Institutional Loan

What is Institutional Loan?

Institutional Loan supports loans of fixed interest rates for a fixed term of 90 days. Borrowers are charged constant interest during the loan period, providing both predictability and stability.

Institutional Loan works on a peer-to-peer model, matching lending orders (taker orders) to borrower orders (maker orders). OKX sets the APR based on market conditions, taking into account various factors. Borrowers place orders on the Institutional Loan order book, specifying their borrowing amount.

Lenders place lending orders on the Simple Earn Fixed orderbook. The system then matches lending orders to borrowing orders. Once matched, OKX will verify the MR (margin ratio) of the borrowers. If it meets the requirement of the IMR (initial margin ratio), the loan amount will be directly added to borrowers' account.

Key Advantanges

1. Under-collateralized, with up to 2.5x leverage

2. Borrowing amount directly added to the account balance

3. Fixed interest rate and term for 90 days, ensuring liquidity stability and cost expectation.

4. Loan risk is measured by the margin ratio of the risk unit, which consists of a master account and sub-accounts defined by clients. This is independent of the Unified Trading Account.

Overview

1. Minimum borrowing amount: 1,000,000 USDT

2. Supported cryptocurrencies: USDT

3. Supported term: 90 days

4. Leverage: up to 2.5x

5. Collateral: The available collateral refers to the sum of the User's assets of certain currencies in the Account which contains the liability, and in all of its sub-accounts. For detailed calculation please refer to [Part Risk Control]

6. Loan Disbursement: Master account of the selected risk unit

How to borrow from Institutional Loan?

1. Get whitelisted

Contact our BD team to ensure your account is whitelisted before borrowing.

2. Make sure you have sufficient funds in your account

Before placing your order, make sure there is sufficient funds in your funding account to cover the total interest incurred.

3. Place your borrowing orders

Set your borrowing amount based on the prevailing APR and your collateral value.

Upon confirming your order, the total interest will be recorded as a contingent liability, and withdrawal restrictions will apply based on the margin ratio requirement.

4. Wait for order to match

Your borrowing request will be split into sub-orders and matched with any available lending orders

Once matched, we’ll verify your margin ratio (MR). If it meets our initial margin ratio (IMR) standard, the matched funds will be transferred to your Master funding account. And the borrowed amount along with the total interest will be both recorded as liability.

Interest

How's interest charged?

Interest for a single Institutional Loan term (90 days) is as follows = Borrowing amount × Interest rate × 90 / 365

Interest begins to accrue once your loan amount is ready to be drawn down. It will be calculated as liability in your risk unit from the time that it is drawn down. It must be repaid along with the principal on the maturity date.

Example:

• Borrowing amount: 1,000,000 USDT

• Matched interest rate: 6%

• Loan term: 90 days

Interest = 1,000,000 USDT × 6% × 90 / 365 = 14,794.5205 USDT

What is the overdue fee?

If you do not repay on maturity date, your loan will become overdue and an extra overdue fee will be charged on an hourly basis.

Example:

• Loan amount: 1,000,000 USDT

• Term: 90 days

• Matched interest rate: 6%

• Overdue APR: 30%

• Overdue period: 9 hours 50 mins (will be rounded up to 10 hours)

Overdue fee: 1,000,000 USDT x 30% x 10 / 24 / 365= 342.4658 USDT (rounded up to 4 digits)

Total amount to be repaid = Loan amount + total interest + overdue interest = 1,015,136.9863 USDT

Repayment

Repay on maturity

You can exercise manual repayment by sub-order level. If you repay in the last 12 hours before maturity, remaining interest for the number of full hours until maturity will not be charged.

Early Repayment

If you repay your loan more than 12 hours before maturity, you will be charged an extra prepayment fee equivalent to 100% of the residual interest.

Overdue Repayment

If a loan order is overdue, an extra overdue interest will be charged. If a loan is overdue by more than 14 days, forced liquidation is triggered. OKX may then sell your collateral and assets to pay down your loan liability. This may result in losses to you. As such, overdue loans should be repaid as soon as possible.

Rollover

Early rollover or auto-rollover is not supported yet. Please stay tuned for the functions to be released soon.

Risk Control

Institutional Loan Margin Ratio Calculation

1. asset refers to the sum of your assets of a certain currency in the account which contains the liability, and all its sub-accounts (custodian sub-accounts are excluded). Accounts for Savings and Earn products, other lending products on the OKX Platform, Mining products and JumpStart Products are not included in the calculation.

2. asset of a certain currency consists of:

   1. Total balance in funding account

   2. Total equity in trading account

   3. It also includes the borrowed funds.

3. liability refers to the amount of assets borrowed by you through Institutional Loan and OKX Creditline, as well as any accrued interest.

4. price refers to the current price of the asset in the currency determined by OKX (in the calculation of all currencies, as against USD (for example, the USD price of BTC or any other relevant asset). The conversion to USD is done using the standard token indices on OKX. If a token index is unavailable, OKX has the right to determine the exchange rate based on the spot prices available.

5. discount ratio refers to the percentage by which the asset is multiplied to determine its weight, for the purpose of calculating collateral where the asset has a positive balance. Where the asset has a negative balance, the Discount Ratio is set to 1

6. interest refers to the interest accrued (if applicable) for the currency borrowed through Institutional Loan and OKX Creditline

Discount Ratio

Other tokens not listed in the table above have a Discount Ratio of 0.

OKX has the right to adjust these parameters based on prevailing market conditions with prior written notice to you.

Risk Control Rules Based On Margin Ratio

OKX sets several risk controls on the Margin Ratio:

1. Withdrawal Limit Margin Ratio (or “Withdraw Limit Ratio” for short):

The Withdraw Limit Margin Ratio (withdraw_limit_ratio) is used for calculating the maximum available withdrawal amount for each currency:max (0, CL * (MR-withdraw_limit_ratio)) / price / Discount Ratio, where “CL” refers to the current total value of assets funded by the institutional loan and OKX creditline, “MR” refers to the Customer’s Margin Ratio, and the “price” is the current price of the asset the Customer intends to withdraw.

2. Initial Margin Ratio (the “IMR”):

IMR is the Margin Ratio that the User must attain, taking into account the funds to be borrowed, in order to receive the initial funding under an Institutional Loan. Typically this ratio will be the same as the Withdrawal Limit Margin Ratio

3. Insufficient Margin Ratio Alert:

When the account Margin Ratio is lower than this level, the User will receive an email alert from OKX notifying of a margin call.

4. Liquidation Margin Ratio Alert:

When the account Margin Ratio is lower than this level, the Customer will receive an email alert from OKX notifying the user of the risk of imminent liquidation.

5. Liquidation Margin Ratio:

When the account Margin Ratio is lower than this level, OKX will liquidate and sell the User's collateral and assets to repay the liability.

Currently, the values of the above risk control measures are:

• Withdraw Limit Margin Ratio: 40%

• Initial Margin Ratio: 40%

• Insufficient Margin Ratio Alert: 30%

• Liquidation Margin Ratio Alert: 17%

• Liquidation Margin Ratio: 15%
  

Example：

How to calculate my current MR?

MR=(Total assets*Discount Ratio-total liability)/total liability

Assuming:

• Borrowing amount：$200,000

• Accrued Interest：$7,397.26

• Asset Overview of the Risk Unit :
  

Calculation Steps:

Step 1: Calculate total adjusted assets

Total adjusted assets represents the total value of assets available as collateral in USD equivalent.

Total adjusted assets= BTC Equity USD + SOL Equity USD +AAVE Equity USD + USDT Equity USD + SUI Equity USD=3 x 100,000 x 1 + 600 x *250 * 0.9 +1,000 x 300 x 0 - 50,000 *1 - 10,000 *4*1=345,000 USD

Step 2: Calculate total liability

Total liability represents the amount of assets borrowed and total Interests.

Total liability=Borrowing amount+total interest=$207,397.26

Step 3: Calculate MR ratio

MR=(Total adjusted assets-total liability)/total liability=(345,000-207,397.26)/207,397.26=66.34%