Navigating the complexities of trading with leverage requires a clear understanding of how borrowing and repayment work. In both multi-currency and portfolio margin account modes, your assets serve as collateral, but the way they are managed differs. This guide breaks down the key concepts, from auto-borrow functions to liability calculations, providing you with the knowledge to manage your account effectively.
How Margin Calculation Works in Different Modes
In the multi-currency cross margin mode, the various cryptocurrencies you hold as customized collateral are converted into their USD-equivalent value. This total USD value is then used as the margin to support your open orders and positions.
Similarly, in portfolio margin cross-margin mode, your diverse crypto assets are also converted into a single USD-equivalent value, which acts as the unified margin for all your trading activities.
A crucial feature in both modes is the auto-borrow function, which you can enable or disable based on your trading strategy.
Managing the Auto-Borrow Feature
The auto-borrow setting significantly impacts how your account handles debt and what fees you might incur.
When Auto-Borrow is Turned On:
- Any liability that results from a negative account balance will accrue interest on an hourly basis.
- However, liability stemming from the unrealized loss of cross-margin positions in expiry or perpetual futures is granted an interest-free benefit up to a specific quota.
- If this unrealized loss liability exceeds your interest-free quota, only the excess amount will be charged interest hourly.
- A key advantage is that your ability to trade on the spot margin market remains active.
When Auto-Borrow is Turned Off:
- The combined liability from a negative balance and unrealized losses on futures positions receives an interest-free benefit.
- If this aggregate liability surpasses your interest-free quota, the system will trigger a forced repayment. This process involves automatically selling other cryptocurrencies in your account to cover the debt.
- Importantly, if your available equity in a cryptocurrency is less than the required trading fee, you will be unable to place new trades for spot, futures, or options.
What Constitutes a Liability?
Liability occurs whenever the equity of a specific cryptocurrency in your cross-margin account falls below zero. The formal calculation is: Abs {Min [0, Equity (cross)]}.
Various common trading scenarios can lead to the incurrence of liability:
- Spot Margin Orders: Selling more of a crypto than you have available.
- Trading Fees: Having insufficient equity to cover fees on futures or options trades.
- Isolated Margin Orders: Lacking the equity to cover the required margin and fees for an isolated position.
- Closing Options: Needing to pay a premium to close a short option position without sufficient equity.
- Unrealized Losses: Market moves causing your futures positions to go into loss, dragging equity negative.
- Funding Fees: Being unable to cover the periodic funding fee for a perpetual futures position.
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Understanding Your Interest-Free Quota
OKX provides a beneficial interest-free quota on certain types of liability. This means you can maintain a specific amount of debt from unrealized losses without incurring interest charges.
The size of your interest-free quota depends on the cryptocurrency. For example:
- USDT: 20,000 USDT + your available USDC equity
- BTC: 1 BTC
- ETH: 5 ETH
A detailed table is provided in the official documentation listing the quotas for dozens of supported cryptocurrencies. It is vital to know your quotas, as any liability amount that exceeds them will either accrue interest (if auto-borrow is on) or trigger forced repayment (if auto-borrow is off).
How Interest is Calculated and Charged
Interest is handled in a systematic, hourly manner:
- OKX records your liability and calculates interest at the start of every hour.
- A bill is generated, and the interest is deducted from your account within 3 minutes.
- The formula used is: Interest = (Liability exceeding the interest-free quota) Ă— (Annualized interest rate / 365 / 24).
A critical point for active traders: if you repay a liability before the hourly mark (e.g., at 22:57), you can avoid being charged interest for that hour altogether.
Potential Borrowing and Quota Limits
Beyond actual liability, traders must understand potential borrowing. This refers to debt that could occur if your open orders were to be filled, given your current equity and frozen assets. The formula is: Abs {Min [0, crypto equity (cross) – Frozen equity]}.
Potential borrowing occupies your borrowing quota, which is limited at three levels:
- Position Tier Limit: Your maximum borrowing amount for a single position is capped based on the leverage you select. Higher leverage often means a lower borrowing cap.
- Main Account Quota: Your entire account (including sub-accounts) has a total borrowing limit for each crypto, which is determined by your VIP level.
- Platform Quota: The entire OKX ecosystem's capacity to lend is limited by the total assets users have deposited in its Simple Earn flexible savings product.
How to Monitor Your Borrowing Data
Staying on top of your borrowing is essential for risk management. You can check your data in several places:
- Assets Tab: On the trading page, this tab shows the borrowed and potential borrowing amount for each cryptocurrency.
- Current Borrowing Overview: This provides a detailed breakdown of your total liability, interest rates, interest-free amounts, and available borrowing headroom.
- Interest Deduction Records: A log of all hourly interest charges, viewable by date, asset, and trading pair.
- Market Borrowing Information: Shows the total amount borrowed for each crypto across the entire OKX platform, along with historical and estimated interest rates.
Methods for Repaying Liability
If you have an outstanding liability, you can repay it through three straightforward methods:
- Spot Trading: Simply place a spot trade that results in you acquiring the cryptocurrency you owe. The system will automatically use these new funds to repay your liability.
- One-Click Repay: Located under the Assets tab, this feature allows you to select the crypto you owe and instantly sell other assets (like BTC, ETH, or USDT) to cover the debt.
- Transfer-In: You can transfer the owed cryptocurrency from your funding account to your trading account. The system will automatically detect this and use it to settle your liability.
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Frequently Asked Questions
What is the main difference between multi-currency and portfolio margin mode?
Both modes convert your various crypto holdings into a USD value for use as margin. The core difference often lies in the sophistication of the risk calculation model. Portfolio margin typically uses a more advanced model that may provide greater margin efficiency for diversified portfolios by considering correlations between assets.
Will I always be charged interest on my debt?
No. Liability that falls within your interest-free quota—primarily from unrealized losses on futures positions—does not accrue interest. You are only charged hourly interest on the amount that exceeds this quota, and only if the auto-borrow function is enabled.
What happens during a forced repayment?
If your auto-borrow is off and your total liability exceeds the interest-free quota, the system will automatically initiate forced repayment. This means it will sell other cryptocurrencies within your account at the prevailing market price to generate the funds needed to repay the outstanding debt.
How can I avoid potential borrowing from blocking my trades?
Potential borrowing occupies your borrowing quota. If you have open orders creating a high potential borrow, it may limit your ability to open new positions. To free up quota, you can cancel any open orders that are not essential, which will release the frozen equity and reduce your potential borrowing.
Where can I find my specific interest-free quotas for each coin?
A comprehensive table listing the interest-free quota for every supported cryptocurrency is available in the official OKX help documentation. It is highly recommended to review this list to understand your limits for different assets.
Is the interest rate fixed?
No, the annualized interest rate for borrowing is variable and is determined at the start of each hour. You can check the rate for the previous hour and an estimate for the next hour in the "Market Borrowing Information" section.
This document is for informational purposes only and is not intended to provide investment, tax, or legal advice. Digital asset investments and leveraged trading carry a high level of risk and can result in the loss of your entire investment. You should carefully consider your financial situation and risk tolerance before engaging in these activities. You are solely responsible for your trading decisions.