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Huobi DM, the futures trading platform of Huobi exchange has recently announced the launch of a new liquidation mechanism to systematically minimize user exposure should prices become too volatile. The platform is introducing these new measures to provide users with a safe, secure and reliable trading experience.
In order to help users hedge against liquidation risks, the derivatives platform now provides partial liquidation. This new mechanism gradually reduces a user’s positions, instead of fully liquidating them in a single event. The system will automatically start liquidating a user’s positions in stages. This will be done at pre-determined margin ratios based on the user’s calculated exposure, until the margin ratio is above 0.
The liquidation mechanism also includes a circuit breaker function that halts liquidation whenever large or unusual deviations between the liquidation price and market price are identified.
According to Ciara Sun, VP of Global Business at Huobi Group, market volatility creates new arbitrage opportunities for users. However, he claims this can also lead to unnecessary high-risk circumstances, if the right measures are not put in place.
Sun added that the company’s goal is to safeguard its users’ assets, while providing a robust trading experience. He claims the idea behind this partial liquidation mechanism is to minimize the downside without diluting the potential upside.
According to the announcement, all coins and leverages on the derivative platform are supported by this new mechanism. It was also noted that the mechanism is available to all users on the platform with no charges.
Launched in less than 16 months ago, Huobi DM has been one of the leading crypto derivatives markets globally. According to Sun, the platform has the highest daily turnover and market depth in terms of delivery contract. Aside the new liquidation mechanism, the platform has received a firm ware update that increases transaction through put by more than 50%.
Looking forward, Huobi DM is planning to launch perpetual swaps with up to 125X leverage starting with support for Bitcoin swaps. The platform is also planning to expand into new markets. globally in 2020. It also claims other products such OTC loan service and options trading are also in the pipeline.
Featured image courtesy of Shutterstock. Source: Cryptopress.