Understanding how borrowing and repayment work under cross-currency and portfolio margin modes is crucial for effective risk management and capital efficiency in your trading account. This guide explains the mechanics of these systems, how interest is charged, and how to manage your liabilities.
Understanding Cross-Collateral and Portfolio Margin Accounts
In the world of trading, margin accounts allow you to borrow funds to open larger positions. Two common types are cross-currency and portfolio margin accounts.
- Cross-Collateral Mode: In this setup, the value of user-selected collateral assets is converted into USD. This total USD value then serves as the margin for all cross-margin positions.
- Portfolio Margin Mode: This mode aggregates the value of all platform-supported collateral assets, converts them into USD, and uses this total as the margin backing for all cross-margin positions.
A key feature in both modes is the option to enable or disable Auto-Borrow. Regardless of this setting, liabilities arising from the unrealized losses of delivery or perpetual swap cross-margin positions, or from a decline in the market value of options cross-margin positions, do not incur interest charges within your interest-free quota. Any portion of the liability that exceeds this quota will accrue interest.
Enabling or Disabling Auto-Borrow
Your choice to enable Auto-Borrow significantly impacts how liabilities are handled.
With Auto-Borrow Enabled:
- Liabilities from a negative balance will accrue interest every hour.
- Liabilities from unrealized losses on delivery and perpetual swap cross-margin positions benefit from the interest-free quota. Any amount exceeding this quota will accrue interest hourly.
- You retain the ability to borrow assets for spot trading.
With Auto-Borrow Disabled:
- Liabilities from both a negative balance and unrealized losses on delivery and perpetual swap cross-margin positions benefit from the interest-free quota.
- If liabilities exceed the interest-free quota, an automatic currency conversion is triggered. This process sells your other coin assets to repay the outstanding debt.
- If your available equity for a coin is less than the required transaction fee, you cannot borrow for spot trading or initiate new contract and options trades.
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What Constitutes a Liability?
A liability occurs when the equity for a specific coin in your account becomes negative. The formula for calculating your cross-margin liability for a coin is: |Min[0, Coin Equity (Cross)]|.
The following table outlines common scenarios that can lead to liabilities.
| Scenario | Description | Example |
|---|---|---|
| Spot Margin Order Execution | A liability is created if your coin equity is insufficient to cover the sold quantity after a spot margin order is filled. | Your account holds 100,000 USDC. You place and execute a sell order for 1 BTC. Your BTC equity becomes -1 BTC, creating a 1 BTC liability. |
| Contract & Options Fees | A liability arises if your coin equity is insufficient to pay the trading fee after an order is executed. | You have 10,000 USDC and open a 10,000 USDT BTC perpetual contract cross-margin position. A 2 USDT fee is charged. Your USDT equity becomes -2 USDT, creating a 2 USDT liability. |
| Isolated Margin Order Execution | A liability is created if your coin equity is insufficient to cover the required margin and fees for an isolated margin order. | With 10,000 USDC and 10x leverage, you open a 1,000 USDT isolated perpetual contract position. 100 USDT is moved to isolated margin and a 0.2 USDT fee is charged. Your USDT equity becomes -100.2 USDT, creating a liability. |
| Closing an Option Short (Cross-Currency Only) | A liability arises if your coin equity is insufficient to pay the premium required to buy back a short option position. | You hold 10,000 USDT and buy to close a BTC-USD short option. A 0.02 BTC premium is due. Your BTC equity becomes -0.02 BTC, creating a liability. |
| Futures/Perp Unrealized Loss | Unrealized losses on open positions can reduce coin equity below zero, creating a liability. Amounts over the interest-free quota accrue interest. | You hold a BTC-USDT perpetual position with 10,000 USDC equity. A -100 USDT unrealized loss makes your USDT equity -100 USDT, creating a liability. |
| Option Position Market Value | A decline in the market value of an option position can reduce coin equity below zero, creating a liability. Amounts over the interest-free quota accrue interest. | You hold a short option position with 10,000 USDT and 1 BTC equity. If the position's value drops to -1.1 BTC, your BTC equity becomes -0.1 BTC, creating a liability. |
| Perpetual Swap Funding Fee | A liability is created if your coin equity is insufficient to pay the periodic funding fee on a perpetual swap position. | You hold a BTC-USDT perpetual position. A 10 USDT funding fee is charged, making your USDT equity -10 USDT and creating a liability. |
Understanding Your Interest-Free Quota
An interest-free quota is a grace amount of debt for which you are not charged interest. The rules differ based on your Auto-Borrow setting:
- Auto-Borrow Enabled: Liabilities from unrealized losses on delivery and perpetual swap cross-margin positions are interest-free up to the quota. Exceeding amounts accrue interest hourly.
- Auto-Borrow Disabled: Liabilities from both negative balances and unrealized losses on these positions are interest-free up to the quota. Exceeding amounts trigger automatic coin conversion.
The interest-free quota varies by coin. A simplified example is shown below. Always check the latest information on the official platform for the most accurate and current quotas.
| Coin | Approximate Interest-Free Quota |
|---|---|
| USDT | 20,000 USDT + USDC Available Equity |
| USDC | 5,000 |
| BTC | 1 |
| ETH | 5 |
How Interest is Calculated and Charged
Interest is calculated and charged on the hour, every hour.
- Calculation: Interest = (Liability exceeding the interest-free quota) × (Annualized Interest Rate / 365 / 24).
- Process: The platform takes a snapshot of your liabilities at the top of each hour. The interest calculated from this snapshot is then deducted from your account balance within the following three minutes.
- Key Point: If you repay a liability before the hourly snapshot is taken, you will avoid incurring interest for that hour.
Potential Borrowing and Borrowing Limits
Beyond actual liabilities, the system also calculates "potential borrow" to prevent over-leveraging.
- Potential Borrow: This represents both your current liabilities and the potential liabilities that would occur if your open spot sell orders or isolated margin orders were to be executed. It is calculated as: |Min[0, Coin Equity (Cross) – Occupied Equity (Cross)]|.
- Borrowing Margin: Potential borrow requires borrowing margin, which is calculated as (Potential Borrow / Borrowing Leverage Multiplier). This margin is locked and cannot be used for other trades.
Common scenarios that generate potential borrow are similar to those for actual liabilities but occur at the order placement stage, not execution.
How Leverage and VIP Levels Affect Your Limits
Your borrowing power is not unlimited. It is constrained by two main factors:
- Leverage Tier Limits: The maximum amount you can borrow is limited by your position tier. Higher leverage multipliers often result in a lower maximum borrowable amount for a given tier. You may need to lower your leverage to access greater buying power if your available balance is sufficient.
- Main Account Borrowing Limit: Your total borrowing capacity across all sub-accounts is governed by a main account limit. This limit varies based on the coin you wish to borrow and your VIP level. For example, a VIP 5 user might have a main account USDT borrowing limit of 35,000,000 USDT.
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Frequently Asked Questions
What is the main difference between cross-currency and portfolio margin modes?
Cross-currency margin allows you to select specific assets as collateral, which are converted to USD to back your positions. Portfolio margin automatically uses all supported assets in your account as collective collateral, often leading to greater capital efficiency.
Will I always be charged interest on my debt?
No. Both modes offer an interest-free quota for liabilities from unrealized losses on certain positions. You are only charged interest on the amount of debt that exceeds this quota for the specific coin.
What happens if I disable Auto-Borrow and my debt exceeds the quota?
If Auto-Borrow is disabled and your debt exceeds the interest-free quota, the platform will automatically trigger a coin conversion. This means it will sell other assets in your account to repay the outstanding debt.
How often is interest charged on my borrowings?
Interest is calculated and charged hourly, on the hour. The platform takes a snapshot of your liabilities at each hour mark, and the interest is deducted within the following few minutes.
How can I check my current debt and borrowing limits?
You can view your liabilities and potential borrow for each coin in the Assets panel on the trading page. Clicking on the potential borrow value will show your current leverage multiplier, potential borrow margin, and borrowing limits.
What is the simplest way to repay a debt?
The simplest method is often the "One-Click Repay" function found in the Assets panel. This allows you to select the coin you wish to repay and automatically sells other specified assets in your account to cover the liability.