The BTSE Insurance Fund is designed to cover the gap when a futures position is liquidated but cannot be closed at its bankruptcy price. It is funded by money from liquidations that close at a better price than the bankruptcy price, and helps protect profitable traders from aggregated losses from other traders. This guide explains when it applies and what it does not do.
Why do futures exchanges need an insurance fund?
Futures trading lets you use leverage, which means controlling a larger position than your own money would allow. Losses grow faster too. When a position loses most of its margin, the exchange closes it automatically. This is called liquidation. The price where the margin is fully used up is the bankruptcy price.
Markets move fast, so a liquidation does not always close at that price. For example, say a position’s bankruptcy price is 100 USDT, but the market will only pay 98 USDT. That 2 USDT gap per unit still has to be absorbed by someone. An insurance fund is a reserve that an exchange builds up to help with these gaps, so they do not fall straight onto other traders. It does not remove market risk.
When does BTSE’s Insurance Fund step in?
The Insurance Fund may step in when a liquidation order cannot be filled at the bankruptcy price. The sequence works like this:
- A position’s margin runs low and the position is liquidated.
- The liquidation engine closes the position at the bankruptcy price, then tries to cover it in the market.
- If the order cannot fill at the bankruptcy price and the fund has enough balance, the order price can be moved by up to 1.0% to help it fill.
- If the order fills at a better price than the bankruptcy price, the leftover amount goes into the fund.
- If the order is still not filled after the 1.0% move, Auto-Deleveraging (ADL) is triggered.
For the full rules, see our BTSE Support Center Insurance Fund article.
Where does the money come from?
The fund is built from liquidation surpluses. Whenever a liquidation closes at a better price than the bankruptcy price, the leftover amount is added to the fund. Over time, this builds a platform balance that can be used to help harder-to-fill liquidations.
What happens if the fund is not enough?
If the order is still not filled after the 1.0% move, Auto-Deleveraging (ADL) is triggered automatically. ADL closes the liquidated position against a winning trader’s position instead.
For you as a user, this means that if you hold a profitable position, it may be closed earlier than you planned. The fund is designed to reduce how often this happens, but it cannot rule it out. ADL also means a liquidated trader’s margin balance never goes negative. For how ADL works, see the BTSE Support Center ADL explanation.
Can I see the Insurance Fund balance?
BTSE does not currently publish a live Insurance Fund balance on a public page. For the rules on how the fund works, see the Support Center article.
The Insurance Fund covers gaps in futures liquidations. How BTSE safeguards your assets is a separate question, covered in Proof of Reserves 2026: A Deep Dive into BTSE’s Security Architecture.
