A participant may assign any limit they choose to a trading desk, however the limit will be adjusted on a pro-rata based upon the total adjusted USD-value of assets allocated to SCXM. The conversion is a two-step process:
- Convert the asset's value to USD using a settlement price calculated by Zero Hash in its capacity as calculation agent.
- Adjust the value using a haircut based upon the risk associated with that value's nature.
The accepted assets and their applicable haircuts are discussed here.
For example, assume a participant has $1m USD and 1,000 BTC allocated to SCXM. First, the asset values are converted to USD. At a $4,000 BTC/USD exchange rate, that results in $1m from USD deposits, and another $4m in deposits due to BTC, for a total of $5m. Second, the assets are adjusted due to risk. The $1m is untouched, however the $4m BTC is haircut by 50% to an accepted value of $2m. This means that the participant will have a total of $3m available for use in credit-based trading.