Alternative derivative exchange
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Delivery Deleverage Mechanism

Carry your positions into settlement with confidence.

ADE's deleverage mechanism aims to promote market stability and discourage manipulation by distributing default risk over a period of time. The exchange customises the designated deleverage period on a per-contract basis and schedules its start as X days before delivery. During this period, traders must provide additional collateral in the form of the underlying asset they are set to deliver to maintain the required equity levels on their accounts. This mechanism makes it prohibitively expensive to manipulate prices during settlement and encourages transparency and price discovery in spot markets.

Delivery Margin Table

Days to deliveryIMR
10+20.00%
1028.00%
936.00%
844.00%
752.00%
660.00%
568.00%
476.00%
384.00%
292.00%
1100.00%

The table above displays the required initial margin as a percentage of the notional value of the contract for each day prior to delivery. For example, if a client wants to enter into a BTC.USD contract with a notional value of $10,000, and the current date is more than 10 days prior to delivery, they would be required to post an initial margin of 20% of $10,000, or $2,000, to open the position. If they hold the position into the deleverage period, which starts 10 days prior to delivery, they would need to post an additional 8% of the notional value in the underlying asset to maintain the position. If they trade on the 8th day prior to delivery, they would need to have 44% of the notional value in the underlying asset in their account to continue holding the position.

“Its only when the tide goes out that you learn who has been swimming naked.”

Warren Buffett
- Legendary Investor