Collateral & Margin System

Collateral Management

Symmio supports two distinct margin systems to manage risk and ensure solvency across counterparties:

1. Isolated Margin

• Used exclusively for Party A option purchases.

• Party A’s funds are deposited into an individual isolated balance, managed per user.

• Party B is responsible for maintaining sufficient collateral in their own isolated balance to cover the total unrealized PnL of all open positions with all Party As.

• The required collateral is determined by the loss coverage ratio, which defines what percentage of unrealized losses must be backed by actual funds.

• Solvency checks for Party B are performed only against their isolated balance, aggregated across all counterparties (not per Party A).

• If Party B’s available balance falls below the required threshold, liquidation is triggered.

• The Scheduled Release Balance System governs how and when deposited funds become available, introducing timed delays for security.

2. Cross Margin

• Available for both buying and selling by Party A.

• Each Party A and Party B maintains a dedicated cross balance per counterparty pair.

• This model is used for:

  • Party A’s maintenance margin (when selling options).

  • Party B’s loss coverage (when Party A is the buyer).

• Funds can be allocated from the isolated balance into a cross balance specific to a trading counterparty.

• Solvency and liquidation are pair-specific—they apply only to the trades and margin balances between a particular Party A and Party B.

  • Party A must maintain enough maintenance margin in their cross balance with Party B to support short positions.

  • Party B must allocate sufficient funds in the cross balance with Party A to cover the required unrealized PnL.

• A dedicated reserve balance is introduced for Party B:

  • Acts as a fail-safe collateral source in critical situations.

  • Can be used to top up a cross balance and prevent liquidation if the account is at risk.

Scheduled Release Balance System

The Scheduled Release System is a smart contract-based balance management system that provides secure fund handling with time-delayed releases and multi-counterparty support. The system supports both isolated and cross-margin trading models with sophisticated locking mechanisms.

This system :

• Controls fund release and transfers between parties

• Implements security delays to prevent immediate fund availability

• Mitigates risks associated with rapid fund movements

• Provides different functionality for isolated vs. cross margin systems

Balance Types

1. Isolated Balance: User's main balance pool which used in isolated solvency checks

2. Cross Balance: Per-counterparty balance for cross-margin operations and solvency checks

3. Scheduled Balance: Time-locked funds awaiting first release

4. Transitioning Balance: Funds in second phase of release process

Margin Types

• Isolated Margin: Uses scheduled release mechanism with time delays

• Cross Margin: Direct balance operations without delays

Isolated Balance Functions

instantIsolatedAdd()

• Immediately adds funds to party's isolated balance

isolatedSub()

• Subtracts funds from isolated balance

isolatedLock() / isolatedUnlock()

• Lock/unlock portions of isolated balance

Cross Balance Functions

allocateBalance()

• Transfer funds from isolated to cross balance for specific counterparty

deallocateBalance()

• Transfer funds from cross balance to isolated balance

crossLock() / crossUnlock()

• Lock/unlock portions of cross balance

Scheduled Release Functions

scheduledAdd()

• Add funds with time-delayed release. This delay is because of security issues.

subForCounterParty()

• Subtract funds from balances for counterparty not just the isolated balance.

Release Mechanism

Time Intervals

The system uses two release intervals:

1. Release Interval 1: Scheduled Balance → Transitioning Balance

2. Release Interval 2: Transitioning Balance → Isolated Balance

Sync Function

The sync() function must be called to progress funds through the release intervals. This function:

• Checks elapsed time for each balance bucket

• Moves funds from Scheduled to Transitioning when interval 1 expires

• Moves funds from Transitioning to Isolated when interval 2 expires