Liquidations are a last resort. Monitor margin health and act on warnings to avoid them.
Venue auto-liquidation (Deribit)
Triggered when equity in a settlement currency falls below maintenance margin.
The venue's liquidation engine places risk-reducing orders incrementally until margin health is restored. It does not necessarily close your entire portfolio.
A liquidation fee is charged on liquidated positions per the venue's fee schedule.
Liquidation trades are tagged in Prime's Activity page and you receive Auto-Liquidation Started and Auto-Liquidation Completed notifications (one liquidation email per day).
Close-out and Liquidity Support Providers
If equity falls below the venue's close-out margin, remaining positions may be transferred to a Liquidity Support Provider (LSP) at the venue's price rather than being worked in the order book. You are notified when a position transfer starts and completes.
Auto-deleveraging (ADL)
In extreme conditions where the venue's insurance fund is insufficient, the exchange may close part or all of a profitable position against bankrupt counterparties. This is rare, is initiated by the venue, and you are notified if it affects you.
FCM-initiated liquidation
CFM may close positions in your portfolio, through the Prime Trading Desk, if:
the portfolio is in deficit after a margin call is not met,
your entity is in default on U.S. Derivatives (Global Derivatives trading is blocked in that case),
a risk limit or compliance requirement requires it.
Standard FCM broker fees apply to these orders, and they are tagged as liquidation trades in Activity. Positions are closed largest-exposure first; open orders are cancelled first.
Need help?
Contact your Coinbase Account Manager or email primeops@coinbase.com. See also Get help and notifications for derivatives.
Note: Derivatives on Coinbase Prime are offered by Coinbase Financial Markets, Inc. (CFM), a futures commission merchant registered with the CFTC and a member of the NFA.
Disclaimer: Trading futures and options involves substantial risk and isn't suitable for everyone. Only trade products you understand, after considering whether trading suits your experience, financial position and investment goals. Leverage can work for you or against you, and losses can exceed the amount you deposit.
Previous: Margin health and margin calls