Fee collection during liquidation

When an account liquidation is triggered, Upvest automatically initiates collection of any outstanding AUM-based service fees as part of the same flow. This section explains the end-to-end event sequence and how to reconcile fees. We also show how to segregate collected fees from sell proceeds for post-trade settlement clients.

For full background on fee types, configuration, and general fee collection mechanics, refer to the Fees guide.

Liquidation fees are collected from the cash proceeds of the account's sell orders. Unlike regular fee collection cycles, no separate sell-to-cover order is generated. Instead, the fee is deducted from the cash received as positions are sold.

Upvest initiates the fee collection immediately after receiving the liquidation request. If some of the instruments on the account take longer to trade and their orders are not executed for several days, the remaining positions will stay in account valuations and continue accumulating fees.

The following is the complete sequence of events emitted during a liquidation that includes fee collection:

The following is an example of the fee collection event emitted immediately after a liquidation is initiated:

{
  "id": "38fc59d0-fc42-46ef-9512-824773219b2e",
  "created_at": "2024-02-04T14:17:22Z",
  "type": "FEE_COLLECTION.CREATED",
  "webhook_id": "1b097e06-8a14-4181-b72a-de0972a3c57b",
  "object": {
    "account_group_id": "999f7566-2ca3-4007-b99d-e501be8c7222",
    "account_id": "689f7566-2ca3-4007-b99d-e501be8c7783",
    "collection_amount": "10.23",
    "created_at": "2024-02-04T14:16:22Z",
    "currency": "GBP",
    "id": "d77e6924-9bb7-4db0-addc-404442258f4b",
    "period_start": "2024-01-01",
    "period_end": "2024-02-03",
    "processed_amount": { "cash_balance": "0", "sell_to_cover": "0" },
    "status": "PROCESSING",
    "type": "SERVICE_FEE_LIQUIDATION",
    "updated_at": "2024-02-04T14:16:22Z"
  }
}

To reconcile fees collected during a liquidation, correlate events across the following identifiers:

The fee_collection_id is present in account_liquidation, FEE_COLLECTION events and in the references array of the CASH_TRANSACTION.EXECUTED event (type: FEE_COLLECTION). Use this to match the cash deduction on the account to the specific fee collection.

For pre-funding clients, collected fee amounts are forwarded to the client in a separate treasury process.

In a post-trade settlement setup, order treasury nets daily buys and sells and performs only one cash movement per day. All liquidation orders are treated the same as other orders, and the fee amount that you need to take out of their proceeds is included in their amounts. To know which cash can be forwarded to the user and which could be part of the fee, separate the proceeds from regular sell and liquidation orders. The final separation of the fee amount can be done after the respective fee collection is finalised.

To achieve this, follow the process:

1. In daily order treasury, don't forward proceeds from the liquidation orders directly to the users right after settlement and hold them until you either confirm that there was no liquidation fee or until the liquidation fee amount is finalised and you can calculate the remaining amount. You can identify liquidation orders by the initiation_flow field in the order webhook events.

2. Account liquidation events contain both list of the individual orders and, starting from state FILLED the fee_collection_id. If the field fee_collection_id is empty in the ACCOUNT_LIQUIDATION.FILLED event, this means that Upvest didn't charge any fee from this account liquidation.

3. If the fee is charged and was collected successfully, you receive a FEE_COLLECTION.FINALISED event. This means that you can take the respective fee amount from proceeds from the related liquidation orders and forward the remaining cash to the end user.

4. You might receive treasury for some of the order executions belonging to a liquidation after finalisation of the respective fee. In this case the received cash can be forwarded to the client right away.

5. In rare cases when account liquidation proceeds are too small to cover the fee, depending on the agreements with Upvest, the fee can either be cancelled or replaced with a smaller amount.

For further guidance on fee configuration, fee models, and treasury reports, refer to the Fee Collection guides.