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It doesn't seem quite like a margin call. The exchange explains here[1]. What appears to have happened is that a client bought a tonne of futures with huge leve
by slivym 8y ago
It doesn't seem quite like a margin call. The exchange explains here[1]. What appears to have happened is that a client bought a tonne of futures with huge leverage. The exchange noticed and asked the client to reduce the position- because it violated their risk limits. (In a proper exchange, a client wouldn't have been able to get in that position). The value dropped and the client didn't want to sell - so eventually the exchange decided to force the sale in order to resolve this. Naturally, they did this while the futures were underwater, and because of the huge leverage they took a loss (which technically they should try and get back from the client - but most likely the client can't cover the loss).
Fortunately, being an exchange for crypto they're unregulated, so they can do what they like. They basically have a policy where they can take money from people to cover the cost they incurred liquidating this position.
So it's worth remembering that on this exchange any volatility will lose you money. Big move for you? You'll make a load of money, but others will lose and the exchange will come and take your profit toe pay for the losses on margin. Big move against you? You lose all your money.
[1]: https://support.okex.com/hc/en-us/articles/360011941512 https://support.okex.com/hc/en-us/articles/360011941512
- phyalow 8y agoTheir version of events seems like ass covering - for a loss on a principle level for OKeX the PnL from the clients position would have exceeded the clients total margin posted not just that clients posted maintenance margin - which it appears they are claiming. OKeX's risk team given the liquidity situation must not have either been able to 1) raise more margin via a margin call AND 2) been unable to unwind the position prior to margin exhaustion given liquidity constraints. I find it truly shocking they did not have net and gross delta limits defined for client accounts and did not model or monitor margin / liquidity dynamics. It is simply amateur hour at play. The client essentially had a massive free put option against the OKeX and its members. I would not be at all surprised if the client was actually the other way on another exchange (net flat) and simply arbed OKeX's socialised policy.
- SilasX 8y ago>Fortunately, being an exchange for crypto they're unregulated, so they can do what they like. They basically have a policy where they can take money from people to cover the cost they incurred liquidating this position. Correct me if I'm wrong, but isn't that exactly how it would work on an above-board, regulated exchange too? Their first, second, and third priority is making sure you can pay back your margin/short; they don't care, and aren't required to care, that they could get a better price if they just held out "till Thursday". The only way a regulated exchange might be different is that they would be required to price (and credit) the assets in the forced sale from a representative sample across multiple exchanges, in order to avoid shenanigans from very local flash crashes that don't represent the best market price.