• Press Releases
    • Submit a press release
    • Read All
  • Advertise
  • Contact us
Sensei Inu Logo Sensei Inu Logo
Bitcoinist.com
No Result
View All Result
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • Gambling
      • Bitcoin Casinos
      • Real Money Slots
      • Online Casino Real Money
      • Casino utan svensk licens
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Play Finance
  • Best crypto casino
Breaking News: Breaking: Bitcoin Repayment Plan Gets New Deadline From Mt. Gox Trustee
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • Gambling
      • Bitcoin Casinos
      • Real Money Slots
      • Online Casino Real Money
      • Casino utan svensk licens
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Play Finance
  • Best crypto casino
Bitcoinist.com
No Result
View All Result
Breaking News: Breaking: Bitcoin Repayment Plan Gets New Deadline From Mt. Gox Trustee
etoro launches etorox

Why the Inverted Fee Model of eToroX Exchange Makes Sense?

Bitcoinist by Bitcoinist
3 years ago
in Trade
0

Disruptive, innovative, and responsive in so many crucial ways, the crypto industry is the first place we expect to see a change in the financial sector, with cryptocurrency exchanges the financial bellwether of innovation. Yet, when looking at pricing models and trends towards new ways of assessing fees across the equity markets, it’s surprising that crypto trading institutions seem to be lagging behind and using dated fee models. The more forward-focused and advanced crypto exchanges, however, such as eToroX, are not. 


Over the past 10 years or so, fees have plummeted in many equity exchanges, to levels once thought impossible. This is good news for traders across the board – – including crypto traders, as a few crypto exchanges have also brought this near-zero pricing structure to customers, by taking the old maker-taker model, and flipped it on its head.  

eToroX, the advanced crypto exchange of eToro, itself a disruptive, innovative, and responsive player in the field of finance, has upturned the traditional maker-taker and joined the ranks of traditional equity trading platforms offering an inverted fee model to bring not just reduced fees to customers, but greater efficiency.  

Maker-taker fees in 100 words or less

While the likes of eToroX are spearheading innovation across the crypto industry – including in its pricing schemes – many digital asset exchanges continue to offer their customers the outmoded maker-taker plan.

Here is how it works: Those adding liquidity to the order book with resting orders, known as Makers, are assessed a low fee, or perhaps even a rebate. These come-hither fees and appealing potential rebates are meant to attract orders that provide liquidity.

Takers, on the other hand, are assigned a large fee for market orders since they are removing liquidity on demand from the order book.  

Maker-taker exchanges still the norm in crypto

Many of the well-known digital asset exchanges, including Kraken, Bitfinex, and Coinbase Pro among others, still rely on the older maker-taker model, where traders typically need to cough up roughly 0.16% to fill a limit order, with a market order coming in at rates of 50% more, at 0.26%.

Gaining popularity in the late 90s as it promised lower fees for liquidity, the fee-and-rebate pricing model (maker-taker) became the standard across equities markets in the United States. Today, however, critics – and governmental bodies in the form of the U.S. Securities and Exchange Commission (SEC) – suggest that it works against traders, incentivizing brokers to seek maximum fees, instead of executing the best deals for their clients.  

The issue was championed by U.S. Senator Charles Schumer who demanded the SEC take note of the issue in 2014, inspiring the 2018 Transaction Fee Pilot to examine the effect of various pricing models on the market. Not everyone was happy with the pilot, however: the SEC was sued by exchanges, including NASDAQ, that believed the market regulator was venturing outside its purview. No pointing fingers, but it does make one wonder.

Inverted fees – or the taker-maker model

The inverted fee structure, which is also known as the taker-maker model, rewards the taker, while at the same time disrupting the traditional pricing model, putting it firmly on its head.  

In this scenario, takers reap the benefit: as they execute trades and subsequently remove liquidity from the market, they enjoy a rebate or lower-than-market fees.

Makers, then, pay higher prices for the ‘privilege’ of posting resting orders and providing liquidity.

What inverted fees mean for institutional traders

The taker-maker fee structure is beneficial to major traders, those moving a lot of money through an exchange. Take, for example, institutional-grade traders on eToroX who trade monthly volumes of $10M or more. With the inverted fee model, takers at this level would secure a rebate of 0.01%. Makers would incur a small charge: just 0.03%.

Low fees and a small rebate are nice, of course, but the taker-maker fee structure offers other benefits as well including better fills.

The best fee structure for better fill orders

Nasdaq led the revolution of inverted fees on its BX exchange in 2009, with many major exchanges following suit. Others that have gone the way of taker-maker pricing include the apt-named Better Alternative Trading System (BATS), which has been acquired by the Chicago Board Options Exchange (CBOE), as well as The Investors Exchange (IEX).

All these exchanges are growing, in part, it would seem, by providing traders with the superior order execution made possible with the inverted model. Remarkably, data from IEX confirms  that while maker-taker exchanges still reign amongst the top U.S. equity exchanges, they nevertheless fail in offering the best to clients, with “greater adverse selection, less stability around executions, significantly longer queues at the inside, and a lower probability of execution.” Accordingly, maker-taker exchanges have several disadvantages to those offering the inverted model, significantly the need for traders to wait for the execution of their orders – if they ever get filled at all.

The data from IEX is not unique. Additional information backs up these claims. Pragma, an independent algorithmic trading provider, concurs with the IEX study stating that the taker-maker exchanges consistently deliver “better execution quality, exclusive of exchange fees,” and this benefit seems to reach all traders, those considered passive as well as more active, or aggressive, traders.

Interestingly, Nasdaq recently published data that this inverted structure works especially well when there are wide spreads and long queues, the scenario often encountered by crypto traders who regularly find cryptocurrency markets with lower liquidity levels and wider spreads.

By establishing the taker-maker fee model in the cryptocurrency market, eToroX is letting institutional-level crypto traders and those operating high-frequency trading (HFT) systems in on the best equity-market-inspired fee models, with timely fills and all the associated benefits especially vital to major traders.


Disclaimer: 

eToro is regulated in Europe by the Cyprus Securities and Exchange Commission, regulated by the Financial Conduct Authority in the UK and by the Australian Securities and Investments Commission in Australia.

eToroX is incorporated in Gibraltar with company number 116348 and its registered office is at 57/63 Line Wall Road, Gibraltar. Its distributed ledger technology (DLT) provider license was granted by the Gibraltar Financial Services Commission in December 2018 (license number FSC1333B).


 

ShareTweetShareShare

Sign Up for Our Newsletter!

For updates and exclusive offers enter your email.

I consent to my submitted data being collected and stored.

Bitcoinist

Bitcoinist

Bitcoinist is the ultimate news and review site for the crypto currency community!

Related Posts

Bitcoin Hovers Below $50k After Weekend Wipeout – Crypto Roundup, Dec 6, 2021

Bitcoin Hovers Below $50k After Weekend Wipeout – Crypto Roundup, Dec 6, 2021

2 years ago
Crypto Market Analysis: December 6, 2021

Crypto Market Analysis: December 6, 2021

2 years ago
bitcoin

Inflation fears sparks Bitcoin rally before Taproot – Crypto Roundup, Nov 15, 2021

2 years ago
crypto market analysis

Crypto Market Analysis: November 15, 2021

2 years ago
ETF approval drives Bitcoin towards all-time high at $65K – Crypto Weekly Roundup, October 18, 2021

ETF approval drives Bitcoin towards all-time high at $65K – Crypto Weekly Roundup, October 18, 2021

2 years ago
Crypto Market Analysis: October 18, 2021

Crypto Market Analysis: October 18, 2021

2 years ago
Please login to join discussion

Premium Partners

Premium Casino Partners

Play Finance

Top Casinos

Trust Dice
Trust Dice
Punt Casino
Punt Casino
mBit
mBit

Press Releases

  • Crypto Insights from the Pros: Hedera, Borroe.Finance and...

    8 hours ago
  • Analysts Predict Polkadot (DOT) to Stabilize, While QUBE is...

    12 hours ago
  • Seize the Opportunity:Domini.art Could Offer 50X Returns...

    13 hours ago
  • 3 Tokens Under $1 to Buy Now – September 2023 Rising...

    15 hours ago
  • Was Solana’s FTX Fear A ‘Buy The Fear’...

    15 hours ago

Bitcoin news portal providing breaking news, guides, price analysis about decentralized digital money & blockchain technology.

Bitcoin

  • News
  • Price
  • Businesses
  • Acceptance
  • Technology
  • Investment
  • Regulation
  • Reviews

Altcoins

  • News
  • Price
  • Ethereum
  • Ripple
  • Litecoin
  • EOS
  • NAGA

Categories

  • Blockchain
  • Security
  • FinTech
  • Technology
  • Trending
  • Breaking News
  • Press Releases
  • How to

Pages

  • Contact us
  • Editorial Policy
  • Advertise
© 2023 Bitcoinist.com. All Rights Reserved.
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • Gambling
      • Bitcoin Casinos
      • Real Money Slots
      • Online Casino Real Money
      • Casino utan svensk licens
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Play Finance
  • Best crypto casino

© 2023 Bitcoinist. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy Center or Cookie Policy.