Traders on the Digitex Futures exchange must have sufficient Initial Margin in their trading account to open a futures position. After opening a futures position, a trader must have sufficient Maintenance Margin in their trading account to keep that position open.
The Maintenance Margin required to maintain an open position is 50% of the Initial Margin the trader posted to open that position. If the trader’s account balance falls below the Maintenance Margin requirement to maintain the current open position, the system will cancel the unmatched orders on that market to free up the margin requirements of those unmatched orders.
If after doing this, the account balance is still below the required Maintenance Margin, the system will take over the trader’s position and liquidate it.
After assuming a trader’s open futures position, the system will attempt to immediately close that position by submitting a buy or sell order at the bankruptcy price. The bankruptcy price is the price at which the trader will lose the entire Initial Margin amount posted to open the position.
For Long positions, the bankruptcy price is calculated by subtracting the Initial Margin requirement from the trader’s entry price. For Short positions, the bankruptcy price is calculated by adding the Initial Margin requirement to the trader’s entry price.
After assuming a trader’s position, if the system is able to liquidate that position at a better price than bankruptcy price, the additional funds are placed into the Insurance Fund.