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Margin Trading Rules

Margin Trading Rules

2021/09/23 20:37:15

1. General

(1) In order to standardize the leveraged trades and leveraged loans of cryptocurrency assets, maintain market order, and protect the legitimate rights and interests of investors, these rules were formulated in accordance with the principles of fairness, openness, and impartiality.

(2) These rules apply to Margin Loan and Cross Margin Trading in FAMEEX. If there are no provisions in these rules, the FAMEEX Terms of Use and other relevant regulations of FAMEEX shall apply.

2. Margin Loan Rules

The maximum margin Loan refers to the largest borrowable amount of digital assets by a user for each crypto. The system will calculate the user's maximum amount allowed to borrow based on the pre-set maximum total amount of margin Loan allowed for the users and the risk control rules on the platform.

In this rule, the maximum margin Loan amount a user can have = (Total Assets Value - Borrowed Assets Value - Accrued Interest) X (Maximum Leverage -1) - Outstanding Margin Loan

3. Interest

(1)  The Assets users kept in FAMEEX’s margin wallet will be treated as the margin.

(2) Interest calculation rules: interest is calculated on an hourly basis. If funds are borrowed for less than 1 hour, the interest rate will still be calculated as for assets borrowed for 1 hour. Interest calculation starts from actual borrowing time, which means borrowing time will be counted as 1 hour after assets are borrowed successfully, and will be counted as 2 hours until the next hour.

Interest calculation formula:

Interest = Borrowed Amount X Hourly Interest Rate X Loan Period (in hours)

(3) If the outstanding interest is unpaid for a long time, it may cause the margin level of the user's current margin account to drop below the liquidation line, resulting in the position being forced to liquidate. Users may choose to pay off the interest periodically or leave enough available balance in the margin wallet.

(4) Repayment Rule: Users can manually select to repay the loan assets partially or entirely. Interest will be repaid firstly, then the principal. The system will calculate interest based on the latest borrowed quantity in the next hour. Your interest will no longer be calculated when your principal and accrued interest of a specific loan are totally settled and the status of that specific loan is changed into repaid.

Depending on what assets the user borrows and what assets must be repaid, other assets cannot be used instead. Therefore, the user must ensure that there are sufficient such assets in the margin wallet when repaying.

4. Margin Level

Margin Level shows the amount the user currently has borrowed. A more outstanding loan means a higher margin level. In other words, it comes with a higher chance of liquidation. If a user borrows both base currency and transaction currency for the specific trading pair, the margin level and risk ratio will be based on the largest amount of borrowed assets.

5. Rule of Transferring Assets from Margin Account

Users have to ensure that after transferring assets from the margin account,  either the base currency or transaction currency, the risk ratio calculated based on the margin trading account’s balance should be larger than the leverage ratio/(leverage ratio - 1) X 100%. For example, if the leverage ratio is 5X, the user’s account risk ratio must be higher than 125%.

If the maximum transferable assets amount is larger than the amount of the available assets, the maximum transferable assets amount will be treated as the available amount.

6. Risk Control

(1) The net assets in the user‘s Margin wallet can only be used as collateral, and the assets in the user's other accounts won't be calculated as collateral.

(2) FAMEEX has the right to monitor the margin level of the user's Margin account in real-time and take corresponding measures according to the change in margin level.

In this rule, the margin level of margin account = (Total Assets Value - Accrued Interest) / Borrowed Asset amount X 100%

Total Assets Value= the total value of assets under the Margin wallet

Total Borrowed Amount = the total value of assets that have been borrowed but not returned in the current margin wallet

Accrued Interest = the amount of each loan asset *the time length of the loan * hourly interest rate - repaid interest.

(3) Liquidation of Margin Accounts: when hitting a certain margin level for the liquidation, the liquidation will be triggered by the system and all assets will be liquidated to pay back the interest and loan. The system will automatically send you a notification via Email/SMS. When Liquidation is triggered, FAMEEX will restrict users’ operation on the account until all the funds are settled. Meanwhile, the system will cancel all the pending orders for the trading pair and convert them into specific assets to repay the loan.

(4) Liquidation: The system will repay the loan and charge a liquidation fee. All the fees will be put into the Margin Risk Fund, which will be used to cover any loss from bankruptcy.

User’s Outstanding Fee = Borrowed Assets + Interest - repaid Assets

(5) Liquidation Fee: When the liquidation is triggered and there is still residual value in the users’ Margin Account, 8% of the value will be charged as a liquidation fee and it will go to the Margin Risk Fund.

If the residual value in the margin account contains both base currency and transaction currency, the system will take both. If there is neither base currency nor transaction currency, the system will take whatever is left in the margin account.

Liquidation Fee Rules:

a. Transaction Currency ≥ Min. transaction quantity, will be charged a certain percentage. 8% will be charged from the account

b. Transaction Currency<Min. transaction quantity, the system will take whatever is left in the account

c. Base Currency ≥ 5 USDT,  will be charged a certain percentage. 8% will be charged from the account

d. Base Currency < 5 USDT, the system will take whatever is left in the account.

(6) Margin Risk Fund: After the system liquidated positions to repay all debts, 8% of the remaining funds in the user's margin account will be put into the platform leverage risk reserve account.  When users return the interest of the borrowed currency, the partial fund from the platform's interest will be put into the platform's Margin Risk Fund account.  

7. Supplementary Provisions

(1) Users have to agree to the terms of the FAMEEX Margin Trading Agreement before proceeding to margin trading.

(2) FAMEEX provides information release, supervision and risk control services for Margin trading and loans. The Platform does not provide any income guarantee or capital guarantee for users' margin trading on FAMEEX. Investors should fully realize that there are relatively large risks, and self-assess the possible losses, and then voluntarily participate based on confirming that the risk is controllable and affordable.

(3) These rules are formulated by the FAMEEX platform and are effective after the announcement to all users; the same applies to modifications. (Effective date: 12 Oct 2020 )

(4) FAMEEX reserves the right to interpret the Margin Trading Agreement.

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