"Immediate liquidation line" suddenly goes viral! What just happened?

Recently, a message stating that “Eastern Securities’ margin trading business has added an ‘Immediate Liquidation Line’; currently, Eastern Securities’ immediate liquidation line is 115%, the liquidation line is 130%, and the warning line is 150%” suddenly went viral.

A reporter from Securities Times learned that this practice is not uncommon in the industry. Different brokerages use different names—for example, some call it the next-day liquidation line, others call it the emergency liquidation line—while the figures are basically around 115%.

Margin trading professionals at brokerages told Securities Times that this approach is mainly to further mitigate risks. Under the traditional liquidation line system, maintaining a higher collateral ratio means a slower liquidation pace; under the current situation where some stocks have a 20% daily price fluctuation limit, it is easy for the maintenance collateral ratio to fall below 100%. By comparison, the immediate liquidation line is more efficient in handling, avoiding the further expansion of losses for investors.

On the market front, on the morning of May 12, the A-share market saw a pullback. The combined trading value of the Shanghai and Shenzhen markets in the morning was 21,704 billion yuan.

Margin Balances Hit a New High

Data shows that as of May 11, the financing balance within A-share margin trading reached 28,130 billion yuan, setting a record high. Notably, this is the first time in history that the financing balance in the A-share market has exceeded 2.8 trillion yuan. Prior to this, the A-share market’s margin trading balance had already surpassed 2.8 trillion yuan on May 8 first.

By this point, the A-share market’s financing balance has increased for four consecutive trading days, with a cumulative increase of more than 110 billion yuan over the four trading days. Since 2026, the A-share market’s financing balance has increased by nearly 290 billion yuan in total. While the financing balance and the total margin trading balance are growing rapidly, the trading value of margin trading is also rising quickly. Data shows that on May 11, the A-share margin trading value further increased, reaching 3,760 billion yuan, hitting a new high in nearly 5 months.

In addition, the latest data from the Shanghai Stock Exchange shows that in April the total number of new A-share accounts opened was 2.4913 million, up 29% from 1.9244 million in the same period last year, but down 46% month-on-month compared with 4.6014 million in March.

Eastern Securities Adds an “Immediate Liquidation Line”

Eastern Securities recently issued an announcement stating that, to further improve the risk monitoring system for its margin trading and securities lending business and to effectively protect investors’ lawful rights and interests, in accordance with relevant provisions of the “Eastern Securities Co., Ltd. Margin Trading and Securities Lending Contract (2026205 Version),” the company will add an “Immediate Liquidation Line” monitoring indicator to its margin trading and securities lending business, effective from May 18, 2026.

Eastern Securities said that the “Immediate Liquidation Line” refers to a specific maintenance collateral ratio value used to monitor the risk status of investors’ credit accounts. After market close on T day, if an investor’s credit account maintenance collateral ratio falls below the immediate liquidation line, the investor should raise the maintenance collateral ratio to the liquidation line or above before the end of the market on the morning of T+1; otherwise, after the end of the market on the morning of T+1, the company will immediately have the right to implement forced liquidation. The parameters for the immediate liquidation line in the margin trading and securities lending business are 115%. The company has the right to dynamically adjust your immediate liquidation line parameters based on factors such as market conditions, its own risk management needs, and your risk tolerance.

Eastern Securities reminds investors to closely monitor risk indicators such as the maintenance collateral ratio and concentration level of their credit accounts, reasonably control leverage and positions, and promptly and adequately supplement collateral or settle related debts to prevent the risk of forced liquidation.

Multiple Brokerages Have Already Set This Type of Indicator

A reporter from Securities Times learned that Eastern Securities’ addition of an “Immediate Liquidation Line” is not new; there have been precedents in the industry before. Many brokerages have already set similar indicators, but some call them a “next-day liquidation line” or an “emergency liquidation line.”

In March 2025, Guotai Haitong adjusted certain parameters of margin trading and added an “Emergency Liquidation Line,” with the value of the “Emergency Liquidation Line” set at 110%. Under the contract, the “Emergency Liquidation Line” is a warning parameter used to monitor the risk status of investors’ credit trading. When investors complete end-of-day clearing (set as day T), if the maintenance collateral ratio of the credit account is below the emergency liquidation line and the investors do not increase their credit account maintenance collateral ratio to above the attention line as required by the brokerage, the brokerage may conduct forced liquidation of them on the next trading day (T+1).

In October 2023, Everbright Securities released an announcement titled “Announcement on the Addition of a Next-Day Liquidation Line for Margin Trading and Securities Lending.” The announcement stated that to strengthen risk management and control for the margin trading and securities lending business and to protect investors’ lawful rights and interests, the company decided to newly set a next-day liquidation line for investors’ credit account maintenance collateral ratio starting from October 30, 2023. The next-day liquidation line is 115% of the maintenance collateral ratio. After end-of-day (T day) settlement, if an investor’s credit account maintenance collateral ratio is below the next-day liquidation line and the investor fails to supplement sufficient collateral or repay financing/margin trading and securities lending liabilities in accordance with the contract, the company has the right to implement forced liquidation starting from 13:00 on T+1 as agreed in the contract, except where otherwise agreed by the investor and the company.

In February 2023, Guoxin Securities adjusted the next-day liquidation line for its margin trading business. For investors who have opened new trading permissions for ChiNext stocks, STAR Market stock trading permissions, or Beijing Stock Exchange stock trading permissions, when the maintenance collateral ratio after end-of-day settlement is below the next-day liquidation line (115%), the investor must supplement collateral before the next trading day’s market close (11:30 a.m.) so that the maintenance collateral ratio after adding collateral is not lower than 130%. If the investor fails to supplement collateral in a timely and sufficient manner, Guoxin Securities has the right to implement forced liquidation in accordance with the contract.

Further Risk Prevention

It is understood that currently, brokerages’ margin trading businesses set multiple indicators, such as a warning line at 150%, a margin call line at 130%, a liquidation line at 130%, a next-day liquidation line at 115%, and so on. These are the risk-control ladder levels for the maintenance collateral ratio of margin trading accounts; they are the core early warning and liquidation rules for brokerages to control leverage risk and prevent losses from going below the floor. Each level progresses step-by-step from safety to risk.

The warning line at 150% is the first risk alert threshold. When the account maintenance collateral ratio falls below 150%, the brokerage will issue a risk warning, and investors need to pay attention to the account’s unrealized losses and prepare to add or reduce positions in advance.

The margin call line at 130% is the strong warning as risks upgrade further. Once the maintenance collateral ratio falls below 130%, the brokerage will formally trigger a notice to add collateral (a margin call notification), requiring investors to supplement margin and reduce positions to lower leverage within the specified time, bringing the collateral ratio back above the safe range.

The liquidation line at 130% means that when the collateral ratio continues to fall below 130% and the investor has not completed the required margin top-up on time, the brokerage has the right to forcibly sell the investor’s holdings directly during trading to repay the investor’s financing/margin trading and securities lending liabilities.

The next-day liquidation line at 115% can be described as the final risk-control bottom line. If the collateral ratio drops to 115%, the account risk is already extremely high. The brokerage no longer provides a buffer for further margin calls, and on the next trading day it will directly execute batch forced liquidation until the collateral ratio rises back to the safety standard.

Margin trading professionals explained to reporters that if there were no next-day liquidation line, when an investor’s account falls below the liquidation line on T day, the brokerage could only require the investor to add collateral on T+1 day. If the investor does not add collateral on T+1, the brokerage can only liquidate on T+2.

But now, some stocks have a 20% daily price fluctuation limit; in such cases, the investor’s account maintenance collateral ratio can easily fall below 100%.

（Source: Securities Times）