Collateral Guide
ElectronX operates a fully collateralized clearing model. Before any order can be submitted, the full amount needed to cover your maximum possible loss, including all applicable fees, must be available in your account. There is no leverage, no margin calls, and no possibility of a loss exceeding your posted collateral.
This model virtually eliminates counterparty risk. All trades are cleared through ElectronX's central clearinghouse, which acts as the buyer to every seller and the seller to every buyer via novation. At settlement, the collateral held covers all payouts in every possible outcome.
The two balance types
| Balance | What it represents |
|---|---|
| Available to Trade | Your free cash — capital immediately accessible for placing new orders. |
| Committed Collateral | Funds currently reserved to back open orders and positions. |
When you place an order, the required collateral plus all three fee types move from Available to Trade into Committed Collateral. That movement is immediate — collateral is reserved at the point of order submission, not execution.
What moves collateral
- Order placed: Required collateral + execution fees + clearing fees + settlement fees move to Committed Collateral.
- Order cancelled: Everything is returned to Available to Trade in full — collateral and all three fee types.
- Order executes: Execution and clearing fees are consumed. Settlement fees and position collateral remain in Committed Collateral until settlement or close.
- Position settles: Settlement fees are consumed. P&L is applied. Remaining collateral is returned to Available to Trade.
- Position closed before settlement: Committed Collateral is released, settlement fees are returned, and the realized P&L is credited to Available to Trade.
Bounded Futures collateral
Collateral for Bounded Futures is determined by the product's floor. For products with a zero floor (for example, BFUT100 and BFUT500), the buyer's maximum loss is simply what they paid — their execution price. For the extended product (BFUT5000), the floor is −$250, which creates additional downside risk beyond the execution price for long positions. Each ISO has its own BFUT products with different price ranges. The examples below pertain to the BFUT products in ERCOT. For a fuller review, see electronx.com/products.
Example 1: BFUT100 and BFUT500 — zero-floor products
Bounds: BFUT100 $0 to $100; BFUT500 $0 to $500.
Long position (buy): a buyer's maximum loss is their execution price — the contract cannot settle below $0, so the worst case is losing everything paid.
Short position (sell): a seller's maximum loss is the cap minus their execution price — the contract can settle as high as the upper bound.
| Scenario | Collateral calculation |
|---|---|
| Buy 20 BFUT500 lots at $150 | 20 × $150 = $3,000 max potential loss (reserved as Committed Collateral): $150/lot if contract settles at $0 |
| Sell 20 BFUT500 lots at $150 | 20 × ($500 − $150) = $7,000 max potential loss (reserved as Committed Collateral): $350/lot if contract settles at $500 |
| Total | $10,000 in collateral is reserved across the buyer and seller (not including fees). This covers the full range of the BFUT500 product in this trade (20 × $500). |
Example 2: BFUT5000 — negative-floor product
Bounds: BFUT5000 −$250 to $5,000. The negative floor means buyers face downside risk beyond their execution price.
Long position (buy): because the contract can settle as low as −$250, a buyer's maximum loss is not just their execution price — it also includes the gap between zero and the floor.
Short position (sell): the seller's maximum loss is the cap minus the execution price — the same logic as other short positions.
| Scenario | Collateral calculation |
|---|---|
| Buy 1 BFUT5000 lot at $50 | 1 × ($50 + $250) = $300 max potential loss (reserved as Committed Collateral): $300 if contract settles at −$250 |
| Sell 1 BFUT5000 lot at $70 | 1 × ($5,000 − $70) = $4,930 max potential loss (reserved as Committed Collateral): $4,930 if contract settles at $5,000 |
| Buy 20 BFUT5000 lots at $1,200 | 20 × ($1,200 + $250) = $29,000 |
| Sell 10 BFUT5000 lots at $2,000 | 10 × ($5,000 − $2,000) = $30,000 |
For simplicity, all examples in this guide exclude fees. Actual Committed Collateral will include execution, clearing, and settlement fees on top of the position collateral shown.
Binary Options collateral
Binary Options always trade between $0 and $100 and settle at either $0 or $100. Collateral is determined by the maximum potential loss for each side.
Long position (buy): a buyer profits if the contract settles at $100 and loses their entire execution price if it settles at $0. Their maximum loss is what they paid.
Short position (sell): a seller profits if the contract settles at $0. Their maximum loss is the difference between the ceiling price ($100) and their execution price.
Long collateral + Short collateral = Execution Price + ($100 − Execution Price) = $100. Total collateral always equals the total possible payout — the system is fully funded in all scenarios.
| Scenario | Collateral · max loss · settlement outcome |
|---|---|
| Buy 50 lots at $60 (Long) | 50 × $60 = $3,000 max potential loss (reserved as Committed Collateral): if the contract settles at $0, P&L = $0 − $60 = −$60/lot |
| Sell 50 lots at $60 (Short) | 50 × ($100 − $60) = $2,000 max potential loss (reserved as Committed Collateral): if the contract settles at $100, P&L = $60 − $100 = −$40/lot |
| Total collateral held | $3,000 + $2,000 = $5,000 (= 50 lots × $100) |
Setup: Day-ahead price (strike) = $50. You buy 1 lot at $60. Real-time settlement price = $55.
| Step | Detail |
|---|---|
| Strike price | $50 (previous day's day-ahead price for this location and hour) |
| Execution price | $60 (price at which you traded) |
| Real-time settlement | $55 ≥ $50 (strike) → contract pays $100 |
| Buyer P&L | $100 − $60 = +$40 profit |
| Seller P&L | $60 − $100 = −$40 loss |
| If settlement had been $45 | $45 < $50 → contract pays $0; Buyer: $0 − $60 = −$60 loss, Seller: $60 − $0 = +$60 profit |
Fees in committed collateral
ElectronX charges three fee types: execution fees, clearing fees, and settlement fees. All three are reserved from Available to Trade and held in Committed Collateral when you place an order. The total amount reserved at order submission is:
| Event | Fee treatment |
|---|---|
| Order placed | All three fees reserved in Committed Collateral. |
| Order cancelled | All three fees returned to Available to Trade in full. |
| Order executes | Execution and clearing fees are consumed and transferred to ElectronX. Settlement fee remains in Committed Collateral. |
| Position settles at expiry | Settlement fee is consumed and transferred to ElectronX. |
| Position closed before settlement | Settlement fee is returned to Available to Trade. Execution and clearing fees are not returned. |
If you cancel an order, everything is returned — collateral and all fees. If you close out a position before it expires, your settlement fee is returned. Only execution and clearing fees are consumed on execution.
Netting & position offset rules
When you hold positions or resting orders in the same contract, ElectronX calculates your collateral requirement based on your net exposure — your maximum possible loss across all possible outcomes. Understanding the netting rules is important for managing your Committed Collateral efficiently.
Rule 1: Self-Match Prevention
A single trader cannot enter a bid and offer at the same price within the same contract simultaneously. The system prevents self-matches. If you attempt to submit an order that would match against one of your own resting orders, the order will be rejected.
Rule 2: different hour endings — no netting
Positions across different contract hours do not offset each other, even if they are at the same locations. Collateral is additive across different hour endings.
| Position | Collateral |
|---|---|
| Long 1 BFUT5000 lot at $50 (Houston HE14) | $300 ($50 + $250) |
| Short 1 BFUT5000 lot at $70 (Houston HE15) | $4,930 ($5,000 − $70) |
| Total Committed Collateral | $5,230 — additive, no netting applies |
Rule 3: same location, same hour — netting applies
When you have positions or resting orders in the same contract (same location and same hour ending), ElectronX calculates collateral based on the worst-case outcome across all possible scenarios. The rules differ depending on whether your orders have been executed.
When you have a resting buy order and a resting sell order in the same contract, your committed collateral equals the larger of the two individual collateral requirements. This reflects the worst-case outcome: whichever side represents the greater maximum loss determines what is held.
| Resting buy at $50 + resting sell at $70 (same BFUT5000 contract) | Collateral |
|---|---|
| Long collateral (buy at $50) | $300 |
| Short collateral (sell at $70) | $4,930 |
| Committed Collateral | $4,930 — the larger of the two |
The system holds the larger amount because in the worst case of the two directions, the contract could settle at $5,000 — the sell side would lose $4,930, which is the greater risk.
If both your buy and sell orders execute in the same contract, your net position is zero. You have no exposure to the settlement price. Committed Collateral drops to $0 — no settlement exposure.
You now hold a short position of −1 and a resting buy order. The system evaluates the worst-case outcome across two possible scenarios: the buy order never executes and the contract settles at $5,000 (loss = $4,930); or the buy order executes, netting the position to zero (loss = $0). The former is the greater loss, so collateral is held at $4,930.
| Short −1 executed + buy order at $50 still resting | Collateral |
|---|---|
| Contract settles at $5,000 (buy never fills) | $4,930 — this is the maximum loss |
| Buy order fills → net = 0 | $0 |
| Committed Collateral held | $4,930 — worst case governs |
You now hold a long position of +1 and a resting sell order. The system evaluates: the sell order never executes and the contract settles at −$250 (loss = $300); or the sell order executes, netting the position to zero (loss = $0). The former is the greater loss, so collateral is held at $300.
| Long +1 executed + sell order at $70 still resting | Collateral |
|---|---|
| Contract settles at −$250 (sell never fills) | $300 — this is the maximum loss |
| Sell order fills → net = 0 | $0 |
| Committed Collateral held | $300 — worst case governs |
Collateral always equals the maximum potential loss of your current position and remaining exposure. When you hold both a position and a resting order in the same contract, the system calculates the worst-case outcome across all possible scenarios and holds collateral accordingly.
Collateral calculator
The Collateral Calculator is built into the Draft Orders pane and shows the collateral implications of your drafts before you place them. It uses the same logic described in the Netting and Position Offset Rules section, evaluating your worst-case outcome across every combination of fills that could occur between draft and execution.
Where to find it
The calculator appears automatically in the Draft Orders pane whenever you have one or more drafts staged. Each draft row displays its own figures, and a combined total appears at the bottom of the pane.
What it shows
| Field | What it represents |
|---|---|
| Collateral impact (per-order) | The change in worst-case collateral required for that symbol if this single draft is placed. |
| This order's reserved collateral (per-order) | The total worst-case collateral that would be required for that symbol if this draft is placed, accounting for your existing position and resting orders on that symbol. |
| Total collateral impact (bottom) | The change in worst-case collateral required across all drafted symbols if every draft in the pane is placed. Matches the change to your Committed Collateral on placement. |
| Total reserved across drafts (bottom) | The total worst-case collateral that would be required across all drafted symbols if every draft in the pane is placed. |
Negative values indicate that collateral would be released rather than reserved. This is common when a draft offsets an existing position. All field values exclude fees.
Cancel-replace
The calculator also applies to amending orders. When you stage an amendment to a working order, the displayed figures reflect the change between your current state and the state after the replacement, applying the same worst-case logic.
Scope
Per-order figures consider only the relevant draft, your existing position on that symbol, and your resting orders on that symbol. They do not include other drafts in the pane. The bottom figures aggregate across every draft in the pane, plus your existing positions and resting orders on the same symbols. Neither the per-order nor the bottom figures include positions or orders on other symbols. All figures exclude fees. Actual Committed Collateral on placement will include execution, clearing, and settlement fees as described above.
Settlement & collateral release
Settlement is automatic for all contracts. When a contract expires, ElectronX calculates the settlement price, applies your P&L, and updates your balances without any action required from you.
Settlement price calculation
ERCOT contracts: Settlement = arithmetic average of the four 15-minute real-time Settlement Point Prices (SPP) published by ERCOT for the contract hour. First published prices are considered final.
PJM contracts: Settlement = verified real-time hourly Locational Marginal Price (LMP) for the contract hour, for the specific pricing location, as published by PJM. PJM verified LMPs for all contract hours (T) are published between 11:00 AM and 12:00 PM ET on the following day (T+1). Committed Collateral on PJM positions is held overnight and released upon the published settlement prices being received.
MISO contracts: Settlement = Preliminary Ex-Post hourly Locational Marginal Price (LMP) published by MISO for the contract hour and pricing location. MISO Preliminary Ex-Post LMPs for all contract hours (T) are published by 8:00 AM ET on the following day (T+1). Committed Collateral on MISO positions is held overnight and released upon the published settlement prices being received.
CAISO contracts: Settlement = arithmetic average of the four Fifteen-Minute Market (FMM) Locational Marginal Prices (LMPs) published by CAISO on their OASIS platform for the contract hour, for the specific pricing location.
Once the settlement price is determined for a contract, the exchange applies the contract's predefined price range as a bound. If the calculated average settlement price or published hourly price falls below the contract floor, the settlement price is set to the floor. If it exceeds the contract ceiling, the settlement price is set to the ceiling. This bounding applies across all ISOs and all contract variants (Standard, Moderate, and Extended) before any P&L or collateral release calculation is performed.
What happens at settlement
| Balance | Change at settlement |
|---|---|
| Available to Trade | Settlement P&L is credited (positive or negative). Excess collateral is returned. |
| Committed Collateral | Settlement fee is consumed. Excess position collateral is released. |
| Today's Realized P&L | Updated with the net settlement result. Resets to $0 at 6:15 AM UTC each day. |
Setup: Buy 50 BFUT5000 lots at $3,000. Contract settles at $4,000. Total fees = $0.25/lot.
| Item | Calculation |
|---|---|
| Collateral posted at order | 50 × ($3,000 + $250) = $162,500 + fees |
| Total fees | 50 × $0.25 = $12.5 |
| Gross P&L | 50 × ($4,000 − $3,000) = +$50,000 |
| Net Payout | $50,000 − $12.5 = $49,987.5 profit |
Quick reference: collateral formulas
| Product | ISO | Side | Collateral formula |
|---|---|---|---|
| Zero-Floor Products | |||
| BFUT100 | ERCOT, PJM, CAISO | Long | Lots × Execution Price |
| BFUT100 | ERCOT, PJM, CAISO | Short | Lots × ($100 − Execution Price) |
| BFUT200 | MISO | Long | Lots × Execution Price |
| BFUT200 | MISO | Short | Lots × ($200 − Execution Price) |
| BFUT500 | ERCOT, PJM | Long | Lots × Execution Price |
| BFUT500 | ERCOT, PJM | Short | Lots × ($500 − Execution Price) |
| Negative-Floor Products | |||
| BFUT300 | CAISO | Long | Lots × (Execution Price + $50) |
| BFUT300 | CAISO | Short | Lots × ($300 − Execution Price) |
| BFUT700 | MISO | Long | Lots × (Execution Price + $100) |
| BFUT700 | MISO | Short | Lots × ($700 − Execution Price) |
| BFUT2000 | CAISO | Long | Lots × (Execution Price + $150) |
| BFUT2000 | CAISO | Short | Lots × ($2,000 − Execution Price) |
| BFUT3500 | MISO | Long | Lots × (Execution Price + $500) |
| BFUT3500 | MISO | Short | Lots × ($3,500 − Execution Price) |
| BFUT3700 | PJM | Long | Lots × (Execution Price + $50) |
| BFUT3700 | PJM | Short | Lots × ($3,700 − Execution Price) |
| BFUT5000 | ERCOT | Long | Lots × (Execution Price + $250) |
| BFUT5000 | ERCOT | Short | Lots × ($5,000 − Execution Price) |
| Binary Options | |||
| Binary Option (BOPT) | All | Long | Lots × Execution Price |
| Binary Option (BOPT) | All | Short | Lots × ($100 − Execution Price) |
All collateral amounts reflect position collateral only. Actual Committed Collateral includes execution, clearing, and settlement fees in addition to the amounts shown.
Educational content only — not investment advice. This document and all ElectronX materials are subject to the EXI Rulebook and EXI Legal Notices and Disclosures at electronx.com/regulatory.
If there is any conflict between this website page and the EXI Rulebook, the EXI Rulebook is controlling. Refer to electronx.com/risk-disclosure for full risk disclosures.