The system of compulsory liquidation refers to that when the trading margin of members or customers is insufficient and not replenished within the specified time, or when the number of positions of members or customers exceeds the specified limit, the exchange or futures brokerage company forcibly liquidates the corresponding positions of members or customers in order to prevent the risk from further expanding.

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Classification of forced liquidation of futures

1, forced liquidation due to failure to fulfill the obligation of additional margin. According to the rules of the Exchange, a margin system is implemented for futures trading, and a certain percentage of margin must be paid for each transaction. When the market changes unfavorably, that is, when the market reverses and changes in the opposite direction, members or customers should also add margin according to the trading rules and the contract when entering the delivery month. If the member or customer fails to fulfill the obligation of additional margin within the specified time, the trading ownership will forcibly close the position held by the member or brokerage company.

2. Forced liquidation due to violation of regulations. If a member or customer violates the trading rules of the exchange, the trading ownership will be forced to close the position and violate the trading rules. It mainly includes: exceeding positions in violation of position restrictions; Failing to report or making a false report in violation of the large household reporting system; Carry out futures business for those who are prohibited from entering the market; Brokerage companies engage in self-operated business; Manipulate the market together; And other violations that require compulsory liquidation.

3. Forced liquidation due to temporary changes in policies or trading rules. Trading rules are often modified due to temporary regulations of policies or regulatory authorities, or can not be implemented normally for the time being.

The compulsory liquidation right of the exchange means that when the spread loss between the open contract held by the customer and the current transaction settlement price exceeds a certain proportion, and the customer fails to pay the additional margin within the prescribed time limit, the futures brokerage company has the right to compulsory liquidation of the customer's hand contract, so as to reduce the margin level and risk and ensure that the customer is free from greater economic losses, and the consequences of compulsory liquidation shall be borne by the customer.