Margin

Margin is the collateral set aside to support a leveraged position. It lets a trader take exposure larger than the collateral committed to the trade, while giving the market a defined point at which unsupported exposure must be reduced.

The difference between the position value and the posted collateral is leverage. Higher leverage leaves less room for the market to move against the position before liquidation.

Initial and maintenance margin

Initial margin is the amount required to open a position or increase its size. Novrinex checks it before an order can create new exposure.

Maintenance margin is the lower threshold that an open position must continue to meet. When account equity falls below this requirement, the position becomes eligible for liquidation.

For price P, quantity Q, price scale S, and a margin rate R expressed in parts per million:

notional = ceil(P × Q / S)
margin   = ceil(notional × R / 1,000,000)

Margin rounds upward so that precision cannot understate the required collateral. A position with 10,000 in settlement notional and a 10% initial rate requires 1,000 units of collateral.

Margin for open orders

An order that could increase exposure reserves initial margin for its remaining quantity. A normal resting order uses its limit price for the reservation.

As the order fills, the clearinghouse moves collateral from the open-order reservation to the resulting position. Cancelling the unfilled remainder releases the corresponding amount.

Reduce-only orders do not require new initial margin when their combined quantity can only decrease an existing position.

Isolated margin

Isolated margin assigns collateral to one position. That position’s collateral and unrealized profit or loss determine its health.

A loss can consume the collateral assigned to the position, but it cannot draw from a different isolated position. Closing the position releases whatever collateral remains.

Cross-margin

Cross-margin evaluates compatible positions together inside one subaccount and risk domain. Available collateral and unrealized profit or loss are compared with the combined requirements of those positions.

This can let a profitable position offset part of the risk of a losing one. It also means a loss on one position can consume collateral supporting another.

Cross-margin never reaches into another subaccount or risk domain, even when both contain the same settlement asset.

Checks at the moment of a fill

A resting order may wait while the account and market change. Passing the initial check does not give it permanent permission to execute.

Before each match, Novrinex recalculates the relevant collateral, positions, mark price, and market limits. If the fill would leave the account outside its requirements, the network does not create it.

Withdrawable collateral

Only available collateral can be withdrawn. Amounts reserved for orders or required by positions are excluded from withdrawal capacity.

The withdrawal and margin checks form one state transition. Funds leave only if the remaining account continues to satisfy every applicable requirement.