1. Liquidate With Fair Price
BBX uses fair price marking for the purpose of avoiding liquidation due to illiquid markets or manipulation.
2. Risk Limits are also imposed that require higher margin levels for larger position sizes.
This gives the BBX liquidation system more usable margin to effectively close large positions that would otherwise be difficult to safely close. If it is safe to do, larger positions are incrementally liquidated.
If a liquidation is triggered, BBX will cancel any open orders on the current contract in an attempt to free up margin and maintain the position. Orders on other contracts will still remain open.
BBX employs a partial liquidation process involving automatic reduction of maintenance margin in an attempt to avoid a full liquidation of a trader’s position.
3. Users on the Lowest Risk Limit Tiers
- BBX cancels any open orders in the contract.
- If this does not satisfy the maintenance margin requirement then the position will be liquidated by the liquidation engine at the bankruptcy price.
4. Users on Higher Risk Limit Tiers
The liquidation system attempts to bring a user down to a lower Risk Limit, and thus lower margin requirements by:
- Attempting to bring a user down to a Risk Limit associated with their open orders and current position.
- Cancelling any open orders and then attempting to bring a user down to a Risk Limit associated with their current position.
- Submitting a FillOrKill order of the difference between the current Risk Limit position size and the position size to satisfy the margin requirement to avoid liquidation.
- If the position is still in liquidation then the entire position is taken over by the liquidation engine and a limit order to close the position is placed at the bankruptcy price.