What Is the Legal or Contractual Basis for an Exchange to Implement ADL? ▴ Learn

What Is the Legal or Contractual Basis for an Exchange to Implement ADL?

The legal and contractual basis for ADL is established in the exchange's Terms of Service (ToS) or User Agreement. By agreeing to trade on the platform, the user explicitly consents to the risk management protocols, including the possibility of Auto-Deleveraging.

This agreement grants the exchange the contractual right to forcibly close a user's profitable position under specific, extreme conditions to maintain market solvency.

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