If the balance of a fund pool—its master trading account—becomes negative, the system starts an automatic process that affects the fund, its open positions and its investors.
What happens automatically?
The fund is terminated. The fund cannot continue operating after its balance becomes negative.
Open positions are closed. The system closes all remaining open trading positions.
Investor relationships end. The system ends the relationship between the fund and its investors and sends forced-redemption notifications.
What can’t a Fund Manager do?
Add personal funds to cover the negative balance. The fund contains pooled investor capital and cannot be restored by adding the Fund Manager’s personal money.
Restore or continue using the terminated fund. A fund that has entered this process cannot resume operating.
Keep the existing investor relationships active. The system terminates them automatically.
What can a Fund Manager do next?
Review the fund-termination notification and the fund’s recent activity.
Analyse the events that caused the negative balance and reassess the trading and risk-management strategy.
Create a new fund if you want to continue operating as a Fund Manager.
Explain the outcome to former investors and, if appropriate, let them know about the new fund.
How could this affect the Fund Manager?
A negative fund balance may affect the Fund Manager’s reputation and credibility.
The platform may retain a record of the event, which may affect future fund-management activity.
Investors may leave negative feedback after losing funds.