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Margin Trading

On Seed Market and Seed SEF, Participants can trade on margin. That is, a Participant can open a position with a notional value larger than the total Available Balance they have on hand. To open any position, a Participant must have sufficient Available Balance in their account to cover the Initial Margin requirement for the Transaction.

Initial Margin

Zero Hash acts as the Calculation Agent for Initial Margin requirements per Contract traded on both Seed Market and Seed SEF. Once calculated, the figure is fed into each marketplace's risk systems to ensure that no trades are executed without sufficient backing.

  1. Initial Margin requirements are calculated by Zero Hash each day to provide a current, risk-based capital requirement to open, and maintain, a Transaction. Initial Margin is calculated based on the risk associated with holding a Contract for a period of time, after the Transaction date. For spot trades on Seed Market, Initial Margin is calculated assuming a 3-day holding period, whereas long-dated contracts will assume a 10-day holding period.
  2. Once calculated, Zero Hash publishes the figure publicly via the seedcx.com website.
  3. Seed Market and Seed SEF download the Initial Margin figure and feed it into their pre-trade controls. 
  4. During market hours, if the Participant’s Available Account is larger than the Initial Margin requirement for a Transaction, an order can be executed. Otherwise the order is rejected.

Collateral Posting

All Initial Margin obligations must settle by T+1. That is, Participants must post or collect Initial Margin to cover open positions on or before the business day after execution.

Compression Service

Zero Hash runs a daily compression algorithm for all participants to reduce outstanding Transactions, whilst maintaining the same risk profile. Capital efficiency is therefore optimized.