Managing Credit Ratio
How to set, monitor, and adjust your credit ratio effectively.
Choosing a Credit Ratio
The credit ratio determines how much total notional you can quote relative to your deposited collateral. Choosing the right ratio requires balancing capital efficiency against risk.
- Ratio 1× (default): No leverage. Every quoted dollar requires a deposited dollar. Safest — you cannot over-quote even if all orders fill simultaneously.
- Ratio 2–3×: Suitable for MMs with consistent two-sided flow where bid and ask fills offset each other. A fill on both sides simultaneously reduces net exposure.
- Ratio 4–5×: Appropriate for highly active MMs with sophisticated risk management. At this ratio, a directional market move that fills all your bids could require more collateral than you have deposited. Ensure your delta management can handle it.
Setting Your Ratio
Credit ratio is configured in the MM Dashboard under Account Settings. Changes take effect immediately and apply to all subsequent order checks. Lowering your ratio may cause some existing open orders to exceed the new limit — those orders will be flagged but not automatically cancelled. You should review and cancel them manually to bring your utilization under the new limit.
Monitoring in Real Time
The MM Dashboard displays live credit utilization. The private WebSocket feed also publishes a BalanceUpdate message after every fill, which includes the current credit utilization as a percentage. Automated MM strategies should subscribe to this feed and implement their own utilization-based order management logic.
Risk Management Best Practices
- Never approach 100% utilization in a volatile market. Volatility increases the probability of consecutive directional fills, which can spike utilization rapidly.
- Use Post-Only orders when possible. A Post-Only rejection is preferable to an accidental taker fill that moves your utilization unexpectedly.
- Implement automated circuit breakers in your quoting strategy that pause new order placement when utilization exceeds a threshold (e.g. 85%).
- Periodically reconcile your open orders against your utilization. Stale resting orders that are far from the market consume credit without generating fills.