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DIRECTIVES FOR MARKET MAKERS

These directives are introduced in accordance with Bye-Laws and Rules of Unicoin Digital Capital Exchange. It is hoped that adherence of these directives would ensure ethical and disciplined business thereby confirming stability and liquidity in the market for fiat settled contracts. All the Market Makers, who have received approval from the exchange for Market Making on fiat settled contracts, are responsible to comply with these directives.

1. PRICE QUOTING SYSTEM

1.1.  Market Maker (MM) shall be allowed to quote with the help of reference price which is termed as “Market Maker EPL Quote”. The MM have to choose the spread and quantity to show their intentions of Buy and Sell for different fiat settled contracts.

1.2.  The range of spread permitted by Exchange shall be from 0 to 5. Default spread shall be 0, if MM doesn’t choose from the given range. However, the maximum permitted spread may differ product wise and this shall be under the discretion of the Exchange. The quantity chosen shall represent quantity of BID and ASK both.

1.3.  If a MM chooses spread as 1 then, 1 tick shall be added on EPL ASK Price and deducted from EPL BID Price; the same calculation shall be applicable for other spread levels.

1.4.  The quote with least spread shall get the priority which shall result in best available price. But if MMs have quoted with same spread, then time priority shall be considered.

1.5.  Validity for the matched intentions of MM shall depend upon the matched order of the Client.


2. MARKET DEPTH

2.1  The best 5 BID and ASK prices shall be displayed in Market Depth. However the identification of any MM for any particular quote shall be anonymous.

2.2  Clients’ Limit orders shall also be visible in the Market Depth, if the Limit prices fall within the best 5 BID and ASK quotes. Clients’ Buy Limit order shall be visible in BID side and Sell Limit in ASK side.


3. ORDER MATCHING PRINCIPLE

3.1  The orders shall be matched based on Price- Time priority.

3.2  Orders shall be matched at any level, Client to Client, Client to MM & MM to MM.

3.3  All orders shall be routed to the Exchange’s trading and clearing system. The orders received and matched shall be recorded in Exchange’s Central Order Book.


4. EDITING & CANCELLATION OF MM QUOTES

4.1  MM shall edit & cancel its quotes for the particular contract if no transaction has occurred against the intention showed. [No transactions in both BID and ASK side]

4.2  Regardless of point 4.1, if the quantity has matched from one side only i.e. either BID or ASK, the equal number of intentions shall be blocked from the opposite side for the cancellation but shall be allowed to edit its spread till the MM has open position/s from first side. Nevertheless, if the intention gets matched from the other side too and MM has open positions for that particular contract, then the open position shall be liquidated on FIFO basis.

4.3  Editing of quotes shall add/remove equal number of BID and ASK quantities.

4.4  If the quotes are edited, the modification time shall be effective for time priority.


5. RISK MANAGEMENT SYSTEM

5.1  MM shall mitigate/transfer its risk by closing its open position/s. The open position shall be matched with the available MM/s or Client/s with the best available quotes.

5.2  In consideration to point 5.1, MM needs to make sure that its intention is not in best for relevant BID/ASK side. If its intention is best in relevant side then MM can re-quote higher spread to give the priority to other MM/s or Clients for best BID/ASK or cancel their intention/s and then only close their open position.

5.3  If MM intention is best in relevant side and MM chooses to close its open position then it shall force to self-matching.


6. INTENTIONS & FUND AVAILABILITY

6.1  MM can show its intentions in multiple times as per the available fund. That is suppose, a MM’s available fund is USD 50,000 and MM’s Margin for regular Bitcoin contract is 5 percent of the Contract Value. When the Contract Value of Bitcoin is USD 5,000, then MM can show 200 quantity [Available fund i.e. USD 50,000 / Required Margin i.e. USD 250 (5% of Contract Value i.e. 5,000)] in Bitcoin at one time and again can show different intention with 200 quantity, if the contract value remains the same. Likewise MM can show its intention for multiple times in same/different contracts.

6.2  If the intentions with insufficient fund are matched, remaining intentions with insufficient fund for that particular contract shall be cancelled. In this scenario, for the matched intentions with insufficient fund, MM shall get the open position but it shall be closed at the same time in market.

6.3  At the time of cancellation of remaining intentions of MM, intentions from both BID and ASK sides shall be cancelled for the particular contract except the opposite intentions of his open position [Excluding Open Position of Self Trade] but the time priority shall be changed to the current time.


7. MARGIN REQUIREMENT & MARGIN CALL

7.1  MM Margin requirement for execution of orders is 50% of Products Margin.

7.2  MM’s account with short of Margin [negative ‘Available Margin’] at EOD shall be issued a call margin to fulfill the margin to 100%. Such margin needs to be brought on the next trade day at the earliest or by 08:00:00 GMT, else the position in excess to the margin available at 09:00:00 GMT shall be liquidated at prevailing price.

7.3  Margin Call Liquidation shall be done based on FIFO Method [First-In-First-Out].

7.4  If MM’s intention is in best for the open position/s which is considered for Margin Call liquidation, the same rule shall be applicable as prescribed on point 6.2.


8. MARK-TO MARKET (MTM) SETTLEMENT

8.1  Exchange shall calculate daily settlement price at 23:59:30 GMT and MTM shall be processed based on the same.

8.2  The rule as prescribed on point 7.2 shall be applicable for margin call calculation.

8.3  All open positions of MM with intraday validity shall be liquidated on daily settlement price at MTM.


9. EQUITY HIT

9.1  If Equity in MM’s trading console falls to 15% of ‘Used Margin’+ Commission [remaining one side], then equity hit shall be considered.

9.2  During Equity Hit, first all the MM’s intentions and pending contingent orders shall get cancelled and then all the open position shall be liquidated at prevailing market price.


10. DEPOSIT & WITHDRAWAL

10.1  The minimum deposit for trading shall be USD 3,000 for MM. MM shall be allowed to show the intention from the deposit for trading.

10.2  MM shall be allowed to withdraw only the amount in excess to the minimum deposit.

10.3  The deposits made by MM is refundable on surrender/transfer/termination of membership subject to settlement of all pending dues, claims or charges, if any.


11. TRANSACTION FEE (COMMISSION)

For every trade executed in the trading account [open position as well as settled position], MMs shall be charged transaction fee [commission]. The fee shall be equivalent to the maximum allowable commission to clients prescribed by the Exchange. For example, if maximum commission for a contract is USD 50, then the MM shall be charged USD 50.


12. OTHER NORMS, PROCEDURES AND POLICIES

These directives may not contain all the possible norms, policies and procedures to be followed by a Market Maker. In such situation, MM shall follow the same norms, policies and procedures as Exchange has prescribed for its registered Clients.


13. AMENDMENT TO THESE DIRECTIVES

Exchange may at its own discretion amend these directives from time to time by giving 5 days prior notice from the date of its application.

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