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Isolated Margin Trading Rules

2020-05-21 05:17

1. General Rules

1.1 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.
1.2 These rules are the benchmark for Binance's leveraged trading business, including statements of investors’ borrowing, trading, and other operations in the leverage market.
1.3 These rules apply to Isolated Margin borrowing and trading in Binance. If there are no provisions in these rules, the Binance Terms of Use and other relevant regulations of Binance shall apply.

2. Collateral

2.1 In isolated leverage mode, each trading pair has a specific Isolated Margin account. The net asset in each isolated margin account can only be used as a margin for the specific trading pair.
2.2 Each isolated margin account can only accept the underlying currency and the denominated currency in its specific trading pair as margin.

3. Assets Borrowing

3.1 In Isolated Leverage Mode, users can only borrow two specific currencies under the current trading pair as loan assets. For more details, please refer to the Margin Data page.
3.2 To ensure the safety of the assets, Binance has the right to adjust the upper limit of assets borrowing and trade permission of the borrowed assets in each Isolated Margin account.

4. Borrowing Rules

4.1 The maximum borrowable limit in an Isolated Margin account refers to the largest borrowable amount in the specific Isolated Margin account. The system will calculate the user's maximum amount allowed to borrow based on restrictions, including the amount in isolated leverage, the amount allowed to borrow, risk control rules of the platform, and others.
In this rule, the maximum amount a user can borrow = min (net assets in each isolated margin account*(maximum leverage in the corresponding isolated margin account -1) - assets to be refunded, the maximum amount Binance platform can loan).
4.2 The loan digital assets will be transferred to the user's corresponding Isolated Leveraged account instantly once the user has borrowed successfully, and the system will start to calculate interest forthwith. Users can use the borrowed digital assets to conduct leveraged trades in the corresponding isolated leveraged trading pairs.
4.3 The rules for borrowing on Tiered leverage: the system adjusts the effective margin level based on the amount of funds borrowed by a user. Thus, the corresponding initial risk ratio and liquidation risk ratio will vary. Herein, there are 10 tiers for 10x margin and 5 tiers for 5x margin. For more information, please refer to the Tiered Leverage Function article.

5. Borrowing Rate Calculation Rules

5.1 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.
The calculation formula: I(interest) = P(borrowed money/principal)*R(daily interest/24)*T(in hours)
5.2 User can repay the loan in advance, and pay interest according to the actual borrowed hour, if less than 1 hour, the interest is calculated for 1 hour. When repaying the loan, the user pays the interest rate value first, then the principal.
5.3 The unrepaid interest is included in the margin level calculation. If the interest is not repaid for a long time, it may cause the margin level of the user's current isolated leveraged 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 current isolated leveraged account.
5.4 Margin account interest rates may adjust from time to time. The latest interest rate can be found here.
5.5 Automatic borrowing rule: users can use the automatic borrowing function on the isolated leveraged trading page.

6. Use BNB to Get 25% Discount on Isolated Margin Fees

6.1 Binance Isolated Margin users can enjoy a 25% discount on the standard trading fees if they choose to pay with BNB. For more details, please check the Fee Structure page.
Users can enable this function by navigating to [User Center] - [Dashboard] - [Your Trading Fee Level]. No other operation is needed if users have already enabled the [Use BNB] for paying fees (25% discount) function.
6.2 Users need to have enough BNB in their Spot Wallet balance to pay for the Isolated Margin trading fees. Otherwise, they won’t be able to receive the 25% discount.
6.3 Users need to pay for trading fees by the standard rate first on the Isolated Margin trading page. Afterwards, the discounted trading fees for using BNB will be charged in users’ Spot Wallet hourly, and the paid trading fees will be refunded to their Isolated Margin accounts. Please note that if the corresponding Isolated Margin account is closed at the time of the BNB trading fee refund process, the trading fees will be automatically returned to users’ Spot Wallet instead.

7. Repay Rules

7.1 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.
7.2 Debt repaying: when repaying the debt, users need to use the same currency as they borrowed, repaying in other currencies is not allowed. Therefore, users need to ensure that there is enough balance of the borrowed asset in their Isolated Leveraged account before repaying.
7.3 Automatic repayment rules: users can use the automatic repayment function on the leverage trading page. When users choose this function and place orders, the system will automatically use the obtained funds once the orders are filled completely to repay debt. Automatic repayment will only be executed after the order is fully filled. If the funds gained via a fully filled order are insufficient to repay the debt, the system will select to repay 90% of the debt automatically, leaving the rest to be repaid by the user manually.

8. Risk control

8.1 The net assets in the user‘s Isolated Margin account can only be used as collateral in the corresponding account, and the assets in the user's other accounts (Cross Margin account or other Isolated accounts) couldn't be calculated as collateral.
8.2 Binance has the right to monitor the margin level (hereinafter referred to as ML) of the user's Isolated Margin account in real-time and take corresponding measures according to the change of margin level.
In this rule, 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.
8.3 Margin level and operations
When your Margin Level (ML) > 2, you can trade, borrow, and transfer assets to the exchange wallet;
When the Initial Ratio (IR) < ML ≤ 2, you can trade and borrow, but you can’t transfer funds out of your Margin account;
When the Margin Call Ratio (MCR) < ML ≤ IR, you can trade, but you can’t borrow or transfer funds out of your Margin account;
When Liquidation Ratio (LR) < ML ≤ MCR, the system will trigger a margin call and you will receive a notification through email^, SMS^, and Binance website inmail to inform you to add more collateral (transfer in more collateral assets) to avoid liquidation. After the first notification, you will receive a notification every 24 natural hours.
When ML ≤ LR, the system will trigger the liquidation engine and your assets will be liquidated to pay back the interest and loan. The system will send you a notification through email^, SMS^, and Binance website inmail to inform you.
*Isolated margin follows the Tiered Leverage function, thus the ratio mentioned above will vary based on the different tier you’re in. For more information, please refer to the Tiered Leverage Function article.
8.4 Users should pay attention to the risk of Margin trading and adjust the position in time to avoid risk. All losses caused by the triggering of liquidation in the Margin Account are borne by the users themselves, including but not limited to: due to extreme price fluctuation, the ML of the Isolated Account has reached the MCR line and the LR line within a short time and the user fails to take corresponding measures in time after receiving the prompt messages sent by the system.
8.5 Binance will carry out intelligent risk management on leveraged trades and risks. When leveraged trades or loans on the platform enter the scope of intelligent risk warning, the platform will take measures to prevent greater risks, including but not limited to: prohibition on transfer, on long, on short, on leverage trades and liquidation.
8.6 Binance will adjust the personal maximum leveraged loan amount and total platform loan amount according to the risk and the actual market operation.
8.7 Binance has established an official Margin Risk Fund that will be used to pay for the outstanding loans of liquidated margin accounts. From April 27, 2020, 15% of all interest fees collected from margin borrowing will be allocated to the Fund.
8.8 Tiered liquidation is subjected to tiered leverage in Isolated Margin. Users’ positions will be liquidated partially to match next tiered leverage if it was under liquidation risk. For more information, please refer to the Tiered Leverage Function article.

9. Sub-account Rules

9.1 Sub-accounts can only be enabled for Isolated Margin Account after opening Cross Margin Account;
9.2 The maximum borrowable amount of the sub-account is 1/10 of the borrowable amount of the master account;

10. Calculation Rules of Margin Account Balance and Trading Volume

10.1 The daily average BNB balance of the Isolated Margin Account (including Isolated Margin Accounts under sub-accounts) will be calculated in the total daily average BNB balance. The calculation formula is as follows:
Daily average BNB balance of Isolated Margin Account (including Isolated Margin accounts under sub-accounts) = The sum of the hourly snapshots of the Net BNB balance(Net BNB Balance = BNB Total Balance - Borrowed BNB - Interest Payable in BNB) divided by 24 (hours).
  • Snapshots are taken at random times every hour
  • Pending orders are included in position statistics
10.2 The trading volume of the Isolated Margin account (including the margin trading volume of the sub-accounts) will be calculated in the user's total daily trading volume;

11. Supplementary Provisions

11.1 Binance provides information release, supervision, and risk control services for Isolated Margin trading and lending, and does not provide any income guarantee and capital guarantee for users' margin trading on Binance. Investors should fully realize that there are relatively large risks, and self-assess the possible losses, and then voluntarily participate on the basis of confirming that the risk is controllable and affordable.
11.2 The terms "exceed" and "below" in this provision do not include equals sign, "not exceed", "not less than", "above" and "reach" contain equals signs.
11.3 These rules are formulated by the Binance platform and are effective after the announcement to all platform investors; the same applies to modifications.
11.4 The Binance platform has the sole discretion of interpreting these rules.
^ Binance is not responsible for the message delivery issues caused by external factors, such as local restrictions, policies of service providers, and device problems.