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Spot Margin Trading

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Disclaimers

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.

View our latest Margin Trading Agreement here.

Overview

Qualified users can access up to 10x leverage on the spot markets on FTX US. In order to qualify for margin trading, have $100,000 USD or equivalent assets in their FTX US account at the time of qualification, and attest to statements under Requirements below.

Accessing Margin Trading and Lending

If your account is margin qualified, you will be able to enable margin trading in your profile or the borrowing page.  Once you do this, you will be allowed to submit buy/sell orders using funds that exceed the balance of your account, provided you have sufficient collateral to remain above the maintenance margin threshold. 

How does borrowing/lending work? 

If you have spot margin trading enabled, then you can lend out one spot token in order to borrow another; for instance you could lend out USD in order to borrow BTC.  That USD would then be locked up and potentially loaned out to another user; you would receive interest if it was.  Conversely, you would pay interest to another user on the BTC you were borrowing.

FTX US uses an automated system for margin trading, borrowing and lending that still allows the user to maintain full control. Rather than requiring discrete actions to request borrows, receive them, move the funds, open/close positions, etc., the entire process is abstracted into net the balances generated by the user's exchange activities (buy/sell/deposit/withdraw). There’s no need to manage collateral vs margin positions vs withdraw-able tokens vs margin trading vs spot trading.

As long as you have sufficient margin, you can borrow spot tokens simply by spending beyond your account’s balance, and any negative balance will immediately and automatically create a borrow for the necessary funds that ultimately accrue interest. Note that any open orders beyond $300,000 per account that are beyond the balances of the account also require a borrow.

For example, if you had $50,000 (USD) in your account and nothing else, and then sold 1 BTC for $15,000 in the spot BTC/USD orderbook, your total balances would then be: +65,000 USD; -1 BTC.  FTX US will automatically send an order to the funding book on your behalf to borrow 1 BTC.

Similarly, FTX will borrow on your behalf for withdrawals that exceed the balances in your account.  If your account has 3 BTC and nothing else, you can request a withdrawal of 1 ETH despite not having any.  FTX will automatically request a borrow for 1 ETH for the withdrawal.  Note that you cannot borrow to withdraw a greater amount than is available and unused in the borrow-lending book!

You can monitor your borrows at ftx.us/spot-margin/borrows. If you're navigating from within the site, click Wallet, and then select "Margin Borrows."

Margin, Collateral and Liquidations

All margin is posted in 'USD' in your wallet.  USD can be funded by depositing either USDC, TUSD, USDP, BUSD, or HUSD.

By default all positions use the same collateral pool, and all USD, non-USD fiat, BTC, USDT, ETH, and many other tokens in your wallet count as collateral.  Each subaccount has one central collateral wallet and uses cross margining for the account.  Each subaccount has separate margin and collateral from other subaccounts.

If you want to use isolated margin create a subaccount for that position and move in collateral.  This means that the fund you can lose on a trade are limited to those in the subaccount that does the trade (and will never include funds not on FTX US).

Initial Margin

The initial margin on FTX US is 10%. That means your Initial Margin Fraction (IMF) or total collateral divided by position size must be at least 10% (.10). An account can only increase its position as long as its Margin Fraction is above the Initial Margin Fraction, so the maximum leverage is 10x.

For example, if you deposit $1,000 of collateral into your account, then the maximum position size you hold is $10,000.

Maintenance Margin and Liquidations

If your Margin Fraction falls below the maintenance margin limit, a liquidation will automatically begin. The maintenance margin on FTX US is 5% (.05). When a user's margin fraction falls below 5%, FTX US sends orders on their behalf to close down their position. 

The speed of the liquidation will depend on the position size but for small positions it will aim to fully close down the position in about one minute.  If partially liquidating the account causes its leverage to drop back below the threshold, the liquidation will end.

If the users's margin fraction drops below 2.5% (0.025), FTX US will close down their account outright.

Calculating Collateral Value

  1. Using the coefficients below for each token, collateral = size * price * min(weight, 1.1 / (1 + imf factor * sqrt(size))) for positive balances. For negative balances, collateral = size * price.
  2. Add up the results for each coin. Note that coins you are lending, or coins that are in the process of being deposited or withdrawn, are not counted.
  3. Coins in open orders do count towards your collateral.
Coin  Weight IMF factor
AAVE 0.9 0.0025
AUD 0.99 0.00001
AVAX 0.9 0.002
BCH 0.95 0.0008
BRL 0.99 0.00001
BRZ 0.99 0.00001
BTC 0.975 0.003
BUSD 1 0
CAD 0.99 0.00001
CHF 0.99 0.00001
CUSDT 0.9 0.00001
DAI 0.9 0.00005
DOGE 0.95 0.00002
ETH 0.95 0.001
EUR 0.99 0.00001
GBP 0.99 0.00001
GRT 0.9 0.00025
HKD 0.99 0.00001
HUSD 1 0
JPY 1 0
LINK 0.95 0.0004
LTC 0.95 0.0004
MATIC 0.85 0.00004
MKR 0.9 0.007
PAX 1 0
PAXG 0.95 0.002
SOL 0.9 0.0004
SUSHI 0.95 0.001
TRX 0.9 0.00001
TRY 0.99 0.00001
TUSD 1 0
UNI 0.95 0.001
USD 1 0
USDC 1 0
USDT 0.975 0.00001
WBTC 0.975 0.005
WUSDC 1 0
WUSDT 0.975 0.00001
XRP 0.95 0.00002
YFI 0.9 0.015
ZAR 0.99 0.00001

 

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.

Minimum margin requirement is position size * max(10%, IMF factor * sqrt(-size)).

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

How does margin work for borrowing?

Spot margin:  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).  

The initial margin for all spot positions (i.e. short token positions) is 10%; the maintenance margin is 3%.   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 * min(collateral ratio, 1.1 / (1 + imf factor * sqrt(token quantity)))
  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).

  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. ETH: 10% * $500 = $50
    2. BTC-PERP: 5% * $45,000 = $2,250
    3. Total: $2,300
    1. ETH: 3% * $500 = $15
    2. BTC-PERP: 3% * $45,000 = $1,350
    3. Total: $1,365
    1. Position size: $500 + $45,000
    2. Initial margin required:
    3. Maintenance margin required: 

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. The borrow rate is influenced by the lending rate, which is determined by the process above, and your taker fee. Borrow rate = (hourly lending rate) * ( 1 + 500 * borrower’s taker fee)
  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 go to ftx.us/support and open a support ticket. A member of our support team will get back to you. 
  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.

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 backstop 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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