The Due Diligence evaluation considers Borrow History, Borrow Reputation, Custody and Compliance Risk. These are described in the table below.
X-Margin captures the majority of this information as part of the onboarding process. Certain calculations are updated periodically as borrowers become more active on the X-Margin platform.
Last updated
| Factor | Description | Calculation | Weight |
|---|---|---|---|
Borrow History
X-Margin captures loans and repayment activity through the platform, allows borrowers to upload information on their external borrowing history, and scrapes publicly available information. X-Margin considers the longevity of borrowing activity, repaid principal, and the team experience.
The score is a function of the time period over which the historical track record of repayment is evident, the repaid principal in relation to Portfolio Equity, and the management team experience. Any history of failed repayment results in a 0 for this score.
50
Borrow Reputation
Reputation considers if the entity is a counterparty of multiple reputable institutions. X-Margin evaluates the number of counterparties, and the average historical collateral requirement for any borrowing activity.
Borrowers points are determined by a matrix where reputable counterparties and average collateralization are the axis.
50
Custody
If trading firms rely on purpose-built, institutional grade infrastructure for the storage and movement of assets, X-Margin considers their operations as more secure. Further, appropriate governance processes are considered for both exchange and decentralized wallet management.
Borrowers fall in one of 3 tiers, each of which corresponds to a point total. For example, if a Borrower uses Copper Custody or Fireblocks, they will receive the maximum score.
45
Compliance Risk
X-Margin uses a 3rd party data provider to assist compliance checks and the searching of international databases. Compliance Risk evaluates the following entity information: Age, FATF Jurisdictions, CPI Index, Worldwide Governance Indicators, and Sanctions List.
Weights are applied to each of the factors in the description, and a percentage score is calculated. This score is converted to a point total using a tiered approach.
30
