Understanding how margin and derivatives trading work is essential for any trader looking to maximize opportunities in digital asset markets. This comprehensive guide outlines the key components of the Margin and Derivatives Trading Agreement provided by OKX Middle East Fintech FZE, offering clarity on services, risk management, fees, and user responsibilities—all while ensuring compliance with Dubai’s Virtual Asset Regulatory Authority (VARA) rules.
Whether you're engaging in Margin Trading, Futures Contracts, Options, or Perpetual Contracts, this agreement defines your rights, obligations, and the mechanisms that protect both you and the platform during volatile market conditions.
What This Agreement Covers
This agreement governs the use of advanced trading services offered through the OKX platform. It supplements the general Terms of Service and takes precedence in case of any conflict.
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Classification of Users
OKX classifies users according to VARA regulations into one of three categories:
- Retail Investor
- Qualified Investor
- Institutional Investor
Retail investors are restricted to Margin Trading only, while qualified and institutional investors may access a broader range of derivative products. Users must promptly notify OKX of any changes affecting their classification status.
Available Trading Services
OKX offers several sophisticated financial instruments designed for different trading strategies and risk appetites.
1. Margin Trading
Margin Trading allows users to borrow funds to increase their trading position size. To get started:
- Deposit Virtual Assets or Eligible Fiat Currency (USD or AED) as collateral.
- Use leverage—expressed as a multiple of your deposited margin—to amplify potential returns (and risks).
Interest applies on borrowed assets once a trade is executed. Leverage amounts are displayed in real time on your trading account, though OKX reserves the right to adjust or withdraw leverage at any time based on market conditions or regulatory requirements.
Note: Retail investors are limited to Margin Trading only under this agreement.
2. Futures Contracts
Futures Contracts enable users to agree on buying or selling a specified amount of a Virtual Asset at a predetermined price and future date. Key features include:
- Expiry-based settlement every Friday at 12:00 PM UTC.
- Daily settlement at 8:00 AM UTC for select contracts like BTC-USDT and ETH-USD in cross-margin mode.
- Settlement prices derived from the average mark price over the hour preceding settlement.
Contract specifications are available directly on the platform and may be updated periodically with prior notification via email or in-app alerts.
3. Options Contracts
Options give traders the right—but not the obligation—to buy or sell an underlying asset at a set price before or on the expiration date. On OKX:
- Options are European-style, exercisable only at expiry.
- In-the-money options are automatically exercised.
- The counterparty (seller) must fulfill the obligation to deliver the underlying asset upon exercise.
This structure supports strategic hedging and income generation through premium collection.
4. Perpetual Contracts
Unlike traditional futures, Perpetual Contracts have no expiry date. Instead, they use a Funding Rate mechanism to keep the contract price aligned with the spot market.
Key points:
- Funding settlements occur every 8 hours (04:00, 12:00, 20:00 UAE time).
- Long position holders pay short holders when the funding rate is positive—and vice versa when negative.
- OKX calculates and settles all funding payments automatically.
FAQ: What happens if I hold a perpetual contract during a funding settlement?
You’ll either receive or pay a funding fee depending on your position type and the current rate. These transfers happen seamlessly in the background.
Trading Account Modes
Your trading experience and risk exposure depend heavily on the account mode you select.
Spot and Futures Mode
Each asset’s margin, profits, losses, and liquidations are isolated. Ideal for traders who prefer clear separation between positions.
Multi-Currency Margin Mode
All Virtual Assets in your account are converted to USD equivalents to form a shared margin pool. This increases capital efficiency but exposes you to multi-asset risk.
Portfolio Margin Mode
Positions with the same underlying asset are grouped into risk units. Margin is calculated holistically, potentially reducing required collateral. Access requires a minimum net equity of $10,000.
Additionally, users can opt for Isolated Margin within any mode to limit risk per position.
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Managing Risk: Margin Requirements & Liquidation
Effective risk management is critical when using leveraged products.
Initial and Maintenance Margin
- Initial Margin: Required to open a position.
- Maintenance Margin: Minimum balance needed to keep a position open.
These values fluctuate based on market volatility and position size. Users must monitor their Margin Ratio—the ratio of equity to maintenance margin.
Early Warning System
When your Margin Ratio drops below 300%, OKX sends an early warning notification (default setting). You can customize this threshold to 150% or 200% at your own risk.
Despite notifications, it remains your responsibility to maintain sufficient margin levels.
Liquidation Process
If your Margin Ratio falls to 100% or lower, OKX may fully or partially liquidate your positions without further notice. Actions may include:
- Closing out open positions
- Selling virtual assets
- Canceling pending orders
A liquidation fee may apply.
Insurance Fund & Auto-Deleveraging
Even after liquidation, extreme price movements can leave accounts with negative balances.
Insurance Fund
OKX maintains a segregated Insurance Fund to cover such shortfalls. However:
- The fund is not guaranteed to cover all losses.
- During high volatility, you may owe money to OKX beyond your initial deposit.
Auto-Deleveraging (ADL)
If the Insurance Fund drops by 30% within 8 hours, ADL is triggered:
- Profits from winning positions are used to offset losses from forced liquidations.
- Positions are ranked from most profitable to least.
- No trading fees apply during forced closures.
ADL deactivates when the fund recovers by 75% within 8 hours or reaches at least $8,000 in value.
FAQ: Can I avoid being auto-deleveraged?
Yes—by closing positions proactively or avoiding highly leveraged trades during volatile periods.
Fees, Payments & Taxes
Transparency in costs ensures informed trading decisions.
Fee Structure
OKX charges fees for:
- Opening/closing positions
- Funding transfers (for perpetuals)
- Settlements
All applicable fees are published on the platform and subject to change.
Taxes—including VAT—are charged where required by law and appear separately on invoices.
Payments are due immediately upon trade execution and deducted automatically from your margin account.
Risk Disclosure Summary
Leverage magnifies both gains and losses. A small adverse price move can result in significant losses—or even exceed your initial investment.
You are solely responsible for:
- Monitoring your margin levels
- Responding promptly to margin calls
- Closing losing positions before liquidation
OKX may increase margin requirements suddenly due to:
- Market volatility
- Economic news
- Regulatory changes
Notifications will be sent via email, app alerts, or website announcements.
Frequently Asked Questions
Q: Can retail investors trade futures or options?
A: No. Under this agreement, retail investors are restricted to Margin Trading only.
Q: How often are funding rates applied in perpetual contracts?
A: Every 8 hours—at 04:00, 12:00, and 20:00 UAE time (UTC+4).
Q: What happens if I don’t respond to a margin call?
A: OKX may liquidate part or all of your positions to meet margin requirements. You remain liable for any resulting deficits.
Q: Is the Insurance Fund guaranteed to protect me from losses?
A: No. During severe market disruptions, the fund may be depleted, leaving you responsible for negative balances.
Q: Can I withdraw funds anytime?
A: Yes, as long as the withdrawal doesn’t reduce your margin below required levels.
Q: How do I know when contract specifications change?
A: OKX notifies users via email, platform alerts, or website updates whenever contract terms are amended.
Final Notes
This agreement remains dynamic and may be updated in line with evolving regulations and market practices. Users are encouraged to review it regularly.
Termination of this agreement does not cancel other agreements with OKX, including the main Terms of Service. All outstanding obligations—including fees and liabilities—must be settled before closing your trading account.
By using OKX’s services, you acknowledge and accept all associated risks. Success in leveraged trading demands discipline, awareness, and proactive risk management.