The system recently introduced by OKEx to balance risk and reward for its investors has so far proven a huge success for the exchange and its customers.
Earlier this year, and to combat the volatility in the derivatives market, OKEx introduced an enhanced risk management system.
The new system features three main components:
- Mark price
- A tiered maintenance margin ratio system, that avoids the liquidation of large positions and the knock-on effect liquidation would have on overall market liquidity
- Forced partial liquidation – this stops a large number of liquidated orders having an impact on the overall market.
When customers trade derivatives on the platform, and when their position is at risk the new system means they will be liquidated closer to the bankruptcy price, allowing users more opportunity to stay solvent and recover from the risky positions.
Now, more than six months since elements of the system were introduced, OKEx can report there have been zero clawbacks.
Risk and reward
An OKEx spokesperson said the move demonstrated the best service for investors and made OKEx the go-to choice for anyone wishing to trade derivatives.
“We introduced this new system to strike a better balance between avoiding early liquidation and to maximize traders’ benefits. Developing a robust decentralized crypto marketplace where everyone can trade freely in a fair manner is something that has always been our mission,” they said.
The new system means customers can have more confidence in their trades, and allows them to benefit from using a higher effective leverage.
The fact that there have been zero clawbacks since the system was introduced means OKEx’s insurance fund has grown steadily.
What this means is that the plan to balance investor risk and reward has proven successful for the exchange.
OKEx on the menu?
While this is great news for investors who use the platform, there’s potentially more good news for the exchange in the days ahead, with OKEx executives expected to be chosen to appear alongside TRON CEO Justin Sun at billionaire investor Warren Buffet’s annual charity ‘power lunch’.
Sun bid a record $4.6 million for the lunch, and is expected to choose representatives from the world’s leading exchange to accompany him to meet Buffett, and talk business, blockchain and crypto.
Sun is looking to tell crypto-sceptic Buffett about the power of blockchain, and having executives from OKEx at the event on July 25, may help convince the legendary trader of the benefits of crypto.