx.com will take 15% of daily distributable interest as the platform's income（Currently, this income is totally injected to the insurance fund for margin trading, which is used for compensating for any margin call loss. ETHEx.com reserves the right to determine the use of such income in the future.）In case the margin trading insurance fund cannot cover a margin call loss, the daily distributable interest will be clawed back to cover the outstanding loss. (Only maximum 50% of the daily interest income will be clawed back so as to ensure users receive interest income every day.) The outstanding loss not covered by the clawback amount will be covered in advance by ETHEx.com and the amount will be set off against the insurance fund and daily distributable interest gradually in the future.
5. Trading Behavior
5.1 Investors shall comply with local regulations and law as well as the related rules of trading and margin trading of ETHEx.com. We reserve the right to suspend or cancel any user's access to margin trading, take over the account, force-liquidate all positions or any related risk control measure when deemed necessary to maintain an orderly market.
6. Margin Trading Glossary
Under token trading page, select the trading pair tagged with "5X" and click "5X Leverage" on the right side to enter leverage trading.
This article aims to provide a glossary to explain all the commonly used terms in leverage trading.
6.1 Assets
Balance in the account of that margin trading pair：Balance in the account of that margin trading pair, including available balance and balance on hold.
Transferred Assets: The amount of tokens transferred from other accounts to your Margin Account for Spot.
Borrowed Assets: Total Borrowed amount of tokens by using your available asset in Margin Account for Spot as collateral.
Available Assets: The total amount of tokens available for trading in Margin Account for Spot.
Assets on hold: The amount of tokens which is unavailable for creating orders, usually refers to the tokens that are currently in use for open orders.
6.2 Leverage
Borrowing limit: Max quantity of token available to borrow of the corresponding token pairs. ETHEx.com would determine the borrowing limit for a user with maximum leverage and other risk parameters.
Maximum leverage formula: Max leverage = (Total assets - outstanding loan - interest payable) * (max leverage multiplier - 1) - outstanding loan
Example of maximum margin lending: A user holds 5 BTC in total. Outstanding loan is 1 BTC and interest 0.01 BTC. If the maximum leverage level is 5x, the maximum margin lending amount = (5 - 1 - 0.01)*(5 - 1) – 1 = 14.96 BTC”
6.3 Margin ratio and Forced liquidation
Margin ratio: The indicator for evaluating margin account's possibility of triggering forced liquidation.
When the margin ratio ≥1 / (max leverage level - 1), the surplus balance can be transferred out to Spot Account.
When margin ratio is ≤ alert level of a user’s tier, it indicates a high-risk status. The system will notify the user automatically via SMS and email.
When margin ratio is ≤ maintenance margin ratio of a user’s tier, full/partial forced liquidation will be triggered and a SMS and email will be sent to notify the user.
Margin ratio Formula: Margin ratio = [(Total Assets (In Quote Currency) – Borrowed Assets (In Quote Currency) – Interests Payable (In Quote Currency) ) / Mark Price + (Total Assets (In Base Currency) – Borrowed Assets (In Base Currency)– Interests Payable (In Base Currency)]/(Borrowed Assets (In Quote Currency) / Mark Price + Borrowed Assets (In Base Currency) ) * 100%
Example of margin ratio calculation: A user trades BTC/USDT on the margin trading market, the quote currency is USDT and the dealt currency is BTC. The user holds 0.3 BTC, borrows 0.6 BTC, and then sells all 0.9 BTC. After a while, the total asset in the dealt currency is 0 BTC and that in the quote currency is 9,000 USDT, the interest is 0.001 BTC and the Mark Price is 9,710.28. The margin ratio = [(9000-0-0) / 9710.28 + (0-0.6-0.001)] / (0/9710.28+0.6)*100% = 54.31%
Liquidation: When margin ratio ≤ maintenance margin ratio of a user’s tier, full/partial forced liquidation will be triggered. All positions will be taken over by the liquidation engine to liquidate the positions in the market and repay the debts.
Estimated Price on Margin Call: A certain amount of margin is required for leverage trading in ETHEx.com. When unfavorable changes occur in the market, such as a reverse trend of market direction which contradicts the direction opened, the account balance may shrink below the perimeter, and system will force liquidate all holding positions at best bid /offer to pay off the debt.
Formula (Est. Price of Margin Call): Forced Margin Call Est. Price = (Borrowed Assets (In Quote Currency) * (1+ Maintenance Margin Ratio) + Interests Payable (In Quote Currency) – Total Assets (In Quote Currency) / (Total Assets (In Base Currency) – Interests Payable (In Base Currency) – Borrowed Asset (In Base Currency) * (1+ Maintenance Margin Ratio))
Example of margin ratio calculation: A user trades BTC/USDT on the margin trading market, the quote currency is USDT and the dealt currency is BTC. The user holds 0.3 BTC, borrows 0.6 BTC, and then sells all 0.9 BTC. After a while, the total asset in the dealt currency is 0 BTC and that in the quote currency is 9,000 USDT, the interest is 0.001 BTC and the Mark Price is 9,710.28. The margin ratio = [(9000-0-0) / 9710.28 + (0-0.6-0.001)] / (0/9710.28+0.6)*100% = 54.31%” “The estimated forced-liquidation price = (0 + 0*54.31% + 0 - 9000) / (0 - 0.001 - 0.6 - 0.6*54.31%) = 9710.204”
6.4 Short
Short Selling: Selling of tokens which the user does not own, and buy back after a period of time.
7. Margin Trading
7.1 Investor shall agree to "Margin Lending User Agreement" in advance of performing any related trading activities
7.2 Investor may place margin trading orders with us via ETHEx.com to borrow/repay digital assets, including BTC and other tokens approved by us.
7.3 We provide information release, management and risk control services for token lending. However, there have been no promises, guarantees or warranties suggesting that any trading will result in a profit or will not result in a loss. Investors shall carefully consider whether such an investment is suitable in light of their own financial position and investment objectives, and invest responsibly at their sole discretion.
8. Additional Terms
8.1 The terms not less than, within, not more than are all inclusive terms and the terms less than, beyond and over/below are exclusive terms. Daily interest will be accrued according
8.2 The terms are established by our company. This document or any further amendments are in effect immediately after make known through publication.
8.3 We reserve the right of interpretation of this document
8.4 The terms are implemented since May 14, 2020.