Spot vs Future Cross Margin Model

Bequant uses a Risk Ratio (RR) methodology to manage loans.

The risk ratio represents the ratio of the market value of the digital assets that the client has borrowed to the market value of the total sum of discounted collaterals (eligible).

Eligible collateral

Eligible collateral is an asset that a lender accepts as security for a loan. If the borrower defaults on the loan payments, the lender can seize the collateral and resell it to recoup the losses.

Total Margin

Total margin consists of the hedged / unhedged positions multiplied with a set of haircuts. These haircuts are based on position and asset type - with larger haircuts for hedged positions and liquid assets:

Available assets

Available assets are the amount of your eligible collateral that is available to withdraw or to use on trading, if the amount turns negative, you must top up your account with eligible collateral equal to this amount (margin call amount).

Collateral list

The list of the Collateral accepted are as below. Any coin not listed will be discounted by 100%.

Asset

Discount Unhedged (%)

Discount Hedged (%)

USDC, BUSD, USD, EUR

0

0

CUSDC, DAI, USDT, USDT20

5

3

ADA, BTC, CUSDT, STETH, STX, TUSD, WBTC

10

5

CRV, ETH, HOT, SAND

15

5

AVAX, DFI, DOGE, ICP, LINK, SHIB, SOL, XRP

20

5

CAKE, CEL, CELO, COMP, DCR, DOT, ENJ, ETC, FLOW, FTM, GUSD, HBAR, IOST, KLAY, KSM, LEO, NEAR, OKB, QNT, ROSE, RUNE, SCRT, USDN, WAVES, XDC, ZEC, ZIL

25

7

ALGO, AXS, BAT, BNB, DAO, EOS, FIL, FTT, ICX, MKR, ONE, SKL, SNX, XEC, XRD, XTZ

30

10

CVX, FXS, HNT, JST, LDO, MATIC, MEX, XMR

35

10

AR, BIT, EGLD, GNO, LPT, OMI, PAXG, YFI

40

10

AAVE, ATOM, DASH, UNI

45

10

APE, BCH, CHZ, CRO, KAVA, LTC, MIOTA, NEO, NEXO, XLM

50

10

KCS, GT, FEI, XAUT, FLM, KNC, XEM

60

10

Risk ratio levels, margin call & liquidation rules

BEQUANT monitors two Risk Ratio levels: Initial and Liquidation.

These levels are set to 90% and 100% respectively.

If your RR goes above the Initial RR Level BEQUANT will issue you with a Margin Call. You have twelve hours to add additional funds to your Account such that your RR Ratio goes back below the Initial Level.

If your RR falls above the Liquidation RR Level, or if you have not responded to a Margin Call within twelve hours, BEQUANT reserves the right to commence liquidating your account until it determines that enough of the loan has been repaid.

Sensible risk management should be employed when using leveraged positions: We recommend you set both a stop loss and a profit target for every opened position.

Example

A client has a total margin of 10 BTC when considering the sum of all hedged and unhedged positions over each currency held, multiplied with the associated haircuts. i.e:

Where;

Hedged margin = hedged position * hedged discount
Unhedged margin = unhedged position * unhedged discount

These haircuts are determined based on liquidity of the coins in question as well as position (hedged and un-hedged):

If the same client has 20 BTC worth of eligible collaterals and sum of client’s loans are equivalent to 9 BTC; then the risk ratio will be 90%:

If this is above the MC RR and below the Liq RR, a margin call may be sent to the client. If this RR is above liquidation threshold, Bequant may choose to liquidate the clients’ assets.

Loan Types

Currently, Bequant Pro platform offers five types of loans to their clients, which are leveraged loan, credit line, single platform leveraged Loan or Loan facility, Uncollateralised Loan, and Off-Platform Swaps.

“Leveraged Loan” This is a loan which constitutes a multiple of the existing user assets to be held in their Bequant account.

“Credit Line” This is a facility for Asset Loan which constitutes a multiple of the existing users assets held in their Bequant Pro Account custodied with multiple exchanges, and for use with the Bequant Asset Services on a rolling basis. Customers can use any part of the credit line granted to them, up to the total amount of the credit limit.

“Single platform leveraged Loan or Loan facility” With respect to the previously described loans and loan facilities, single platform loans and facilities are dedicated to a unique venue whereby the existing user assets held in such venues will not amount less than 10% of the loan/loan facility amount.

“Uncollateralized Loan” This type of loan, which is a Bequant Exchange product, is only available for reliable and well-known customers, who can avail of interest free post trade limits, with or without the provision of collateral, with pre-agreed settlement terms and no option to withdraw funds.

“Off-platform Swaps” Bequant may enter a cryptocurrency swap which is a process of exchanging one digital asset to another without using fiat currency as an intermediary and between two wallets. Cryptocurrency swaps are usually performed using a cryptocurrency trading exchange or a swapping platform to allow quick coin-to-coin exchanges.

Loan Process

· To request a leveraged loan, contact [email protected]

· Your account manager will discuss the terms of the loan with you

· You may be asked to complete a loan questionnaire and provide financial or other information BEQUANT requires

§ Once the Loan is approved, you will need to sign a loan agreement and confirmation of a digital assets loan

§ The loan amount will then be credited to your account

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