Liquidation Mechanism

In the event that the collateral is not enough to cover the client’s position, the position
will be partially or fully liquidated. At any moment of time ZUBR calculates the
liquidation price of clients’ positions in all instruments taking into account the amount of
funds on their accounts and an applicable margin mode (Cross Margin or Isolated
Margin).

The liquidation is triggered when the Mark Price crosses the Liquidation Price. This
crossing shall be the moment when the client’s margin is not enough to cover the
position.

ZUBR applies full and partial liquidation regimes. Full liquidation of the client position
occurs in the event of the significant price movement against the client and the Margin
Level goes below the Full Liquidation Margin Level (FLML), or there is no point in
splitting the client’s position into fractions due to its small size.

In the event of partial liquidation, at least 20% of the client’s position may be liquidated;
however, it cannot be liquidated in full. The goal is to allow the client to hold a portion of
the position with the margin level above the Partial Liquidation Margin Level.

The liquidation levels are linked to the Risk Limit, which the client may determine as per
the desired maximum position in the instrument. For more details, please check out the
Margin page.

When the partial liquidation is triggered, the exchange core cancels any outstanding
orders of the client to reduce its portfolio leverage. If this does not help, full liquidation of
the client’s portfolio is triggered.

The client may select between the Cross Margin or the Isolated Margin modes. In the
Cross Margin mode, liquidation is only triggered when the client’s margin is not enough
to cover all open positions. In the Isolated Margin mode, liquidation occurs only when
there is the client’s margin assigned to a particular position that it cannot maintain.
Further, in the Isolated Margin mode, only the full liquidation can take place. If the
margin level for the position reaches the FLML, this position is liquidated in full.
The price which the client receives in case of position liquidation is different from the
Mark Price and the Market Price at the moment. To define the Liquidation Price (P Liq )
the Mark Price (P MARK ) is adjusted by the client’s FLML as per the formula below.

The above calculation of the Liquidation Price guarantees that the client's balance would not go to negative territory.