Binance Margin Level and Margin Call

Binance
2019-07-05 11:08
Margin trading allows you to add leverage to your positions to increase your potential earnings and profits. Binance uses the margin level to evaluate the risk level of your Margin Account.

1. Margin level of Cross Margin

1.1 Users participating in Margin Loans may use the net assets in their Cross Margin Accounts as the Collateral, and the digital assets in any other accounts are not included in the margin for cross margin trading.
1.2 The Margin Level of a Cross Margin Account = Total Asset Value of a Cross Margin Account/(Total Liabilities + Outstanding Interest), where:
Total Asset Value of a Cross Margin Account = Current total market value of all digital assets in the Cross Margin Account
Total Liabilities = Current total market value of all outstanding Margin Loans in the Cross Margin Account
Outstanding Interest = Amount of each Margin Loan * the number of hours as loan time by the time of calculation * hourly interest rate - deduction/paid interest.
1.3 Margin level and related operation
  • Leverage 3x
When your margin level > 2, you can trade and borrow, and transfer assets to the Spot Wallet;
When 1.5 < margin level ≤ 2, you can trade and borrow, but you can’t transfer funds out of your Margin Account;
When 1.3 < margin level ≤ 1.5, you can trade, but you can’t borrow, neither transfer funds out of your Margin Account;
When 1.1 < margin level ≤ 1.3, a margin call will be triggered and you will receive a notification through mail, SMS and website to inform you to add more collateral (transfer in more collateral assets) to avoid liquidation. After the first notification, you will receive the notification every 24 natural hours.
When margin level ≤ 1.1, the liquidation engine will be triggered and all your assets will be liquidated to pay back the interest and loan. The system will send you a notification through mail, SMS and website to inform you.
  • Leverage 5x (only supported in the master account)
When your margin level > 2, you can trade and borrow, and transfer assets to the Spot Wallet;
When 1.25 < margin level ≤ 2, you can trade and borrow, but you can’t transfer funds from your Margin Account to your Spot Wallet;
When 1.15 < margin level ≤ 1.25, you can trade, but you can’t borrow, neither transfer funds from your Margin Account to your Spot Wallet;
When 1.05 < margin level ≤ 1.15, a margin call will be triggered and you will receive a notification through mail, SMS and website to inform you to add more collateral (transfer in more collateral assets) to avoid liquidation. After the first notification, you will receive the notification every 24 natural hours.
When margin level ≤ 1.05, the liquidation engine will be triggered and all assets will be liquidated to pay back the interest and loan. The system will send you a notification through mail, SMS and website to inform you.
1.4 For more information, please refer to Cross Margin Trading Rules.

2. Margin level of Isolated Margin

2.1 The net assets in the user‘s isolated margin account only can be used as the collateral in the corresponding account, and the assets in the user's other accounts (cross margin account or other isolated accounts) couldn't be used as collateral for it.
2.2 The margin level of the isolated account = the total value of assets under the isolated account / (total value of liabilities + unpaid interest)
Among them, the total value of assets = the total value of the underlying assets + nominal assets in the current isolated account
Total liabilities = The total value of the assets that have been borrowed but not returned in the current isolated account
Unrepaid interest = (the amount of each loaned asset * the time length of the loan * hourly interest rate) - repaid interest
2.3 Margin level and Operation
When the Margin Level (hereinafter referred to as ML) > 2, users can trade, can borrow, and the excess assets in the account can also be transferred to other trading accounts. But the ML still needs to equal or greater than 2 after transferring out to ensure normal asset transferring out functions.
  • Initial Ratio (IR)
IR is the initial risk rate after the user borrows, and there are different IRs according to different leverage. For example, the IR will be 1.5 under the 3x leverage with full borrowing, 1.25 under 5x leverage with full borrowing, and 1.11 under 10x leverage with full borrowing.
  • Margin Call Ratio (MCR)
When MCR < ML ≤ 2, users can trade and borrow, but cannot transfer assets out.
The MCR will be different according to different leverage. For example, the MCR for a 3x leverage is 1.35, for 5x leverage, it will be 1.18 and for 10x, it will be 1.09.
  • Liquidation Ratio (LR)
When LR < ML ≤ MCR, a margin call will be triggered. The system will send notifications with an email, SMS, website reminder, suggesting the user add a margin (that is, transfer more collateral funds) to avoid the risk of liquidation. After the first notice, the notifications will be sent every 24 hours. If ML ≥ MCR later, the user will not receive the next notification.
When ML ≤ LR, the system will execute the liquidation process. The assets held in the account will be forced to sell to repay the loan. At the same time, users will be notified via email, SMS, and website reminders.
LR will vary according to different leverages. For example, the LR for 3x leverage is 1.18, for 5x leverage, it is 1.15, while for 10x leverage, it is 1.05.
2.4 For more information, please refer to Isolated Margin Trading Rules.

What are Liquidation Clearance Fees?

When your Margin account or Crypto Loan order is being forced liquidated, the Margin Insurance Fund will charge a certain percentage in clearance fees. These fees can be viewed in the Margin account Clearance Fee History. However, you are recommended to manage your risks carefully to avoid forced liquidations. The user's liquidation price will not change as a result.
Products
Liquidation fee
Cross Margin
Cross Margin liquidated assets*2%
Isolated Margin
Isolated Margin liquidated assets*clearance fee rate corresponding to Tiered Leverage
Crypto Loans
Crypto Loan liquidated assets*2%
Note: The Clearance Fee rate corresponding to the Tiered Leverage = (the liquidation risk ratio of your tiered leverage during liquidation -1)*8% (the max. amount that can be charged without exceeding your remaining asset balance after liquidation).
Example: If a user is being liquidated and reduced positions in ADA/ETH Tier 3, then the Clearance Fee rate = (1.165-1)*8% = 1.32%.