Liquidations

When accounts do not have sufficient capital they will need to be liquidated to ensure that the system at large does not become bankrupt and to ensure that risks are isolated to individual user accounts where possible. The element underpinning this process is the margin check:

$$AB + UP - IM +min(0, IPnL) > 0$$

where:

• AB = Account Balance

• UP = Unrealised PnL

• IM = Initial Margin

• IPnL = instantaneous PnL from execution