Why Is ADL Generally Preferred over Socialized Loss by Major Exchanges?

ADL is preferred because it is a more targeted and precise mechanism. It only affects the most profitable and highly-leveraged traders, who are typically better equipped to handle the reduction in position size.

Socialized loss, by contrast, affects all profitable traders, regardless of their leverage or magnitude of profit, leading to broader market dissatisfaction. ADL also allows for quicker deficit resolution.