1 General principles
1.1 These Rules are formulated in accordance with the principles of fairness, openness and impartiality for the purposes of regulating margin trading and Margin Loans of digital assets, maintaining the market order and protecting the legitimate rights and interests of investors.
1.2 These Rules are supplementary provisions of the Margin Trading Service Agreement.
1.3 These Rules shall apply to cross Margin Loan and cross margin trading conducted on this Website. Any matter for which there is no specific provision in these Rules shall be subject to Margin Trading Service Agreement, User Agreement and other relevant provisions of this Website.
2. Security Deposit
2.1 Margin User can use their net assets in their Cross Margin Accounts multiplied by the corresponding conversion ratio as the Security Deposit for cross margin trading.
2.2 The Security Deposit conversion ratio refers to the ratio according to which the currency in which the Security Deposit is paid is converted at the market rate thereof.
2.3 The range of currencies that the Security Deposit hereunder may be in shall be subject to announcements by the Platform; specifically, the conversion ratio of single-currency Security Deposit shall be subject to the announcement.
2.4 In order to ensure the safety of assets, the Platform shall have the right to adjust the Security Deposit conversion ratio hereunder, subject to the announcements released by the Platform from time to time.
3. Loan Rules
3.1 The Maximum Amount of Margin Loans refers to the maximum borrowable quota for the current margin trading currency pairs. The Platform will calculate the maximum amount of margin loan that may be borrowed by a specific User according to the quota of the maximum amount of cross margin available and the Platform’s risk control rules.
In these Rules, the Maximum Amount of Margin Loans = value of converted net assets in a Cross Margin Account * (Maximum Margin Multiples - 1) - outstanding loan assets,
in which, the value of converted net assets in the Cross Margin Account = the net assets in the Cross Margin Account * Security Deposit conversion ratio
3.2 After the successful grant of a Margin Loan, the borrowed digital assets shall be transferred to the User's Cross Margin Account immediately, and the Platform system shall begin accruing the service fee payable thereon immediately, upon which, the User may use the borrowed digital assets to engage in margin trading in trading pairs permitted in cross margin trading.
4. Rules for Calculating loan service fee Rates
4.1 Fee Calculation Rules: the loan service fee shall be calculated at an hourly simple fee rate according the actual term of the loan, with each sixty(60) minutes of such term deemed as one(hour) (the term shall commence as of the time when the loan assets are delivered into the User’ Cross Margin Account by the Platform; if the term is less than 60 minutes, it shall be deemed as one(1) hour). the service fee shall accrue at the time when the loan assets enter the User’ Cross Margin Account, and shall accrue every one(1) hour after that.
4.2 User can repay their debts in advance and pay the service fee thereon according to the number of hours for which the assets are borrowed. If the assets are borrowed for less than one(1)hour, the period shall be counted as one(1) hour and the service fee shall be calculated accordingly. User shall give priority to the payment of service fee when repaying loans.
4.3 Outstanding loan service fee shall be included into the Risk Ratio hereunder. In the event that no service fee is deducted, if there is any long-term outstanding service fee payable by the User, the Risk Ratio of the User’s Cross Margin Account may drop to a level below the liquidation line, and therefore give rise to the risk of forced liquidation of the account. In view of this, the User is advised to pay service fee on schedule or deposit a sufficient balance in their margin accounts.
5. Rules for Currency Repayment/Candy and Airdrop Rules
5.1 Rules for Currency Repayment: User can manually select the loan order to be repaid, repay the loan order that is generated the earliest, and shall give priority to the payment of service fee over the repayment of the principal. After the principal and service fee of a specific loan order are paid off, the status of the loan order shall be changed into “paid off”, and after that no service fee will be calculated for such order.
5.2 Candy and Airdrop Rules: the User is not allowed to obtain candies and airdrops from Margin Loan digital assets.
6. Risk Control
6.1 A User participating in Margin Loans may use the net assets in his/her Cross Margin Account as the Security Deposit thereof, while the digital assets in their other accounts are not included into the Security Deposit of the Cross Margin Account.
6.2 Huobi shall have the right to monitor the Risk Ratio of the User's Cross Margin Account on a real-time basis, and adopt corresponding measures according to the changes in the Risk Ratio.
In these Rules, the Risk Ratio of a Cross Margin Account = Total Asset Value of the Cross Margin Account / (Total Liabilities + Outstanding Service Fee), where:
The market value conversion shall be calculated in BTC;
Total Asset Value = Current Total Market Value of All Digital Assets in the Cross Margin Account
Total liabilities = the current total market value of all outstanding Margin Loans in the Cross Margin Account
Outstanding service fee = the amount of each Margin Loan * the number of hours in loan time by the time of calculation * hourly fee rate - deducted/paid service fee.
6.3 When the Risk Ratio of a Cross Margin Account reaches 120% ("the Warning Line"), the system will send warnings to the User according to the contact information provided by the User in advance, so as to indicate to the User the trading risks. After receiving the reminders, the User shall promptly repay the loan or transfer a sufficient amount of Security Deposit from the currency-currency account thereof, so as to ensure that the Security Deposit conversion ratio remains above the Warning Line.
6.4 When the Risk Ratio of an cross Margin Account of a User reaches one hundred and ten (110%) ("the Forced Liquidation Line"), the system will automatically trigger forced liquidation, which will close the position in the cross Margin Account held by the User, and automatically repay all the Margin Loans of the User. If the User has multiple Margin Loans, the User will repay the loans according to the order in which such loans arise, with the loan that occurs the earliest to be repaid first. If all assets in the User's cross Margin Account are insufficient to repay all the loans of the User under the account (a scenario known as "negative balance"), the Platform shall have the right to continue recovering any outstanding loans from the User.
6.5 The User shall pay due attention to the risks of margin trading and timely adjust their position-holding ratio to avoid risks. All losses that arise when the User’s margin account triggers forced liquidation shall be borne exclusively by the User that owns the account, including but not limited to: losses that arise when the User fails to timely adopt corresponding measures after receiving warnings from the system, in the event that the Risk Ratio of the cross Margin Account reaches the Warning Line and then quickly reaches the Forced Liquidation Line, due to violent fluctuation in the digital asset prices.
6.6 The Platform will manage the total market value of Margin Loans hereunder. When the aggregate amount of Margin Loans on the Platform reaches the maximum total amount of Margin Loans set by the Platform, the system will automatically suspend Margin Loans until the total market value of Margin Loans becomes lower than such pre-set maximum total amount.
6.7 The Platform will adjust the maximum total amount of Margin Loans and the Security Deposit conversion ratio according to the actual operation conditions and risk control rules.
6.8 In the event of a position-negative balance after a Cross Margin Account of a User is forcefully liquidated by the system to repay all Margin Loans of the User, the Platform shall have the right to restrict the User from transferring assets from Cross Margin Accounts thereof to currency-currency accounts thereof or from currency-currency accounts thereof to other Huobi accounts thereof; and the User also authorizes the Platform to require other Huobi service Platforms to transfer assets from the User's other Huobi accounts to non-Huobi accounts, and the assets transferred to the Cross Margin Account shall first be used to repay the outstanding Margin Loans.
6.9 In order to guarantee the security of account assets, only when the Risk Ratio of an cross Margin Account exceeds two hundred percent (200%) can the User transfer digital assets from the cross Margin Account thereof to the currency-currency account thereof, and the Risk Ratio of the cross Margin Account shall not be less than two hundred percent (200%) after such transfer.