ADL Further Information utilizes an Auto-Deleveraging (ADL) system instead of the traditional “Socialized Loss” system.
Comparison of the two systems:
  • Resolve loss uncertainty
  • Allow traders to take immediate actions right after a deleveraging event
  • Inform deleveraged traders of their closeout price and size, and allow them to re-enter the market
Socialized Loss System
  • One risky trader can cause large losses to other traders, including low-risk traders
  • Profit is locked until rebalance or settlement in case of loss