Market Maker Protections (MMP)

Market Maker Protection (MMP) is a safety feature designed to protect market makers from these risks. It automatically cancels their orders on the platform if certain pre-defined limits are breached. This helps to prevent large, unintentional trades and gives market makers a moment to reassess the market before they resume trading.

This feature not only benefits market makers but all users of Bullish by helping to ensure a more stable and liquid market.

What Products are eligible for MMP ?

Only Bullish Exchange traded options are applicable for MMP checks .

How to Setup MMP and use it on your trading account?

By default, MMP is not activated on trading accounts. To get started, you'll need to request that the feature be enabled. Please Contact your sales representative (RM) and express your interest in using MMP.

Once MMP is enabled for your trading account, you can set your specific risk thresholds per underlying asset for the trading account that has MMP.

• quantityLimit: This is the total amount you have traded (buy and sell) in a specific time interval. The quantity is measured in the base currency (e.g., BTC, ETH).

• deltaLimit: This is the net change in your position's delta. Delta measures the sensitivity of your position to a change in the price of the underlying asset.

• windowTimeInSeconds:The time window (in seconds) during which your trading activity is monitored. This is a rolling time window.

• frozenTimeInSeconds:The duration (in seconds) that your account is "frozen" after MMP is triggered. During this time, new MMP orders are rejected. You can set this to '0' if you prefer to manually reset your protection instead of having an auto-reset.

How Does it Work?

Once you have enabled MMP, the system will monitor your trading activity in real-time. If your trades exceed any of the limits you have set within a specific time frame, the MMP will be triggered.

When triggered, the system will:

1. Instantly cancel all your orders for the specific underlying.

2. If frozenTimeInSeconds is configured , Temporarily freeze your ability to place new orders for that underlying for a configurable amount of time.

This "cool-down" period gives you time to assess the market conditions before you decide to start trading again.

Examples

Here are a few examples of how the MMP works in practice:

Quantity Limit Example:

• Your Settings:

  • windowTimeInSeconds: 10 seconds

  • quantityLimit: 20 BTC

• Scenario:

  1. You buy 15 BTC Options. Your traded quantity is now 15 BTC, and the 10-second timer starts.

  2. 5 seconds later, you sell another 10 BTC. Your total traded quantity in the last 10 seconds is now 25 BTC (15 + 10).

• Result:

  • Your quantityLimit of 20 BTC is exceeded, so the MMP is triggered.

  • All your MMP-tagged orders for this underlying asset are immediately cancelled.

Delta Limit Example:

• Your Settings:

  • windowTimeInSeconds: 2 seconds

  • deltaLimit: 4

• Scenario:

  1. You buy 20 LONG call options with a total delta of ++0.30 each

     1. Delta counter internally gets calculated as +6 ( 20*0.30)

• Result:

  • Your deltaLimit of 4 is exceeded, so the MMP is triggered.

  • All your MMP-tagged orders are cancelled.

Resetting the MMP

After the MMP is triggered and your orders are cancelled, the system will be in a "frozen" state for the time you have configured. You can either wait for this time to expire or you can manually reset the MMP from your account settings or via an API call.

Margin Requirements for options MMP tagged orders may get discounted:

• MMP tagged orders with Delta Limit get discounted MR.

• MMP tagged orders with (Delta Limit and Quantity Limit) get discounted MR based on Delta Limit.

• MMP tagged orders with Quantity Limit get NO discounted MR.

We hope this article helps you to understand the Market Maker Protection feature. If you have any further questions, please do not hesitate to contact our support team.