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Margin Trading

FTX US Support
  • Updated

FTX US supports margin trading in its spot markets for qualified users.  Note that margin trading carries risk; chiefly it opens your account up to the possibility of liquidation.

Notes:

1) FTX US reserves the final right to interpretation of all rules around margin.
2) FTX US reserves the right to alter the rules around margin.
3) Only qualified users can access margin on FTX US.
4) Lending on FTX US is only open on a per-customer basis, and only for qualified lenders.

 

Overview

In order to qualify for margin trading, a user must meet our threshold for assets.

Qualified users can access up to 10x leverage on the spot markets on FTX US.

 

Accessing Margin Trading

If your account is Margin Qualified, you will be able to enable Margin Trading in your profile.  Once you do this, you will be allowed to send orders that require more of an asset than you have, as long as your account has sufficient margin.

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Any negative balance you pick up will result in immediately and automatically taking a borrow and ultimately paying interest on that borrow.  Any open orders beyond $300,000 per account that are beyond the balances of the account will also require a borrow.

You can monitor your borrows at ftx.us/spot-margin/borrows.

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Margin and Liquidations

Users must post at least 10% collateral on FTX US.  This means that their total collateral value divided by their position size must be at least 0.10.

When a user's margin fraction drops below 0.05, liquidation will begin.  This means that their collateral divided by their position size is below 0.05.

While a user's margin fraction remains below 0.05, FTX US will send orders on behalf of their account to close down their position.

If the users's margin fraction drops below 0.025, FTX US will close down their account outright.

Collateral value is calculated as:

  1. For each coin, multiply your holdings in your trading wallet by its mark price by its collateral ratio.
  2. Add up the results for each coin.
  3. Note that this means that coins you are lending, or coins that are in the process of being deposited or withdrawn, are not counted.
  4. Coins in open orders do count towards your collateral.
  5. The collateral ratios are as follows:
    1. USD: 1
    2. BTC: 0.975
    3. Others: 0.95

Position size is calculated as:

  1. For each coin, let the "position size" be min(0,balance - open orders).
    1. This means that positions are always either negative or 0.  This also means that open orders count towards your position size.
  2. Add up (-1 * position size * mark price) across all coins.

While the minimum margin requirements start at 10% of position, they may increase with position size.

 

How does margin work for borrowing?

Your spot margin positions are cross-margined with your futures positions; there is no separate spot margin requirement you have to monitor.

Generally the way that futures margin works is that each contract has a margin requirement (initial margin fraction to open a position and maintenance margin fraction to avoid liquidation), and you need a total collateral value which meets those thresholds.

Spot margin is similar.  The position size of a spot margin position is the notional size of any short (negative) balances you have.  So for instance if you have + $65,000; -2 BTC; and BTC is trading at $15,000, then your position size from spot is $30,000 (2 BTC * $15,000 per BTC).  This is treated the same as if you had a $30,000 futures position on, and requires initial margin to increase and maintenance margin to avoid liquidation.

The initial margin for all spot positions (i.e. short token positions) is 10%; the maintenance margin is 3%.  (The auto-close margin--the point at which you are not just liquidated but in fact closed down off-exchange--is 1.25%.)  This means that you can open positions up to 10x leverage and will get liquidated around 33x leverage.

Note that, in addition to requiring margin, negative spot positions also decrease your account collateral value.  Your account’s total collateral is the sum over all spot tokens of:

  1. If token quantity is positive
    1. Token quantity * token mark price * collateral ratio
  2. If token quantity is negative
    1. Token quantity * token mark price

So if you have +2 BTC, -1 ETH; BTC is worth $15,000; ETH is worth $500; BTC’s collateral ratio is 0.975; and ETH’s collateral ratio is 0.95; then your account’s collateral is:

  1. BTC:
    1. Quantity: 2
    2. Mark price: $15,000
    3. Collateral ratio: 0.975
    4. Value: $29,250
  2. ETH:
    1. Quantity: -1
    2. Mark price: $500
    3. Collateral ratio: doesn’t matter
    4. Value: -$500
  3. Total collateral:
    1. $28,750
  4. Margin required:
    1. Position size: $500
    2. Initial margin required: $50
    3. Maintenance margin required: $15
    4. Auto-close margin required: $7.50

So the short ETH position both requires collateral, and decreases your total account value (and thus total account collateral).

This is the same collateral number that futures use!  So say that you instead had: +2 BTC, -1 ETH, -3 BTC-PERP (short)

  1. BTC:
    1. Quantity: 2
    2. Mark price: $15,000
    3. Collateral ratio: 0.975
    4. Value: $29,250
  2. ETH:
    1. Quantity: -1
    2. Mark price: $500
    3. Collateral ratio: doesn’t matter
    4. Value: -$500
  3. BTC-PERP
    1. Quantity: 3
    2. Mark price: $15,000
    3. Collateral ratio: doesn’t matter
    4. Required initial margin: 5%
  4. Total collateral:
    1. $28,750
  5. Margin required:
    1. Position size: $500 + $45,000
    2. Initial margin required:
      1. ETH: 10% * $500 = $50
      2. BTC-PERP: 5% * $45,000 = $2,250
      3. Total: $2,300
    3. Maintenance margin required: 
      1. ETH: 3% * $500 = $15
      2. BTC-PERP: 3% * $45,000 = $1,350
      3. Total: $1,365

Borrow Rates

Every hour, lenders are paid and borrowers are charged.  This is determined as follows:

  1. All lenders specify a minimum rate they must receive.
  2. At the beginning of the hour, we calculate the total borrow demand for each coin.
  3. We have an auction: we sort the lending offers by minimum rate, and take the cheapest set that satisfies the borrow demand.  The borrow rate is set to the minimum borrow rate of the marginal (most expensive) loan that was required.
  4. FTX US collects 20% of the interest paid by borrowers; the other 80% is given to the lenders.
  5. The interest rates are generally quoted in % per day (e.g. 0.05%/day); 1/24th of that is paid out on the hour.

 You can monitor the borrow rates you're paying here.

 

Requirements

In order to be able to access margin trading on FTX US, there are the following requirements:

  1. Users must verify that they are qualified to participate in the program.
  2. Users must have at least $100,000 on FTX.US at the time of qualification. Note: FTX.US may require additional proof of assets. To qualify your account, please email support@ftx.us while your account balance is above the threshold, or after uploading qualifying documents.
  3. You must read, understand, and agree to all the required attestations that you will be presented with before being able to margin trade.
  4. If you meet the above criteria, your account will be deemed "Margin Qualified" and you will be able to margin trade and lend on FTX US.

To apply for margin trading, ensure your account has sufficient funds and then click 'ENABLE MARGIN TRADING' on your profile page.

 

Lending

Note that lending on FTX US is only open on a per-customer basis, and only for qualified lenders.

In order to lend your assets, you specify a quantity and a minimum desired interest rate.  If the borrow rates end up higher than your minimum desired rates, your coins will be loaned.  You will be paid hourly interest and will not be able to withdraw or sell them.  If you choose to remove your coins from the lending pool, they will be unlocked at the end of the hour and you will stop earning interest on them.  If your coins are in the lending pool but are not actually required or the prevailing rates are below your desired rates, you will not be paid any interest and you will be free to withdraw or spend them.

Approved users can lend out at ftx.us/spot-margin/lending.

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Risk Factors

There are many risk factors involved in margin trading.  The following lists some but not all of them:

  1. You open your account up to liquidation risk.
  2. You are potentially exposed to large amounts of risk from price fluctuations.
  3. As a lender you are not directly facing the borrowers, but rather FTX US.  This means that you are not directly responsible for their performance or risk management, and FTX US and its insurance fund are.  However, there is the possibility of haircuts in an extreme scenario.

 

Fees

FTXUS  charges a fee on interest payments made. Outside of that, there are no fees beyond the typical trading fees.  The net fee on loans is already built into the interest rates you see (so lenders and borrowers see slightly different rates); there is no fee on top of that.

Details on how borrow rate is calculated: 
Borrow rate = (lending rate) * ( 1 + borrower’s spot margin borrow rate)
Borrower’s spot margin borrow rate = min(500 * borrower’s taker fee, 1)

Note: if funds are borrowed and withdrawn from the account the expected borrow rate for the next hour will be applied to the withdrawn funds

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