Been watching the crypto derivatives space mature slowly over the last few years, but am amazed that exchange fees haven't altered. The standard +0.075% on notional for marketable executions is so ridiculously high it simply wipes out entire categories of strategies in one go. Why hasn't increased competition pulled this down to provide punters with more sensible fee structures?
That can't be right, 750 per 1mln notional traded? I never trade cryptos and never will but this sounds wrong. Generally speaking, you should not be surprised at high fees though, I have been saying for years that the crypto space for solving payment issues is wrongly understood. The market will soon be dominated by a few large players that will inflate commission for their own gain in the exact same way PayPal has done in the past. What keeps shady operators from colluding with their few competitors and dictating how much the rest of the world has to pay?
Are you talking about fees at BAKKT? Or the bucket shops who advertise themselves as "exchanges"? I just looked at the fee at IB, it's at $15.01 each way. With the last traded front month CME futures at $58,445, notional value at $58,445 x5 = $292,225, that makes the fee at IB about 0.0051% each way. https://www.interactivebrokers.com/en/index.php?f=25379
I already do substantial volume with the Merc and have leased memberships. Unfortunately though their BTC and ETH products are weak offerings. IMHO they've sized the contracts incorrectly, which has resulted in poor liquidity when you really need it. Coupled with the margin requirements, I imagine they are only attractive to institutions forced to used regulated exchanges for longer term hedging. I have no problem with the crypto "bucket shops" personally. I don't really consider them bucket shops as order flow goes through the matching engines. Since they aren't regulated I'm sure there's more than a few shinanigans being played, but if you've ever had transactions busted at a traditional exchange because some exchange member ended up out-of-pocket then you'll know fairness isn't a concept that exists anywhere in finance. The crypto exchanges have innovated in several areas, and have structured some of their products in attractive ways (the convexity of the inverse perpetuals is very appealing for certain plays). Just don't understand why competition in the space hasn't brought the fees down to sensible levels.
I've contacted a few of the exchanges with my estimated ADV and none have offered me anything except headline rates.
then you're not doing enough volume Jokes aside...the days where you could impress anyone with 10m volume a day are long gone. Do 1k BTC a day and you will find the good deals
And therein lies the rub. Not a chance I'm going to post the collateral required for $50M a day without first fully evaluating them. And I'm not paying the silly headline vigs they charge to evaluate them. Oh well. Guess I'll stay on the sidelines for a while longer.
Here's the thing. You need a 3rd party clearer so your collateral isn't on the exchange. Do a bit of digging...you've just scratched the surface. BAKKT and CME are ghost towns in terms of volume and they will never gain traction since they are closed on the weekends
Unless you're an institution, I fail to understand why anyone would want to use CME, CBOE, Bakkt etc to play the crypto markets. Interested in the notion of 3rd party clearing. Looked around a while ago but could only find OTC clearing. Mind you, it was a while ago.