A common misconception: when a position gets liquidated, the margin is assumed to be completely gone. In reality, there's usually still a small buffer of a few tenths of a percent between the liquidation price and the point where truly nothing is left.
Two different prices
The liquidation price is the point where your margin hits the maintenance margin threshold — the exchange starts force-closing your position here. The bankruptcy price sits further from entry: it's the theoretical point where your margin would truly be zero.
Between the two lies exactly the amount of maintenance margin — and that buffer is what pays for the liquidation clearance fee some exchanges charge when force-closing a position.
Why this buffer exists
Maintenance margin is deliberately sized not just to absorb the liquidation itself, but to leave enough room to close the position in a controlled way and cover any fees — before the account actually goes negative.
Where the fee actually belongs — and where it doesn't
Important to know: not every exchange handles the clearance fee the same way. Some (e.g. Binance in isolated mode) deduct it from remaining margin only after the liquidation trigger — it doesn't change when liquidation happens, only how much is left afterward. Others (e.g. Bybit, OKX) build a comparable fee directly into the trigger formula, which means liquidation actually happens slightly earlier.
What to take away
- Liquidation doesn't automatically mean a total loss of margin — a small remainder usually survives.
- Whether the fee shifts the trigger point or gets deducted afterward depends on the specific exchange.
- The insurance fund is the safety net for cases where even this buffer isn't enough during extreme market moves.