Under Cross Collateral, a Gemini Derivatives Account may be able to establish and maintain a negative GUSD balance. If a customer is running a negative balance, a management fee will be charged.

Establishing and maintaining a Negative Balance

The only ways to establish a negative balance are through Trading Fees, the settlement of Funding Payments and Realized P&L. If the fees, funding payment or the Realized P&L is greater than the balance of GUSD in the Gemini Derivatives Account then a negative balance will be created.

Note: A Gemini Derivatives Account should not be able to create a negative balance through any other means, for example, withdrawals or executions of spot trades.

As long as the Margin Assets Value remains above the Margin Maintenance Limit there will be no liquidation of leveraged positions, even if a negative GUSD balance is created.

A Negative Balance can be maintained as long as the balance doesn’t exceed the negative balance limit and the Margin Assets Value of an account is > 0. This means that the account has a greater value, adjusted for haircuts, of other funding assets than the negative balance in GUSD.

Negative Balance Limits and Fees

Any negative balance that is greater than the Negative Balance Fee Threshold will incur a management fee. Fees are calculated and charged every 12 hours and paid in advance in GUSD. This means the fee is equivalent to maintaining the negative balance at the reconciliation time for the next 12 hours.

If the negative balance is less than the Negative Balance Fee Threshold then no fees are charged for that 12 hours.

A Maximum Negative Balance Limit will apply to all Gemini Derivatives Accounts. Should the negative balance exceed this limit then (part of) the collateral assets used to fund the negative balance will be liquidated according to the Cross Collateral Liquidation Process.

You can find the maximum negative balance limits, thresholds, and fees here.