What Is the Exchange’s Priority during a Liquidation Event?
The exchange's priority during a liquidation event is to close the position as quickly as possible at the best available price to minimize the loss and prevent the account from reaching negative equity. This is done to protect the exchange's solvency and its insurance fund, ensuring the integrity of the entire futures market.
Glossar
Best Available Price
Execution ⎊ Best Available Price, within cryptocurrency derivatives, represents the lowest ask price accessible to a trader given prevailing market conditions and order book depth.
Liquidation Event
Event ⎊ A liquidation event, within cryptocurrency derivatives and options trading, represents the involuntary closure of a position due to margin requirements falling below a predetermined threshold.